Saturday, January 17, 2009

Kenosha-Racine-Milwaukee Corridor Rail: Mass Transit Boondoggle

Yesterday we attended a presentation sponsored by Milwaukee County Supervisor Joe Rice on the proposed commuter rail line from Kenosha to Milwaukee.

Rice has a history of opposing tax increases, so it made sense that the free-market think tank, the Reason Foundation, would be doing the study.

In spite of the Reason Foundation’s pro-market bent, the presenter and chief researcher, Thomas Rubin, took a rather moderate tone. He clearly implied that the Milwaukee County Transit System was deserving of further taxpayer subsidies, and failed to outright condemn the rail line, simply urging the consideration of other, possibly more cost-effective, alternatives.

But the data he presented was damning.

The most obvious absurdity: each one-way trip on the rail line would cost $28. But the fare would be only $2.92. That means that every round-trip commuter, using the line to go from Kenosha to a job in Milwaukee would get a $50 daily subsidy from the taxpayers of southeastern Wisconsin.

That’s right. Fifty dollars per day. Assuming a 52 week work year, with two weeks vacation, that’s $12,500 per year. If we lived in Kenosha, we would gladly take that money and commute by car, or arrange a car pool, or telecommute or simply find a job in Kenosha. That would leave us better off, and the taxpayer no worse off.

Mass transit proponents continually claim to particularly care about the poor, and always puff the need that poor people have for mass transit. Where city bus systems are concerned, this argument may have some traction. But try finding somebody on a commuter rail line anywhere in the country who is taking the train in to a janitor’s job, or a hotel maid’s job, or to work on the counter in a McDonald’s in the city. In short, the vast majority of the riders would be affluent professionals enjoying a massive subsidy financed by the sales tax.

But if the $50 per day subsidy is the most obviously outrageous part of the plan, it’s hardly the only one.

In the first place, estimates of costs and ridership for mass transit projects have a nasty history of being badly off. And not off randomly. The costs are systematically underestimated, and the ridership is systematically overestimated. If that has happened here, the taxpayer subsidy would have to be larger -- probably much larger.

Further, it’s virtually impossible to dismantle a project like this if it proves a failure, since you have to give back the money you got from the Federal government! Thus taxpayers have to throw good money after bad with a costly white elephant that can’t be gotten rid of.

A lot of the costs of the project aren’t taken into account, and Rubin gave an enlightening account of the complexity of projects like this. A train line along the KRM route would impede traffic at many grade crossings, and kill at least a few people. (Admittedly, the people killed would be idiots who drive around a lowered gate to try to beat a train.)

(U.S. railroads reported 237 deaths in “highway/rail incidents” in the first ten months of 2008.)

Noise would be substantial. In fact, Federal regulation requires that train whistles be loud.

Economic Benefits?

One of the standard excuses for spending massive amounts of taxpayer money is that the spending has large spillover benefits. And indeed a study from the University of Wisconsin-Milwaukee claimed that the rail line would indeed produce such benefits, both in terms of stimulating the local economy and raising property values.

The Reason study thoroughly debunks that.
The University of Wisconsin-Milwaukee analysis of the local economic benefits of the construction of the rail line wrongly assumes all expenditures, and jobs created, would be local, even though there is no local capacity to produce many of the components, such as the $48 million rail cars. And the $2.1 billion increase in property values the rail project alleges would mean that each of the 3,696 projected 2035 round-trip riders would be “worth” $568,000, a claim that “cannot be taken seriously” the Reason Foundation concludes.
Of course, any economist knows that you can create jobs and development in some highly visible place if you just throw enough money at a particular developer, or provide a large enough subsidy (explicit or implicit) to this or that locality or industry.

The Reason study, however, concludes that while the KRM line could certainly move development around (taking it from the I-94 corridor to the lakefront, for example) it wouldn’t actually create any new development.

This, of course, reflects a truism about subsidy-driven economic development. With enough taxpayer money you can create showpiece development that politicians can brag about, while leaving everybody else, including businesses who pay their own way, worse off.

Most economists know this, but there are always a few hacks around (often, it seems, in the UW system) who will try to justify this or that expensive project.

The policy brief of the study is here, and the full study is here.

