Cascadia Scorecard Weblog

Sims Gets On The Bus

Is it a miracle? Can it really be so? Did I just read about a transportation plan that's actually useful and affordable? That can happen soon but also has long-term benefits?

I'm stunned by King County Exec Ron Sims' proposal to increase the sales tax to fund better bus service. For an additional 1/10th of a penny per dollar, Sims believes the county can drastically improve bus service--increasing the frequency and speed of routes and adding capacity to boot. (The Seattle Times reports; the P-I editorializes in favor.)

I have no idea what prompted Sims' outburst of sanity. These days, Puget Sound residents are accustomed to pony up for outlandish schemes of miracle monorails, glammed-out streetcars, multi-billion dollar tunnels, and vast highway expansion measures. (Not to mention problem-plagued light rail, the one transit option that's almost a reality.) Buses, on the other hand, are not especially sexy and they don't come with big-ticket political bragging rights. They're just staid, effective, flexible, and affordable. And--oh yes--they're already working so well that they're over-subscribed, at least in the city.

So on the upside, Sims' bus boosting proposal will improve mobility in the near future. On the downside, it doesn't promise flying saucers or citizen jet-packs, and it doesn't come with a flock of crazy-eyed proponents. (I do have a non-humorous quibble; but more on that later...)

Improving bus service is critical to the continued health of Seattle and the rest of King County too because it makes density work. As the region's density increases it should be able to leverage ever more viable transit--with more people in a neighborhood, it makes sense to run more buses, more often.

This morning as I was shuffling onto the 28 Express--a double-length bus crammed so full that we were standing in the aisles the entire length of the coach and crowding up near the driver--I wondered for the billionth time when Metro would start running twice as many buses. I also wondered why I wasn't on my bicycle. And I wondered whether I should drive more often. I'll bet my not-especially-dense Ballard neighborhood could fill double the buses, especially as more frequent departures tapped latent demand. And as nearly every week reveals new townhouses going up in formerly low-density lots, and condos rising along busy corridors, I wonder if we couldn't fill triple the buses.

So I'm all for Sims' bus proposal. All for it. I just hope that it doesn't get swamped by the headline-grabbers like the Alaska Way Viaduct tunnel, the regional transportation improvement ticket that voters will see this autumn, and all the other kooky multi-billion dollar career-makers. I'm hoping that local leaders--and local voters--remember that bus service works and it's a bargain.

Now a quibble. Why sales taxes? Most King County residents are already paying 8.8 percent and sales taxes are regressive, falling hardest on those who can least afford them. That's a problem, I think, in a county that's struggling with affordability issues. (Admittedly, some of that regressivity is mitigated because the higher taxes pay for bus service, which is especially important to lower income folks.) Wouldn't a better way to fund buses be something ingenious like a fee or tax based on the value of cars. Something more or less exactly like the monorail fee? *

* Yes, I know that such a tax/fee would require enabling legislation from Olympia. Enable it already. It has a host of benefits: it's progressive (because owners of more expensive cars pay more), it's nicely symmetrical (because it provides an incentive to switch from car to transit), and it's deductible from federal income taxes. It's also potentially localizable, meaning that your car tab renewal fee could pay for transit in your neighborhood. If West Seattle gets drastically better bus service, then West Seattle car owners could pay the bill. But if you live in Duvall and don't see many buses anyway, your fee could be proportionally lower. In any case, it would probably be far, far cheaper than the current monorail fee that's just about to expire.

Hitting the Sweet Spot

Here's a cool graph from the Puget Sound Regional Council that illustrates the "sweet-spot" for highway speeds.  Apparently, traffic throughput is maximized at about 1,800-2,000 cars per highway lane (the horizontal axis) when vehicles are moving somewhere between 40 and 50 miles per hour (the vertical axis).

As the graph shows, when speeds are lower than that, or higher than that, then highways aren't operating as efficiently as they might.

