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now, let’s not regress…

By enelson
Tuesday, September 12th, 2006 at 4:38 pm in BART, Funding, tolls, transit equity.

BART San Jose extension funding chart from 

 BART to SJ piechart-smaller.gif

Last week, I wrote that transit advocates should be pleased with some of the introductory sound bites offered by the federal transportation secretary nominee, Mary Peters.

My armchair analysis was received with some consternation by Rebecca Long, the Metropolitan Transportation Commission’s legislative analyst, who knows more about how transportation is funded in this town than anyone should have to. 

I suggested that Peters’ support of user fees (tolls, basically) for highways could make the term “freeway” obsolete, and didn’t really explain why “freeway” is already a misnomer. I also may have been unkind to the idea of single-vehicle toll lanes known as HOT lanes, sometimes called “Lexus lanes” because people who are willing and able to pay can scoot by traffic jams on them.

But hear Rebecca explain it (She did not pick the links, however):

There are a few points in there that I think might confuse the reader.
First, you point out that some transit critics claim that highways are
“free” but you don’t explain why this is a misconception. Highways are
subsidized, just as transit is – but in this case, it’s not fares but
the gas tax and sales taxes that constitutes the public investment or
“subsidy” – to the tune of tens of billions of dollars annually. By
calling them “free” but not explaining that they are not in fact free,
you just perpetuate this anti-transit viewpoint.

Second, you talk about “regressively providing transit.” I’m not sure
what you mean by the use of “regressive” here. Regressive in the context
of taxes usually means that poor people get a raw deal. A flat tax, for
instance, is regressive. Sales taxes are regressive because everyone has
to pay them. User fees are less regressive because you don’t HAVE to pay them.

I suppose transit fares could be argued to be regressive because they aren’t indexed by income, but fares (a direct user fee) are far less regressive than sales tax, which everyone who buys anything is
forced to pay, whether or not they benefit from the expenses funded by
the sales tax. However, when evaluating whether or not a tax/fee is
regressive, you have to also consider the expenditure plan and in the
case of the Bay Area sales tax measures that are dedicated to
transportation, all expenditure plans dedicate sizable amounts to
transit, which benefits lower income riders.

Finally, I would point out that the argument that HOT lanes are
regressive is flawed in the sense that HOT lanes do not make anyone
worse off, unless of course they clog up the lane, but that would be bad
implementation more than anything else. And the revenue from HOT lanes can be used to fund additional transit services, reducing the need for fare increases.

Ok, ok. I’ll concede that I hadn’t thought these issues through as thoroughly as one might. I certainly should have clarified the “free” freeways notion.

While it’s true that gas taxes pay for highways, and that means drivers, by and large, pay for their upkeep, it’s also true that we depend quite heavily on regressive sales taxes for transit improvements. Backers of the BART extension to San Jose were more-or-less counting on voters to pass a sales tax measure to get their project built. The voters, however, made other plans by rejecting it June 6. 


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7 Responses to “now, let’s not regress…”

  1. Ryan Says:

    How on earth can Rebecca argue that user fees aren’t regressive because no one has to pay them?? This makes no sense. Public transport is the only option for many workers, and this is BY DESIGN in many “transit first” cities like Berkeley that make driving cost prohibitive as *a matter of policy*. To then turn around and call mass transit use a choice ignores the sky high housing prices throughout the Bay Area that force many of us to commute. Yes, force. Is there any question over whether the people working in sandwich shops and hotels in downtown SF can afford to live within walking distance, or afford to DRIVE? The cost of Muni, BART or road tolls is in effect a regressive tax on such people, and it’s disheartening that the MTC does not recognize this.

  2. Ryan Says:

    PS I recognize Rebecca said user fees are *less* regressive but politely disagree because many people do have to pay them.

  3. Joel B. Says:

    First as to the usage of the term “Freeways,” the problem is that free means different things. My understanding is that the “free” in freeway is meant to refer to the lack of impedment on the freeway. That is, no level crossings, no traffic lights, no stop signs, etc. That is, the freeway is free in the sense that you are not impeded. The true destruction of the term freeway, comes from the fact that tollways would (presumably) require toll collection, Fastrak mitigates the issue (and I imagine Fastrak would be required for HOT lanes), if the entire freeway requires the payment of a toll, then there will at least be the impedment by the toll collection, hence the freeway is no longer “free” (without impedment).

    I doubt very many people feel as though freeways are “free” (without cost) and that is precisely because people pay for them through a myriad of gas taxes and tolls (see e.g. the promised no user fee bridges), as well as the plenty of Federal, State and other taxes Californians pay to actually use freeways.

