Cheaper to pay each Light Rail Customer $100,000 to stay home!

Part I: The Cost of Sound Transit

Under its larger package, Sound Transit is planning to spend a combined $35.2 billion to move 351,000 people a day. It would be cheaper to pay the same people $100,000 each to stay home.

by Michael Ennis, Director, Center for Transportation Policy
06-17


In 2007, Sound Transit intends to ask residents in King, Pierce and Snohomish counties to pay for its second phase of public transportation projects. Commonly known as ST2, the package will expand on its first phase, which was approved in 1996. These new projects will include extending light rail, the Sounder rail and the ST Express bus systems.

Sound Transit, Phase 1

The first phase of Sound Transit was approved in 1996 and imposed a ten-year .4% sales and use tax and a .3% Motor Vehicle Excise Tax (MVET). In 1996, Sound Transit estimated the total phase would cost about $5 billion in year-of-expenditure (YOE) dollars and be completed by 2006.[1] Today, Sound Transit says the total cost of Phase 1 is about $15 billion and will not be finished until around 2020.[2] In other words, Phase 1 is about $10 billion over budget and 14 years late. In addition, Sound Transit will persist in collecting both the .4% sales tax and .3% MVET in perpetuity, even after the first phase is complete in 2020.

Sound Transit, Phase 2

Under Phase 2, Sound Transit is considering three options for new taxes in 2007. Option A would increase the sales tax by .3% and implement a series of projects that would cost about $7.6 billion. Option B would raise the sales tax by .4% and build about $9.4 billion worth of projects. Option C would raise the sales tax by .5% and, with a project package of about $11.6 billion, exhaust Sound Transit’s current taxing authority.[3]

However, Sound Transit’s figures are based on constant 2006 dollars and do not reflect inflationary adjustments as projects are completed in the future. In 2005, Sound Transit did calculate project costs adjusted for inflation. In 2005, Option A would have a total project cost of about $10.0 billion. Option B would have a total project cost of about $13.1 billion, and Option C would have a total project cost of about $17.1 billion.[4]

Unlike the constant-year figures, Sound Transit has not updated these year-of-expenditure (YOE) amounts since 2005. Applying the same assumptions Sound Transit used before, Option A would have a total project cost of about $12.2 billion. Option B would have a total project cost of about $15.9 billion, and Option C would have a total project cost of about $20.2 billion.[5]

To promote ST2, Sound Transit also provides estimates on system-wide ridership through 2030. If ST2 is approved, Sound Transit says Option A would generate about 303,000 passengers per day. The larger Option B would bring total daily ridership to about 344,000 passengers and Option C would carry about 351,000 passengers per day, system-wide.[6] The following table summarizes the three options Sound Transit is considering.







Projected Ridership, System-Wide


ST2 Cost (constant 2006 dollars)


ST2 Cost (year of expenditure dollars)





Sales Tax Increase



Project Name

Option A


Bus/Rail Extension


0.3%


302,000


$7.6


$12.2

Option B


Medium Rail Extension


0.4%


344,000


$9.4


$15.9

Option C


Maximized Rail Extension


0.5%


351,000


$11.6


$20.2









(Figures in billions)

Analysis

Comparing Sound Transit’s ridership projections with the total cost of both phases reveals that the cost to move one passenger from a private automobile to the Sound Transit system is relatively expensive. The following table illustrates this comparison between the first phase of Sound Transit and the three options of ST2.



Sound Transit 1 & 2 Cost (YOE$ billions)


Ridership Projections, system-wide by 2030




Cost per Person

Option A


$27.2


302,000


$90,066

Option B


$30.9


344,000


$89,826

Option C


$35.2


351,000


$100,285

Depending on which option the Sound Transit Board chooses, the combined cost of both phases would cost $27.2 billion, $30.9 billion or $35.2 billion, respectively. The cost for Sound Transit to pull the driver of one passenger vehicle off the existing roadway and into its public transportation system would range from $89,826 to $100,285.