So it would seem (to me at least) that a key ingredient in reducing demand for new highways is to keep traffic on existing roads flowing at somewhere between 40 and 50 miles an hour, even at times of peak demand.  How to do that?  Metered on-ramps help; so would tolling the most congested highways.

Alan (Heart) This Report

A year ago, Seattle Mayor Gregg Nickels assembled a “Green Ribbon Commission” to advise him on how to keep his trend-setting Kyoto pledge.

Last week, the commission released its report.

The global significance and political symbolism of the event have drawn much well-earned comment. The report itself has not.

How is it? Superb. I’m in love.

It’s well researched, innovative, and (mostly) courageous.

(Full disclosure: the commission is also full of friends and even funders of Northwest Environment Watch. Click through the break, and you'll see I’m not just sucking up.)

It recommends many of the policy solutions that we've become convinced are smart and systemic. A sampling of the 18 highly praiseworthy recommendations:

Lead a regional partnership to develop and implement a road pricing system (about which we’ve written much). Road pricing is the only way to solve congestion, and it’s a potent stimulant for alternatives to driving.

Implement a commercial parking tax (ditto). Taxing parking is a great way to pay for alternatives.

Expand efforts to create compact, green, urban neighborhoods (double ditto). Ultimately, compact neighborhoods are the real alternative to driving.

What’s left to say? I’ll stifle a long list of wonkish addenda that I scribbled in the margins (ideas for refrigerator bounties and lightbulb brigades), and limit myself to three things: a curiosity, an observation, and a regret.

My curiosity: The report mentions that 25 percent of Portland’s arterial streets have striped bike lanes, while only 1.5 percent of Seattle’s do. Could those numbers be right?! Wow.

My observation: The report calls for a regional road pricing system – right on! When reading Clark’s post about Stockholm, it occurred to me that the ideal opportunity for a downtown (London-style) tolling anywhere in Cascadia would be when the Alaskan Way Viaduct is torn down. Whatever it’s ultimately replaced with, construction will take years. And during that period, local leaders will have an unusual degree of political cover to implement ambitious steps such as congestion pricing.

My regret: In a report that’s courageous enough to suggest parking taxes and regionwide tolls, it’s disappointing to see the veil of politeness descend in one case that’s critically important—the case of highways reconstruction.

Early in the report, the commissioners plead for a measly $57-73 million a year extra to fund transit improvements that they call “the keystone for other actions.” Then, on page 21, buried in a discussion of “leveraging state and regional action” the Green Ribboners finally refer to the elephants in the living room—the huge highway rebuilding projects planned for the city:

"For example, decisions on major transportation infrastructure improvements, such as the Alaskan Way Viaduct and the two Lake Washington bridges, must closely consider the climate impacts of investment alternatives."

That statement is true, of course, but it’s awfully mild. It’s a bit like a report on global disarmament only mentioning thermonuclear weapons in a footnote. Here’s what I (the impolitic dreamer) wish the commissioners had said,

"The mere fact that city leaders are seriously considering rebuilding multibillion dollar freeways through our city—while the ice sheets are melting, our snowpack is dwindling, our transit system is starved, our bike lanes are few and glass-strewn, and a quarter of our streets lack even sidewalks—is proof that we still have terribly far to go. Freeways are giant emissions generators. They’re the antithesis of climate leadership. We should never build another one in this or any other city. We should begin to tear them down."

Sigh.

Well, anyway, I’m still in love with this report.

Tax-deductible Wildlife

Here's an interesting solution to a problem I blogged about a few weeks ago: states like Oregon are losing money to fund wildlife biology and habitat management. Traditionally, these activities have been funded by various hunting and fishing fees; and as the rod and gun sports have waned in popularity their revenue has dried up too. That leaves states less able to pursue wildlife and biological research--not to mention basic land and water conservation--which are hugely important for protecting natural resources.

The solution, in Oregon at least, is to allow tax payers to check a box on their state income tax forms and then make a tax-deductible contribution to non-game wildlife conservation. As far as I can tell from the Oregonian article, the contribution is above and beyond whatever taxes an individual owes. Still, it seems like a good way to encourage wildlife aficionados to make a voluntary contribution to Oregon's natural heritage. This sort of revenue-generation must certainly be more popular than access fees like parking at USFS trailheads and state parks--fees that have proved less than popular in the Northwest.