Ken Yunker Responds

The people who staged this press conference graciously allowed Ken Yunker, a strong supporter of the KRM line, to respond. Supervisor Rice kindly sent us two slide shows that Yunker prepared, and they are available here and here. Due to limitations on time, Yunker only dealt with a few of the issues covered in his slide shows.

We found his responses unconvincing, and indeed rather silly.

In response to the absurdly high subsidy that would be required for each rider on the KRM line, he said that the Marquette interchange upgrade cost millions, and does not accommodate a single new rider.

We confronted him after the presentation on this, and told him that even if no additional autos use the interchange, the reduction in waiting time might well justify the expenditure.

He then responded: “so you want to subsidize drivers and not transit users?”

Too shocked at this absurd response to explain that (1.) we don’t like to subsidize anybody, and (2.) drivers pay a Federal gas tax to provide funds for such interchanges, we responded “subsidize what is cost effective.” We added “you are assuming that people are exogenously assigned to driver versus mass transit status, but in fact people choose.”

He said he understood. We are rather confident he did not.

Conclusion

What we have, with the KRM line, is the typical mass transit boondoggle. Those proliferate all over the country, driven by a variety of forces. There is, first, the pork barrel imperative. Big projects create big profits for various suppliers and contractors, and political profit for politicians who can point to some “achievement” confident that the average voter will have no idea what the project cost, either in terms of other lower-visibility public programs, or in terms of private consumption.

Then there is the “other people’s money” factor. Given that “free” Federal money, siphoned off from funds that should go to highways (since they come from gas taxes) are available, why not have something for “free.” But of course it isn’t free. And it especially isn’t free when it saddles local taxpayers with an expensive white elephant.

Finally, there is the liberal dislike of roads, cars and suburbs. To elitist liberals, all those things are symptoms of ordinary Americans getting uppity. They think they have the right to live where they want, to commute if they want, and to drive their cars where they want -- all without permission of bureaucratic planners.

(It’s true, of course, that planners plan highways, but their typical task is to simply accommodate traffic by making it easier for people to travel as they want.)

Those ordinary Americans have the gall to live under suburban governments that are may be responsive to their own interests and values, and not inclined to massive social engineering.

So ultimately, the animus against autos -- which translates into a lust after “public” transportation -- is cultural. But the culture follows from the class interests of elite liberals.

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17 Comments:

Anonymous Fred Young said...

This is an excellent summary of the arguments against KRM. Boosters thereof have created a fantasy supported by studies and qualitative assertions by fellow travelers of the green persuasion.

Indeed, the push in nearly all major cities for rail is derivative from federal legislation which dictates that a certain portion of the federal excise tax on gasoline/diesel will be diverted to public transit.

The result is boondoggles in most cities and underinvestment in roads in relation to the increase in automobile passenger-miles.

Great job, Professor.

5:09 PM  
Anonymous Aaron Rodriguez said...

Good job on the article. It was well written analysis.

6:02 PM  
Anonymous Brew Cityzen said...

I assume you're also opposed to highway and road construction, which is subject to billions in subsidies. As a person who walks to work, I suppose you would recognize the legitimacy of my disgust with any use of property or sales taxes to pay for road construction or repair.

It absolutely baffles me any transit spending proposal that isn't car-oriented has turned into a partisan issue. But I think in reality the problem is really a generational one. The dwindling-in-number, aging, exurbanite crowd that tends to vote Republican isn't likely to be interested in anything other than the more-parking-lots, more-highways, more-cars status quo that is astonishingly short-sighted on a cultural, environmental, and commercial level.

Why must everyone be forced to live in a suburb-oriented, spoke-and-wheel design, no-car-no-way society? Can't we have different options for different people? I don't pay automobile fees for my wife's car to support road building (and these don't come close to covering it) because I WANT to have to drive all over to live an ordinary, not-wholly-inconvenient life; I do it because I have no other choice.

It is astonishing the amount of economic productivity lost because of road congestion. Building more and bigger roads won't solve the problem, it will only make it worse. Parking will never keep up, unless we just start razing buildings or paving over parks and other open spaces.