To put this in perspective, King County proposed to expand its bus service through a recently passed ballot measure called Transit Now. The proposal estimated it would remove between 50,000 to 60,000 passenger vehicles from the roadways by adding 175 new buses. The expansion will cost taxpayers about $50 million by 2008.[7] Under Transit Now, the estimated cost to move one traveler to the public transportation system is between $833 and $1,000.

Compared to the potential benefits, the combined cost of Sound Transit is extremely expensive. It is unlikely that all of the 300,000 to 351,000 system-wide riders will translate to an equal number of vehicles removed from the roadway. Some of these riders already are in the public transportation system or simply do not have access to a passenger car.

Nevertheless, if the larger package is chosen and Sound Transit’s ridership estimates are correct, removing an estimated 351,000 vehicles from the roadways by 2030, for a combined cost of $35.2 billion is not an efficient use of taxpayer money. It would be cheaper for Sound Transit to pay these estimated 351,000 travelers $100,000 each to stay home or to not drive. These people could pocket the money and use the existing public transportation system. The effect on traffic congestion would be the same, we would not have to wait until 2030, and it would save taxpayers more than $100 million.

Compared to the projected system-wide ridership estimates, Sound Transit’s costs for ST2 are astoundingly high. Given that the Sound Transit Board will move forward with choosing a proposal, it appears that Option B will provide a greater benefit than either of the other two options once costs are factored in.

Since Sound Transit’s ridership estimates and projected costs were translated into a cost/benefit relationship, it becomes possible to compare the efficiency of the three options.

According to Sound Transit, Option B will generate about 42,000 more riders than Option A. This is not surprising because Option B proposes more transit capacity than the smaller Option A. But what is surprising is the cost-per-person for Option B, $89,826, is actually smaller than Option A, $90,066. This indicates that Option B is more efficient and provides a greater cost/benefit return than Option A.

Option C, the largest of the three proposals, will only increase ridership by 2% over Option B. But Option C will cost 14% more than Option B. Again, this indicates that Option C is not nearly as efficient as Option B.

These calculations imply that Sound Transit planners have made it virtually impossible for the Sound Transit Board to choose any other proposal than Option B. The cost-per-person is cheaper than Option A and Option C has seemingly crossed the point of diminishing returns.

Conclusion

Under both phases, Sound Transit claims spending a combined $27 billion to $35 billion to expand the region’s public transportation network is justified by the need to keep pace with the projected population increases and congestion relief. According to Sound Transit, 1.2 million more people will be living in this region by 2030.

Depending on which package is chosen, Sound Transit claims it can handle about 302,000 to 351,000 of these new travelers if ST2 passes.

But what about the remaining 850,000 others who will spill onto our already congested road system?

Public officials are trying to address this issue through a companion measure, the Regional Transportation Investment District (RTID). But RTID’s funding levels are far below those of Sound Transit.

Despite years of spending on public transit systems, congestion has and will continue to worsen. In fact, in its 2006 Congestion Relief Analysis, the Washington State Department of Transportation predicts that delay will rise 300% by 2025, despite a 90% increase in public transit service hours.[8]

Congestion is a result of policy choices, not an inevitable consequence of growth. Spending on transportation has tipped toward public transit but congestion is worsening. The region should shift its focus back to roads where there is a greater return on investment and spending has a measurable impact on congestion relief.

This is not to say the region should stop investing in public transportation; a multi-modal transportation system is valuable. But its impact on congestion relief is only successful at the margins. In the private sector, businesses make decisions based on cost and the expected return on those costs. Likewise, policymakers should make the same considerations.

Our roadways are already congested and growing worse. If the larger package is chosen, spending $35.2 billion to move less than 29% of the region’s projected population growth by 2030 is not only expensive, its benefits are not even enough to reduce today’s congestion at today’s current population.

Michael Ennis is Director of the Center for Transportation Policy at the Washington Policy Center . Nothing in this document should be construed as an attempt to aid or hinder any legislation before any legislative body. Contact Washington Policy Center at 206-937-9691 or washingtonpolicy.org. The Policy Note is available online at www.washingtonpolicy.org.


[1] Sound Move, The 10-Year Regional Transit System Plan, May 1996.

[2] Sound Transit, University Link Financial Plan, June 2006.