I'm intrigued by this idea, partly because the revenue is important and partly because it shifts the funding away from hunting and fishing and toward wildlife watching. I imagine the funding shift will also be reflected in the research and conservation priorities that the money pays for. Too bad it can't happen in Washington (because there's no state income tax and hence no form with a handy box to check).

Anyone else know of similar stuff happening elsewhere? 

UPDATE: And by the Oregonian, of course, I meant the Salem Statesman-Journal. Of course. Here's the article. (Thanks, Grace.)

Drivers Wanted

There's been a bunch of comment in the blogosphere today about hiking gas taxes -- with the rough consensus that it's ok environmental policy, tough on the poor, and politically risky (though perhaps not quite as unthinkable as it once was). 

So it's interesting to note that Oregon -- often considered a policy innovator among US states -- is in the middle of an experiment that could eventually lead to a repeal of the state gas tax.

Oregon's transportation department is recruiting volunteers to test a system that would charge people based on how far they drive, not on how much gas they use. The trial will test two rate structures -- some participants will pay a flat rate of 1.2 cents per mile, while others will pay a variable rate depending on whether they're driving during rush hour; a control group would continue to pay normal gas taxes. (See here for details, or if you're interested in volunteering.)

The state is interested in this sort of approach for a bunch of reasons, but if I read things correctly, they're mostly worried that gas tax revenues are poised to fall, perhaps significantly, over the upcoming years.

Here's the issue: if gas prices remain relatively high, or keep rising over time, economists project a gradual per-capita decline in gas consumption, as people replace their cars with more efficient ones. And if cars keep getting more and more fuel efficient, then total gas revenues could actually fall, even as the demands on the road network increase. Ultimately, states may be forced to choose between continual gas tax hikes and persistent funding shortfalls for roads -- both of which are bound to make lots of people unhappy. Under a pay-by-the-mile system, however, transportation funding would be keyed to how much people actually drive -- so the state would still keep up its funding no matter how efficient the cars get.

Obviously, shifting from gas taxes to mileage-based taxes has some signficant downsides. First, the gas tax does create a slight incentive for fuel-efficient cars; getting rid of it could put Hummers on a more even footing with hybrids. And second, it's not entirely clear that a falloff in highway funding would be a bad thing. Obviously, most drivers want the roads maintained in good working order; but, in my mind at least, a lot of highway spending seems like it's pretty wasteful.

That said, we've been pretty interested in the pay by the mile idea, despite the potential downsides. Fully developed, the technology could facilitate two innovations that could be far more powerful at promoting fuel conservation than the exisiting gas tax. First, the same technology used to track mileage for taxing purposes could also be used for a more comprehensive congestion pricing system -- which could simultaneously clear up congestion, reduce driving, and promote bus ridership by keeping streets and highways flowing. And second, it could pave the way for Pay-As-You-Drive car insurance, which would have the same effect on driving overall as roughly doubling the cost of gas. 

If you want to get really fancy, you could even fine tune the pay-by-the-mile taxes, to increase fees for cars with the worst pollution or CO2 emissions, the most road space (SUVs require longer stopping distances, and tend to use up a little more space on streets and highways), or the worst safety records.

Of course, pay-by-the-mile taxes suffer from one huge drawback: they're much more complicated than gas taxes, not just because they require special technology but also because a properly "fine tuned" system -- one that accounts for all the different externalities of driving, ranging from pollution to congestion -- could be pretty incomprehensible to the average driver. And mileage-based taxes would be vulnerable to all sorts of political shenanigans, as car manufacturers would jockey for special exemptions or rates for certain kinds of vehicles. All of which means that, even though I'm very excited by the tests, I'm not yet ready to support the idea -- and certainly not until we see how drivers really react to the system.