Milwaukee needs comprehensive, all-inclusive, multi-faceted solutions. I don't want to rip down our highways or cease all road construction or ban downtown parking. I just want other things to be on the table too. I'd like to think you're just casting a critical eye here as part of a broader debate about what steps we should be taking, but I can't past the sneaking suspicion that you have no interest in seeing any steps taken at all.

9:09 PM  
Blogger John McAdams said...

I assume you're also opposed to highway and road construction, which is subject to billions in subsidies.

You've never heard of the gas tax, which goes to support those things -- after a lot is diverted into mass transit boondoggles.

I would be for mass transit if it were cost-effective. But the vast majority of it isn't.

My argument that hating roads is a cultural matter to liberals is supported by your stereotyping of people who drive.

And the notion that young people don't like cars and the freedom that cars and roads bring is a bit bizarre.

Maybe the young people you know all come from the East Side of Milwaukee, and have been properly indoctrinated.

9:52 PM  
Anonymous N. Holton said...

"But try finding somebody on a commuter rail line anywhere in the country who is taking the train in to a janitor’s job, or a hotel maid’s job, or to work on the counter in a McDonald’s in the city."

The metro in Washington D.C. Just saying.

11:46 AM  
Anonymous Bettye J. said...

Yes, gas tax money does pay for road construction, but Milwaukee County property taxes fund approximately $180 million of road construction each year. Statewide, property taxpayers fund approximately $1.3 billion in road construction. If you don't want your tax money going to transit, then guess what? I don't want my tax money going to roads that I don't drive on, that contribute to sprawl and pollution, and that do nothing to expand opportunities to the economically disadvantaged. I'm sure you would love it if gas taxes increased the 40 cents per gallon that would be necessary to make roads fully funded by the gas tax.

12:39 PM  
Blogger John McAdams said...

The metro in Washington D.C. Just saying.

Fair enough, but the Metro is not actually commuter rail, it's the subway system that extends into neighboring counties in Maryland and Virginia.

Not really like a line to Racine and Kenosha.

2:27 PM  
Blogger John McAdams said...

I'm sure you would love it if gas taxes increased the 40 cents per gallon that would be necessary to make roads fully funded by the gas tax.

Assuming your numbers are correct, I would be happy to see roads funded entirely by gas taxes.

But we should also stop taking gas tax money for mass transit.

Let both transit and roads pay for themselves.

You comments -- like those of Brew Cityzen -- show a cultural bias against roads and cars and suburbs.

They therefore vindicate what I said about liberals and mass transit.

2:30 PM  
Anonymous Bettye J. said...

I actually don't have a cultural bias against roads and suburbs. I own a car, and I use the bus. But I recognize that the property owners of Milwaukee County subsidize my ability to drive my car on roads far more than they subsidize my bus rides.

When 40% of area highway and road construction is funded through property taxes, I'm sure you can understand why some of us might want more sales or property taxes to support transit.

I also love how having a cultural bias against cars is TERRIBLE, but having a cultural bias against transit is just peachy keen, huh?

3:55 PM  
Blogger mikemiller34 said...

Hi John, this post was cited on another blog--that's how I found yours. Didn't I used to see you riding the #15 bus from Shorewood to Marquette every morning in the early-to-mid 1990s? You would always pay full fare in cash. I made the connection because you'd be pictured in the paper every so often. I'm not trying to call you out on anything, but in that light, I do find this all a bit curious.

9:18 PM  
Anonymous jpk said...

"You[sic] comments -- like those of Brew Cityzen -- show a cultural bias against roads and cars and suburbs.

They therefore vindicate what I said about liberals and mass transit."

Wow. Doesn't the opposite hold for you? Your writing betrays a basic weakness -- a rather irrational cultural bias against urban development and transit.

By the way, not all public choice scholars agree with your arguments. And please don't try to label them as conservative - because they're not - they're crackpot.

For those who want to see what the top scholars are saying about transit and urban development, please read Anthony Downs' Sprawl Costs as one example. Tony Downs, the most oft-cited poli scientist, shows the inefficiencies of suburban sprawl.

You might want to brush up on some of the latest lit professor.

1:01 PM  
Blogger John McAdams said...

Wow. Doesn't the opposite hold for you? Your writing betrays a basic weakness -- a rather irrational cultural bias against urban development and transit.