[3] The details of Sound Transit’s three options are available at: http://www.soundtransit.org/x1190.xml. Sound Transit updated these calculations from 2005 and assumed each option would climb by 22%, 21% and 18% respectively.

[4] Ibid.

[5] Under the three options, Sound Transit estimates the change in constant dollars between 2005 and 2006 is 22%, 21% and 18%, respectively.

[6] The details of Sound Transit’s three options are available at: http://www.soundtransit.org/x1190.xml.

[7] Guide to Transit Now, Washington Policy Center , September 2006. Available at: http://www.washingtonpolicy.org/Transportation/PB_EnnisTransitNow.htm.

[8] Congestion Relief Analysis, Central Puget Sound Area Report. Washington State Department of Transportation, March 2006. Available at http://www.wsdot.wa.gov/Mobility/4chapter2pugetsound.pdf.

Sound Transits Rising Costs Plague Light Rail

March 23-29, 2007

Sound Transit’s rising costs belie logic of light rail

By Michael Ennis
All sides can agree that the region’s transportation
system is woefully insufficient to handle the demand on
our road system. The state’s November Congestion
Report concludes that travel times increased on most
every major route monitored in the region. And
population estimates show the region will gain another
1.2 million more people in the next twenty years.
Elected leaders responded to this looming congestion crisis and urged the region to embark on expanding the public transportation system. In 1996, voters agreed to raise both the sales tax and the motor vehicle excise tax to fund the first phase of Sound Transit. Officials
promised it would cost $3.9 billion and take only 10 years to complete.
Today Sound Transit says it will cost up to $15 billion
and take until 2020 to complete the project — a total of
24 years. It says it will collect the 0.4 percent sales tax
forever, even after the first phase is complete in 2020.

In addition, Sound Transit officials are asking voters to increase the sales tax an additional 0.5 percent to raise up to another $20.2 billion to complete a second phase of projects, which would exhaust its current taxing
authority.

Combining both phases shows the total cost of Sound Transit would be $35.2 billion, taking inflation into account, according to my study of Sound Transit’s estimates. (Sound Transit hasn’t produced an updated inflation-adjusted estimate of total cost.)

It goes without saying that the proposed costs of Sound Transit are staggering. What does the public get for its $35.2 billion?
If Phase 2 is approved, Sound Transit predicts its total system would carry 351,000 riders a day by 2030.
This means Sound Transit will only capture about one in four of the predicted 1.2 million people that are expected to move into the region over the next twenty years. The remaining 850,000 people will spill onto our already
congested roadways.
Based on Sound Transit’s estimates, the cost to pull one
passenger vehicle off the existing roadway and into the

agency’s public transportation system is about $100,000
per person.

To put this in perspective, King County’s voter-approved
Transit Now initiative will remove an estimated 50,000
passenger vehicles from the roadways by adding 175
new buses. The expansion will cost taxpayers about $50 million by 2008. Under Transit Now, the estimated cost to move one traveler to the public transportation system is about $1,000 per person.

It would be cheaper for Sound Transit to pay these
people $100,000 each to stay home. The effect on
traffic congestion would be the same, we would not have
to wait until 2030, and it would save taxpayers more than
$100 million.

Traffic congestion is the result of policy choices, not an inevitable consequence of growth. Spending on transportation has tipped toward public transit, but congestion is worsening anyway.
Reverences to sound business principles free a
company from the pitfalls of failure and make long-term
sustainability more likely. If these values are violated,
the market will react and force more efficient decisions.
But in the public sector, when public money is at stake,
government officials poke at these time-tested values.
As a result, the public does not enjoy the protections of
the market and bad policy choices are allowed to live on.

Sound Transit’s plan to spend $35.2 billion to move less
than a quarter of the region’s projected population
growth by 2030 is not only expensive, it is not even
enough to reduce today’s congestion at today’s current
population. If Sound Transit’s second phase is
implemented, our daily commute will continue to get
longer.

Rather than pouring more money into light rail, we
should return to a policy of strategic increases in road
capacity, easing congestion and reducing travel times for
all citizens.
MICHAEL ENNIS is the Director of the Center for Transportation Policy at the Washington Policy Center, an independent research firm in Seattle.