Poll: Americans Hate/Love Higher Gas Tax

Americans strongly reject new gas taxes. According to a new NY Times/CBS poll, 85 percent oppose higher federal gas taxes. Not too surprising--except that the very same poll also found something quite different...

Americans strongly reject support new gas taxes--so long as the tax revenue is earmarked for specific investments. The most popular investment? Fighting global warming. 59 percent would support a gas tax if the result was less climate change. Slightly less popular was reducing dependence on foreign oil: 55 percent supported the tax in that case.

So surely gas tax increases would be super-popular if they abetted core American desires like fighting terrorism and reducing income taxes? Uh, nope. Only 28 percent would support a higher gas tax if its intent were to reduce other taxes. And only 24 percent would support it as a measure to fight terrorism.

I'm not sure I understand what exactly the poll reveals. But my hunch is that when it comes to gas consumption we Americans are a conflicted bunch; and we tend to see our fossil fuel use in ethical or even moral terms. We're not necessarily interested in paying more for gas in order to take home bigger paychecks, or even to defend ourselves. But when it comes to offsetting some of the harm of gasoline use--things like climate change--we would support higher gas taxes with a landslide.

Accounting for Endangered Species

In the Washington Post today, an ominous headline for endangered species: "The True Cost of Protection?"

Dust off your sense of outrage, fellow taxpaying Americans, because as the article informs us, protecting endangered species cost $1.4 billion in 2004. So magnificent is that figure that the writer sneeringly suggests that king salmon are so called because recovering them cost the princely sum of $160 million in '04. By the tenor of the piece we are supposed to feel that spending $5 million on gray wolves is magnanimous, while spending $11,000 on a rare species of beetle is the height of absurdity.

What's truly outrageous is the intimation that somehow the species themselves are to blame for their costly predicament. Like lazy welfare queens, these imperiled animals should pony up. Never mind that wild Columbia River king salmon are perhaps 1 percent of historical abundance because a welter of industries were given free rein to destroy them. Clearcuts, dams, voracious fisheries, nuclear plants, pesticides... the list of culprits is long and it is to them that the $160 million bill should be assessed. The cost is not of "protection" as the writer asserts, it is instead the cost of heedlessly trampling ecosystems.

It's apropos that the headline editor added a question mark because, in truth, none of the dollar figures cited in the article actually amount to the "true cost" of protection. Like a blinkered accountant tallying only expenses but not revenues, the article utterly fails to mention any of the monetary benefits of species recovery. (And I won't even mention the inestimable non-monetary ones). Study the "costs" of protection for a moment and you'll see that the figures just don't add.

In the Yellowstone region, University of Montana economists have estimated that gray wolves have generated $23 million dollars in tourism to gateway towns. Add to that the many millions of dollars in central Idaho and the Upper Midwest, where gray wolves are also rebounding, and it turns out that wolves not only pay for themselves, they pick up the tab for those good-for-nothing salamanders, and still return a hefty dividend to taxpayers.

In Idaho, fully functioning sport salmon fisheries have been valued as high as $544 million per year. Though that estimate is disputed, it's for just one year for one of the several states where that $160 million was spent in 2004 to assist king salmon.

I could go on and on. The point is, the "true cost" of endangered species protection is much lower than the greenbacks that the US Fish & Wildlife Service lays out. It's even possible that the investment is actually a net benefit for the economy, if one bothers to factor in the revenues of wildlife-based tourism, ecosystem services, and sport (and commercial) fisheries. And that's just the dollars and cents, which is a lamentably poor way to value our natural heritage.

Even if they never do hold steady jobs and pay back what they rightfully owe us taxpayers, protecting and restoring endangered species is worth the price. When I consider the meaning of those species, their uniqueness in geography and history and their symbolism of wildness, $1.6 billion just doesn't seem like very much money to me. Especially when I remember that it's spent on species across the entire country--from Florida manatees to Northwest salmon.

Where I live, in Seattle, officials are just about to plunk down $3.5 billion in tax dollars to build a 2 mile long tunnel. Enough said.

