Poison Pill for Transit (Updated)

The Senate Budget and Taxation Committee has recommended that the Maryland Transit Administration (MTA), which is responsible for planning the three major transit projects under consideration by the state, return to the drawing board to study heavy rail options for all three. Whether the Senators asked for this in good faith or bad faith, the proposal is in fact a poison pill that threatens the viability of all three projects.

The reason is cost. In order to receive federal funding, transit projects are evaluated on the basis of cost per hour of user benefit. The lower this ratio is, the more cost effective the project is and the greater the likelihood it will be funded. The Obama administration is re-evaluating federal rules for funding transit projects – and that is probably a good thing – but it is inconceivable that some measure of cost effectiveness will not be included.

In an earlier blog post, we demonstrated that all-surface light rail on Baltimore’s Red Line, BRT on the Corridor Cities Transitway (CCT) and multiple light rail and BRT options for the Purple Line all passed the federal cost effectiveness threshold. Subsequently, the state picked light rail options for both the Red and Purple Lines and began the process of competing for federal funds for those projects. (No option has been picked yet for the CCT.) The Red Line barely passed muster as light rail. MTA insisted on burying it through a large part of Downtown Baltimore and had to use a danger-prone single track tunnel and last-minute ridership “revisions” to squeeze it past federal standards. But the Purple Line is not much below the federal cost effectiveness threshold either. So as light rail projects, the two transit lines are competitive with dozens of other projects from around the country, but neither is a sure thing. Given this cost structure with light rail, MTA head planner Henry Kay is 100% correct when he criticized the feasibility of more expensive heavy rail:

Henry Kay, deputy administrator of the MTA, said he didn’t expect the study to change anything. He said it was “impossible” that the federal government would find a heavy rail alternative suitable for Baltimore. Cohen and others have argued that the MTA didn’t study heavy rail in enough detail.

The budget language originally only included the Red Line, but was extended to the other two transit proposals before a final committee vote.

Kay said it would set the MTA’s planning back years if it had to study heavy rail as comprehensively as it had looked into the light rail plans. He said the agency’s preliminary take was that heavy rail would not make the cut, even in light of the new regulations.

“It was far out of the range of what is being considered nationally,” he said.

The House has not passed such a provision and is currently negotiating the budget with the Senate. If the Senate’s provision holds, it will have three outcomes.

1. Waste
MTA has already spent $47 million to study the Red Line, $43 million to study the Purple Line and $8 million to study the CCT. Each project has tens of millions of dollars in additional spending scheduled over the next several years. This demonstrates a central fact: planning costs lots and LOTS of money. If the three transit projects have to be carefully budgeted to be viable as light rail, why bother to study heavy rail options which are absolutely sure to cost more money and fail federal cost effectiveness tests?

2. Delay
Planning is both expensive and time consuming. Study of heavy rail options will delay all three projects for several years, causing them to fall behind competitors from across the country in the funding queue. And that is not all: they could fail to receive funding entirely. While the Obama administration has expressed an interest in steering more money to transit, there is no assurance that future administrations will share that commitment.

3. Cost Increases
The end product of delay is cost increases. Now is a good time for owners to build because the global recession has dampened demand for both labor and materials. But as years pass and the economy recovers, costs are bound to go up. That means even if the Red Line or the Purple Line wind up getting built after years of delay, they will cost much, much more. And those cost increases will come directly from the pockets of Maryland taxpayers.

And so the Senate is dispensing a poison pill for transit. Will the House swallow it? We’ll see.

Update: The House rejected the proposal. The two chambers still have to reconcile their conflicting budget language.