    The bigger issue is the fact that motorist have been paying for years user fees in the form of gas taxes (more convenient than tolls remember “impedment”) that get swiped out of the Freeway and Roads budget whenever the state has a “budget crisis.” If we pay tolls we’ll be promised the same thing too “tolls will only go to pay for roads” then 5 years later, the legislature will screw drivers again directing the money to whatever pet project the legislature wants to enact (perhaps BART to SJ, a complete waste of money by the way, far more efficient is a stable Fremont ACE/Amtrak to BART connection and enhancement of ACE/Amtrak service, but there are pet projects to be had), and perhaps such great ideas as “affordable housing” (the California Lottery for Housing as it were, better odds, still the vast majority are losers, and bad news is you have to play). No, the problem with tolls is that it’s just another tax, the perfect example is bridges (which I avoid for the life of me) which now instead of paying for just bridges are paying for all sorts of Bay Area transit improvements through RM2. Which is good for me, but still a complete fleecing of Bridge users. Did I mention that they were supposed to be free?

    Second, user fees are regressive even if you choose not to pay them, I tepidly support HOT lanes (although I fear them) because might as well use that pavement for something instead of hybrid subsidization (which my Corrolla nearly matches in Highway Mileage but no bitterness), because while the user fee exact more from the poorer individual than from the rich. That is, in another way of looking at it, the poorer individual is paying his toll in time. If the DMV enacting a “service fee” where they would help you in 5 minutes if you paid $50, is there little doubt that the poor would bear the brunt of such a fee, sure they wouldn’t pay $50, but they would probably see plenty of people pay the $50, and skip the 1.5 hr line they’ve sat in.

    Lastly, a flat tax is not regressive, nor is it actually progressive. A truly “flat” income tax, would be neither, called a proportional tax. That is because whether something is progressive or regressive, depends on whether the proportion of tax paid by higher vs. lower income earners is greater or lessor . A tax that is regressive, like Sales Taxes, taxes lower income earners greater as a proportion of their income than higher earners. A tax like the current US Income tax is progressive because higher earners (are supposed to) pay a higher proportion of their income then lower earners. A flat tax can be “progressive” if say you had an exemption for the first 30K of earned income. Thus making lower earners pay less tax than higher earners as a proportion of their income, or it can be “regressive” if you had a cap at say 95K of income (like SocSec).

  4. OaklandNative Says:

    So, is the MTC finally giving up on the Bart-to-San Jose boondoggle? It’s been soaking up all of our transit funds for years. A small injection of cash on the Capitol Corridor (like the new trains that started running this month) could replace the proposed BART line at a fraction of the cost.

  5. Frequent Amtrak Rider Says:

    BART to San Jose hasn’t soaked up any dollars outside of San Jose. It’s not a BART project, it’s a VTA project. FTA gave the project a “Not Recommended” year after year in the New Starts process so VTA withdrew the project last year. I don’t know if they jumped back into New Starts this year. Doubtful. VTA is still moving forward with the EIR/EIS and PE but that’s on their nickel.

  6. Eric Says:

    Although I agree with other comments that user fees can be regressive, that stance alone seems to sweep under the rug a bunch of other considerations that most people (or at least most who read this blog) would care about.

    First, the current system is extremly hard to justify on these or any other grounds. As someone has pointed out above, we’re subsidizing hybrid car drivers, who — despite the lower sticker price on the car — tend to be rather well-to-do themselves. And indeed, beyond their purchase price, they are not paying a fee that increases with usage. Bad redistributional policy mixed with bad incentives.

    Second, for everyone else we have a status quo system where delay is the cost that folks pay; maybe some like this system, because they think it is even handed — or even a steeply progressive tax, depending on how one converts delay costs into time (e.g., by hourly wages). Whatever you think of this issue, what do we get back from the status quo ante? More traffic jams, more pollution, and an effective “tax payment” that cannot be redirected elsewhere (read: redistribution) because it is reflected purely in economic loss of delay. It would be like having a great progressive income tax system, and then burning (rather than redistributing) all the money. Bad redistributional policy mixed with bad incentives.

    I’ve definitely come around on the HOT lane approach, but one done in a sophisticated way that is sensitive to distributional issues. Consider, for example, the following approach: HOT lanes would be opened on highways and through bridge toll lans, where drivers in a hurry could “buy” their way out of traffic jams. Sounds regressive, right? Maybe — but what if in addition an allocation of “credits” for the HOT lanes were made to drivers at the beginning of the month, which could be traded over e-bay, craigslist, or some other low-cost centralized market. Better still, beyond this monthly allocation you could “earn” more credits to sell by riding BART, Caltrain, Muni, etc., again on a per-mile-ridden basis. If calibrated right, the system could be wealth & income neutral. It would of course represent a greater burden on those who drive more (regardless of their socioeconomic level), but that’s sort of the point, isn’t it.

    It might be interesting to note that Stockholm (not a bastion of conservatism itself) appears likely to vote in user fees for driving downtown….

  7. Paul Says:

    I am not sure how HOT lanes can be called “Lexus lanes” or branded as “regressive”, when buses typically enjoy free access.

    Providing express bus service over HOT lanes is a great way to include low-income earners, non-drivers, and people who choose not to drive.

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