Do Mess With Taxes

The basic point here (NY Times, registration required) is pretty good: the idea of coupling a gasoline tax increase with a cut in payroll taxes deserves a much closer look.  It makes sense as a policy -- gas taxes should be higher, and a payroll tax cut could help soften the blow.  Plus, pairing a tax increase with a tax cut seems to draw far broader political support than a straight-out hike in gas taxes:

The gasoline tax-cum-rebate proposal enjoys extremely broad support. Liberals favor it. Environmentalists favor it. The conservative Nobel laureate Gary S. Becker has endorsed it, as has the antitax crusader Grover Norquist. President Bush's former chief economist, N. Gregory Mankiw, has advanced it repeatedly.

Ok, so it's a good idea.  But I can't help myself -- I'm going to pick some nits.

First, I think it's going too far to claim, as the article seems to, that it will be easy to sell this kind of thing to the public. Voters seem to forget about tax cuts: for example, in the runup to the 2004 election -- and despite the administration's efforts to tout their income tax cuts -- US voters were more likely to say that their taxes had gone up over the previous 4 years than down.  On the other hand, everyone knows when gas prices go up -- it's emblazoned over every filling station.  So people will be reminded of the tax increase every day, but notice the tax cut they only see if they look carefully at their payroll records.  That's a pretty good recipe for outrage, unless you work really, really hard to explain to people what's happening.

Second, there are still some regressive effects here.  If you're a retired senior, you don't pay payroll taxes -- so you'll see no benefit from the payroll tax cut.  But you'll still be hit by higher gas taxes.  Same thing if you're unemployed.  (Undoubtedly the AARP, among others, will have a few things to say about this.) 

Third -- why just gas?  I know, I know, oil makes us vulnerable to foreign political shocks, sucks money out of the economy, yada yada.  But gas represents only 43 percent of total US petroleum consumption (see here for details); so we should be taxing all petroleum consumption, not just gas.  And more broadly, natural gas and coal are both major greenhouse gas sources -- coal even moreso than gasoline.  Coal-fired power plants are also bad news for air quality, and put mercury in our fish.  And natural gas production within the US is headed in the same direction as oil--down--which means that soon enough our natural gas imports will start sucking serious money from the economy, just as oil imports do now.  All of which suggests to me that a broader tax on carbon, or natural resource use, would be better than just a tax on gas -- and might even allow for steeper payroll tax cuts.

And finally -- gas taxes are all well and good.  But they're not the be-all-end-all when it comes to promoting fuel efficiency.  Pay by the mile car insurance and feebates get even less air time in policy circles than tax shifting -- but arguably would be just as effective, if not moreso, at promoting fuel conservation. Obviously, I'm always glad to see gas taxes discussed in a public forum.  But it would be even niftier to see other worthwhile ideas get some attention.

Principles of the State of the Union Address

I hadn't intended to join the cacaphony of bloggers and pundits who are Monday-morning-quarterbacking the State of the Union address. But NEW's all-star board member, Laura Retzler, asked a great question last night that I've been puzzling over since: what's NEW's take on Bush's plan to end the nation's addiction to oil?

It later occurred to me--too late to answer Laura--that my reply should have been rather obvious to me. NEW is developing a concise statement of values and principles, that will orient and unify our research. Among these values are two that are especially germane to energy security: "make prices tell the truth" and "build complete, compact communities."

In his speech Bush called out technological innovation as the primary way to break the addiction. Certainly he's right that technology should play an important part in diversifying our energy portfolio--especially certain types of biofuels, new clean energy sources, and lighter-weight vehicles, for just a few examples that NEW promotes. Yet technological solutions may not be the surest path to ending our addiction.

That's where NEW's principles come into the picture.

"Making prices tell the truth" is especially important. The price of gasoline does reflects only the direct costs of extracting, refining, and distributing it, not the full costs that are externalized to society, such as air pollution, climate change, and even entanglement in unstable regions. By the same token, "free" parking often carries with it high costs, similarly externalized. With a smart restructuring of parking incentives, including parking taxes, there's reason to believe we can achieve substantial gains in both energy efficiency and conservation.