No, I'm not trying to use government money to subsidize lifestyles I happen to like. You folks are.

If you want to live in cities, ride your bikes to work and drink lattes in Fair Trade coffee houses by all means feel free.

But don't ask me to subsidize you.

As for the "latest lit," you might see:

Here

And here.

You can always cite liberal professors who share your cultural biases.

It's possible to have a serious discussion asking about what externalities certain activities involve, and trying to internalize those.

But a cultural bias against suburbs is simply odious.

You and your liberal friends simply have no right to tell people where to live, or how to live their lives.

2:59 PM  
Anonymous Anonymous said...

Mr. McAdams,

As a civil engineer, urban planning student at UWM and your former student (Don’t worry I am not a hippy dippy liberal, as you might phrase it.), I feel inclined to comment on your KRM post. First, here is a list of cities implementing or currently using commuter rail lines:

Albuquerque
Austin
Boston
Chicago
Dallas
Harrisburg
Los Angeles
Miami
Minneapolis
Nashville
New Haven
New Jersey – Statewide
New York City
Philadelphia
Portland
Salt Lake City
San Diego
San Francisco
San Jose
Seattle
Tacoma
Washington

(This list is far from exhaustive)
http://www.apta.com/links/transit_by_mode/commrail.cfm

Does this mean Milwaukee should have commuter rail? It depends on how you approach the subject. Looking at the immediate, the initial answer could be “no” for some people. However, with an eye towards the future and a coordinated plan – becoming more integrated into the Chicago market via I-94 expansion and commuter rail – suddenly there is a goal and reasons to attain that goal. The fundamental truth at the very root of commuter rail in Milwaukee is that as the region’s manufacturing base continues to decline we, as a region, will decline with it. If we do not take measure now to adapt, our region will be at a economic, social, political and cultural disadvantage. The logical and efficient path of adaptation is through new connections with Chicago. (As a Milwaukee southsider all my life I don’t rejoice in admitting this but the facts cannot be denied)

Now the goal is understood, but how do we attain the goal? The political, business, educational, many citizens, and regional thinkers and leaders have selected commuter rail as one element of the overall plan. It will cost $1.9 billion to reconstruct I-94 from Mitchell Field to the IL – WI state line. It will cost about $250 million to construct the KRM line or 13% of the cost of I-94. The highway trust fund supplied by the gasoline tax has around a minuscule $15 billion to cover the federal government’s 80%. To put that in perspective, it will cost $6.5 billion to reconstruct the Milwaukee region’s freeway system. The federal share being $5.2 billion and then multiply that across our nation's crumbling infrastructure. (http://www.fhwa.dot.gov/policy/ohim/hs06/pdf/fe10.pdf). Maintenance is also a factor. Judging by Wis Dot’s ambitions to tear down I -794 and the Hoan bridge instead of maintaining it, shows how burdensome and expensive roads are to maintain. So, are highways subsidized? Yes, the US Office of Technology Assessment (OTA), which provide estimates of "pure" subsidies to automobile users range from $300 billion to $935 billion annually. Of course, we now unfortunately directly subsidize the auto industry as our nation tips towards socialism. It can also be argued that the original highway plan was an indirect subsidy of GM, Goodyear and Standard Oil, so the new direct subsidy shouldn’t be a surprise. My question here is; based on subsidies, why attack such a tiny, minuscule public infrastructure project when we have been riding the 800 lb gorilla for the last 50 years?

I would like to take a detailed look at your arguments made against KRM. I am not strictly advocating for KRM but I like to point out fallacies when I see them.

“But try finding somebody on a commuter rail line anywhere in the country who is taking the train in to a janitor’s job, or a hotel maid’s job, or to work on the counter in a McDonald’s in the city. In short, the vast majority of the riders would be affluent professionals enjoying a massive subsidy financed by the sales tax.”

This statement can be best described as personal conjecture without evidence and therefore mute in addressing the original issue that the KRM is a boondoggle. Also, the function of KRM is not just bringing affluent people from the suburbs to the city, as you suggest. With stops at urban cores connecting Milwaukee, Racine, and Kenosha, KRM functions as both bringing people in and out of the cities. This may seem unimportant until we look at the spatial mismatch of job growth in outlying suburbs and unemployment in central cities. Suddenly your proverbial janitor has access to mobility options that increases his/her ability to access a larger employment market.