Another of the principles, "build complete, compact communities," would improve home energy consumption and render driving, which has high energy demands, optional or even irrelevant for many people. We already know that compact urban development with good transit and pedestrian alternatives yields dramatic reductions in energy need, even while it boosts health for residents.

NEW's principles may not point to flashy promises of zero-pollution cars or safe nuclear energy. (And they may not come with strings attached to big subsidies.) But they point to hidden levers in our economy and society--small tweaks that can yield outsize results for energy security.

So that's may belated reply, Laura. Thanks for setting me to thinking about this.

*********

By the way, here's the full text of Bush's remarks on energy last night:

Keeping America competitive requires affordable energy. Here we have a serious problem: America is addicted to oil, which is often imported from unstable parts of the world.

The best way to break this addiction is through technology. Since 2001, we have spent nearly $10 billion to develop cleaner, cheaper, more reliable alternative energy sources, and we are on the threshold of incredible advances. So tonight, I announce the Advanced Energy Initiative, a 22 percent increase in clean-energy research at the Department of Energy, to push for breakthroughs in two vital areas. To change how we power our homes and offices, we will invest more in zero-emission coal-fired plants, revolutionary solar and wind technologies, and clean, safe nuclear energy.

We must also change how we power our automobiles. We will increase our research in better batteries for hybrid and electric cars, and in pollution-free cars that run on hydrogen. We will also fund additional research in cutting-edge methods of producing ethanol, not just from corn but from wood chips, stalks or switch grass. Our goal is to make this new kind of ethanol practical and competitive within six years. Breakthroughs on this and other new technologies will help us reach another great goal: to replace more than 75 percent of our oil imports from the Middle East by 2025. By applying the talent and technology of America, this country can dramatically improve our environment, move beyond a petroleum-based economy and make our dependence on Middle Eastern oil a thing of the past.

Gas Fees: The Good, The Bad, and The Curious

I'm not sure, exactly, whether this news is promising or disappointing: the San Jose Mercury News reported last week that environmental advisers to Governor Schwarzenegger are calling for a new fee on gasoline that would help pay for incentives to reduce climate-warming emissions.

The good news here is that they're considering fees on gasoline in the first place. 

The bad news is that the proposed fees are tiny -- just 2.5 cents per gallon, which isn't enough to affect consumption more than a nominal amount.

The good news is that the fees will go to a good cause: there are a lot of inexpensive ways to reduce emissions, so the fees, as small as they are, could do a lot of good -- especially considering that California uses about 15 billion gallons of gasoline per year, so a 2.5 cent per gallon fee would raise $375 million per year. 

The bad news is that opponents are already up in arms, blasting the idea as an unnecessary new tax on gas.

Of course, there's also a curiosity here that's worth noting.  The proposed gasoline fees are similar to the "public goods charge" already levied on electricity bills.  But it seems as though the outrage about new "taxes" is largely reserved for gasoline; fees on electricity get a pass.  Which suggests that gasoline holds a special place in the American psyche -- we pay close attention to anything that can make gas prices go up, but let similar price increases in other parts of the economy slide by unnoticed. 

One possible explanation for this is that we're a car oriented culture, and that we've come to prize cheap, unlimited mobility.  I think that's only partially true.  To me, it seems that we pay so much attention to the cost of gas because it's the only commodity whose price is regularly and consistently advertised on busy streets. Day to day, most people get much more information about gas prices -- which stations have cheap gas, what the recent price trends have been -- than about anything else they buy.  The way that gas is advertised has made us super-attentive to its price. 

Which makes me wonder what the world would be like if the harmful side effects of gasoline (money shipped out of the local economy; greenhouse gas emissions; cost of foreign entanglements; etc.) were advertised as broadly as its price.