“A lot of the costs of the project aren’t taken into account, and Rubin gave an enlightening account of the complexity of projects like this. A train line along the KRM route would impede traffic at many grade crossings, and kill at least a few people. (Admittedly, the people killed would be idiots who drive around a lowered gate to try to beat a train.) Noise would be substantial. In fact, Federal regulation requires that train whistles be loud.”

Rubin fails to understand that freight trains already run on these tracks. There were 3 fatal train crossing accidents for all of Wisconsin in 2007. (Wis Dot) There were 96 fatal car accidents just in Milwaukee, Kenosha and Racine counties in 2008. According to these numbers, it would be a morally responsible action to decrease the number of drivers on the road and increase the number of people on trains – to save lives. (Wis Dot) Freight trains also already blow horns – at all hours. The KRM would blow its horns during commute times – when people are not trying to sleep. The argument of an increase in deaths put forth is completely inaccurate and false. Horn noise is already a fact of life for residents living nearby and a slight increase during commute times will surely not be as burdensome as you suggest.

“The Reason study, however, concludes that while the KRM line could certainly move development around (taking it from the I-94 corridor to the lakefront, for example) it wouldn’t actually create any new development.”

This is exactly what people concerned with sprawl want to happen. This also greatly supports the faith many people have in KRM. By taking development away from the auto-centric environment of I-94 and placing it near existing infrastructure of already developed urban areas the following goals are achieved:

•Decrease dependence on gasoline
•Increase in shopping and employment options for those without cars or those who choose to not own cars
•By increasing development around the lake, there are more reasons for more people to ride the train
•Saves agriculture land and green space from development
•Decreases traffic congestion on I-94

So Rubin makes an excellent argument for and not against KRM here.

Is KRM fiscally perfect? Are highways fiscally perfect? No. Do they both benefit people, communities and our region? Yes. I say let us be innovative in the way we approach KRM funding to be effective as possible. KRM planners should do everything to make the project self-sufficient, looking to dedicated public funding as a relatively small last resort, making it no more subsidized than roads and highways. That, at least, is something we can agree is absolutely workable – until the next issue when blinding ideologies catch up to the best of us.

That being said, I appreciate differing views on all topics from right to left (I especially enjoyed your class at Marquette University), but again, I felt inclined to put my two cents in this time.

9:43 AM  
Anonymous Anonymous said...

For only $10 you can be spoon-fed (along with breakfast) all the advantages of rail:

http://www.writesendtrack.com/news/?mID=5018&mG=12F6B2&sID=519998&sG=698C14

10:15 AM  
Anonymous Moral Hazard said...

Below is the logical (and unfortunately not too distant)conclusion of what central planning in transportation may look like:

http://reason.tv/picks/show/653.html

10:40 AM  
Blogger John McAdams said...

Hi, Former Student,

(And I'm always happy to find my students reading my blog, even when they disagree with me.)

As for your list of cities doing commuter rail: what is your argument? Is it an argumentum ad populum? Everybody else is doing it, so we should be doing it?

But, as I'm sure you agree, everybody is always doing things that should not be emulated. As I've said, Federal money creates an artifical incentive to install commuter rail.

The fundamental truth at the very root of commuter rail in Milwaukee is that as the region’s manufacturing base continues to decline we, as a region, will decline with it.

Yea, but how is building an expensive white elephant a way of dealing with this? If I want to go to Chicago, I take Amtrak, which is vastly quicker than this lakeside route would be.

If I want to go go Kenosha, I drive.

The political, business, educational, many citizens, and regional thinkers and leaders have selected commuter rail as one element of the overall plan.

This is an Appeal to Authority. Community leaders often do silly things. I explained in my original post how commuter rail is politically profitable for office-holders, even if a nasty burden in taxpayers (an asymmetry of information). Business will usually sign on to any feel-good initiative so long as they are not taxed.

It will cost $1.9 billion to reconstruct I-94 from Mitchell Field to the IL – WI state line. It will cost about $250 million to construct the KRM line or 13% of the cost of I-94.