Big Business Versus the Car

NYC may be leading the next wave of driving-reduction initiatives as it considers congestion pricing for parts of Manhattan. According to the NY Times:

"The idea is to charge drivers for entering the most heavily trafficked parts of Manhattan at the busiest times of the day. By creating a financial incentive to carpool or use mass transit, congestion pricing could smooth the flow of traffic, reduce delays, improve air quality and raise the speed of crawling buses."

Congestion pricing, charging variable tolls based on predicted or actual congestion, was first tried on a large scale by London, which charges drives $14 to enter the financial district during weekday work hours. (New York would probably charge between $4 and $7 per car.) In the US, San Diego, Minneapolis, and a number of other cities have toyed with the idea, but New York's would be the most aggressive and comprehensive program.

Obviously, there are a welter of environmental benefits from crimping driving--it reduces air pollution, carbon emissions, and sprawl just to name a few--but I wonder if the big lesson from the big apple is not what congestion pricing accomplishes, but who's supporting it.

In the past, environmental advocates have had only limited success in winning policy changes that diminish driving. But in NYC the champion of congestion pricing is the city's major business assocation, Partnership for New York City. I wonder if there's an object lesson here about figuring out ways for environmental advocates to leverage the huge power of the business lobby to green ends.

Taxation Without Privation

This is days old now, but the blogosphere was all a-twitter earlier in the week about this paper by economist Jayanta Sen, arguing that a stiff tax on crude oil, far from bankrupting the US economy, would actually transfer more than $100 billion a year from foreign governments to US consumers. 

Yes, consumers would pay steeper prices for gasoline. But since all of the oil tax revenue stays within the US, that money continues to stimulate the economy.  Meanwhile, we'd import less oil -- and, as a consequence, we'd export less money to pay for it.  I'll let Sen explain things:

[T]he wealth transfer savings for the United States ... should be in the range of $108 to $152 billion a year. The new tax revenues ... can be returned to the US consumers as a lump sum, thus providing the economic stimulus. The reduction in crude oil consumption ranges from 7.13% to 10.30% while providing a stimulus (defined as additional purchasing power to consumers) to the economy of $95 billion to $133 billion a year.

The title of Sen's paper:  "A Tax to Save the US $100 billion a Year and Solve Global Warming?"  Sounds like a plan to me.  Any takers?

Tax and Farm

I thought this was a pretty intriguing way to conserve rural land. Clallam County, on Washington's Olympic Peninsula, is considering a real estate sales tax of 0.5 percent per sale to finance farmland preservation, which is something of a vanishing resource in the booming county. The tax would go to purchase development easements on farmland, which gives farmers an injection of cash and also guarantees that the land will stay rural.

Apparently, similar measures have failed in both King and Snohomish Counties, though San Juan County does have such a tax on the books. In spite of the taxes apparent unpopularity with Puget Sound voters, I wonder if there's a creative way to tweak the tax--or the way it's assessed--so that conservation can benefit from the real estate boom, which is arguably the biggest threat to forest and farmland preservation. I'd love to figure out a way to harness the building craze toward preservation. Perhaps a tax solely on new construction? On new construction in certain areas?

$10 billion? That's nothing!

Cleaning up Puget Sound--removing toxics and restoring its ecosystems--could cost as much as $10 billion, according to a gathering of conservationists and lawmakers as reported in the Seattle Times. Leaders are hoping to wrangle $5 billion of that total from Congress, but so far the Army Corps of Engineers, which has a sweeping vision for restoring the Sound, has garnered only a tiny fraction of the necessary dough.

Okay, $10 billion is a lot of money--even when it's spread out over a number of years--but one way to make the amount seem smaller is to compare it to other expenses. So, just for the heck of it, how about a comparison to American household spending? Here's how that multi-year $10 billion compares to just a single year (2003) of spending. It's...

• 30% of household spending on tobacco
• 22% of household spending on alcohol
• 7% of household spending on gasoline
• 4% of household spending on health care

Or another, more locally relevant way to think about it: it's substantially less money than taxpayers in just three counties--King, Pierce, and Snohomish--were, in 2004, nearly asked to shell out for a Regional Transportation Improvement District that was predominantly for road-building.