OK, accepting your numbers, how many people will use I-94, as opposed to the KRM line? Ten times as many? Probably more like 100 times as many.

Judging by Wis Dot’s ambitions to tear down I -794 and the Hoan bridge instead of maintaining it, shows how burdensome and expensive roads are to maintain.

This doesn't show any such thing, but rather the cultural bias against highways.

Yes, the US Office of Technology Assessment (OTA), which provide estimates of "pure" subsidies to automobile users range from $300 billion to $935 billion annually.

That's absurd. A trillion dollars annually?

why attack such a tiny, minuscule public infrastructure project when we have been riding the 800 lb gorilla for the last 50 years?

First, I think mass transit proponents radically overstate any subsidy to highways.

Just how much does the gas tax bring in per year?

Secondly, think about your argument.

You are saying one (in your estimation) bad program justified another bad program.

Thus if we (again, in your opinion) waste billions of dollars on highways) why not just go ahead and waste "merely" a few hundred million on commuter raid.

And you are taking into account a massive operating loss decades into the future, aren't you?

This may seem unimportant until we look at the spatial mismatch of job growth in outlying suburbs and unemployment in central cities.

Handling this "mismatch" would involve using buses, not a massive subsidy for affluent people who want to commute from Kenosha to Milwaukee.

By the way, if there really were so many people in the inner city seeking jobs, that would be a dandy incentive for industry to locate there.

Could it be that all the inner city residents who want jobs but can't get to them is an urban legend?

As for the fact that freight trains run on those tracks already, this is a big problem.

Futher, passenger rail runs a lot faster (and thus is vastly more dangerous) or it's absurdly show.

The KRM would blow its horns during commute times – when people are not trying to sleep.

Just exactly when will the first train run? If memory serves, very early, since the run is nearly an hour, and some people need to be at work at 8:00 a.m. Further, it would easily be 20 or 30 minutes to get to their job after the train arrives in the station in Milwaukee.

Now to some of your bullet points:

Decrease dependence on gasoline

At what price? Even assuming we should do this (and the fact that it's taken for granted in your Urban Planning school isn't evidence), there has to be a cost benefit test.

Increase in shopping and employment options for those without cars or those who choose to not own cars

Again, at what cost? For $12,500 per rider per year, you could buy everybody who would ride the train a car.

By increasing development around the lake, there are more reasons for more people to ride the train

Which begs the question. Why do we want to distort development in order to justify and bail out commuter rail.

You are essentially assuming that commuter rail is good in itself. This is no better than assuming that cars are a good in themselves.

Saves agriculture land and green space from development

First, wouldn't development near the lake take up green space and agricultural land?

Secondly, we are not talking about Yellowstone here. So what if some fields get developed?

And so what if there are subdivisions? Americans seem to like a good sized lot with a yard. Who are you and your "urban planning" cohorts to tell them they can't have that? We do you feel the need to dictate people's lifestyles?

Decreases traffic congestion on I-94

Look at ridership estimates. KRM would be hardly a drop in the bucket. Futher, widening I-94 (or just getting more of the commuters riding in buses) would handle the congestion.

That, at least, is something we can agree is absolutely workable – until the next issue when blinding ideologies catch up to the best of us.

Look, let me be frank. You are in a program with a particular ideology. Your professors and your curriculum favor things that serve the interests of the urban planning elite. I would urge you to be just a bit critical of the assumptions that are near universal in your program.

I especially enjoyed your class at Marquette University

I very much appreciate that, and appreciate your comment.

11:47 AM  
Anonymous Anonymous said...

great write up. I support a commuter rail link from Chicago to Milwaukee. I have serious reservations about building a 'light rail' at this point.. why not simply extend the Metra link (run on old school rails) to run Kenosha-Racine-Milwaukee runs for a bit before moving forward with this huge investment?

And - trains only work if other forms of public transport are up to date and efficient. Buses should have logical routes that follow major thougroughfares, with lines dedicated to these routes. The hub and spoke things is outdates... why not go back to the street car concept... one road, one line.. the Hwy 32 line, the Hwy 50 line.. ect... fewer stops, shelters, free rides when there's 8 inches of snow or more.

Just some ideas.

2:56 PM  

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