Tax Hammer

Here's a reasonably good article on BC's Centre for Integral Economics, which works on an issue very dear to our hearts -- promoting reforms in tax policy that foster sustainability.

From the article...

[P]eople eat less and are healthier afterwards when they "pay by the slice" instead of going to the all-you-can-hold-down buffet. But most city services ... are based on the buffet model. That's not exactly a strategy for rewarding or encouraging thrifty and conservationist behaviour.

Moving to pay-by-the-slice methods means metering water use, which a 1999 Environment Canada study showed resulted in 70 per cent reductions in home water use, and charging by the bag for garbage... When individuals pay more per unit, the ornery side of human nature works for the social good.

That seems just about right to me.  I could preach until I was blue in the face about the importance of, say, voluntarily conserving water or fuel.  But all of the good I could do would probably be dwarfed by even a small tax shift that made those commodities more expensive.  It's not that people don't have an idealistic side, or that passionate arguments are useless.  Just that, all things considered, self interest seems to be a lot more effective at swaying actual behavior than appeals to altruism.

Smarter Gas Tax III

Stateline.org has a good update on Oregon's project to test a smarter, by-the-mile alternative to the gas tax.  The Oregon project begins field testing in 20 vehicles in September and plans to expand to 280 cars next year.

(Tip of the hat to BlueOregon.)

UPDATE: Willamette Week beats on the per-mile pilot.

Burnt CAFE

It's a rare treat to read a dry, technical report and--almost by accident--learn something surprising, counterintuitive, useful and (at least to me) genuinely new. 

Which is exactly what happened when I read this paper (beware, pdf) by Todd Litman at the Victoria Transportation Policy Institute.  The upshot:  raising vehicle fuel-economy standards, which always seemed to me like a good idea, may actually be counterproductive, even if they're truly successful at reducing the amount of gasoline the average vehicle consumes per mile.

Now, I'd long heard the argument that current fuel economy standards (also known as Corporate Average Fuel Economy or "CAFE" standards) were ineffective in practice, because of a big loophole:  current CAFE rules hold big pickups and SUVs to a lower standard than cars.  This has let manufacturers skirt CAFE standards by shifting production away from cars to big trucks, which in turn has led to a gradual decline of the overall fuel efficiency of the US vehicle fleet -- thwarting the purpose of the CAFE standards.

To me, that seemed to be an argument for fixing the big-truck loophole, rather than scrapping the standards outright.  Clearly, the techonology exists to produce more efficient vehicles; and our economy would be better off, and our roads safer, if there weren't as many huge gas guzzlers on the road.  So ratcheting up fuel economy standards for SUVs and pickups--though currently a political non-starter at the federal level--certainly seemed like it would be a wise move over the long term.

Or so I thought.  But Litman's article argues, fairly convincingly, that CAFE standards suffer from the law of unintended consequences.  Improving vehicle fuel economy would reduce the amount of gas a vehicle consumes per mile--which, as a consequence, makes driving cheaper.  And according to Econ. 101 (which I never took, sadly) if something's cheaper, we do more of it.  So, all else being equal, the cheaper it is to drive, the more driving we do.

Here are the numbers: a 10 percent improvement in fuel economy reduces fuel consumption by 6 to 8 percent (a good thing), but also increases driving by 2 to 4 percent.  The increase in driving increases congestion, parking costs, noise pollution, and traffic accidents.  Plus, making driving cheaper fosters sprawl, while an increase in vehicle traffic makes walking and biking more dangerous and less convenient.  Assigning a rough dollar value to these competing effects, it looks as though an increase in fuel economy standards is actually a net economic loss for society, because the costs of increased driving outweigh the benefits of fuel and pollution savings.  Not at all what I expected.

LItman gets similar results for alternative fuel subsidies -- by  reducing the cost of fuel, alternative fuel subsidies encourage driving.  The costs of increased driving largely offset any benefits in petroleum savings.

Fuel taxes are another matter.  On equity grounds, they don't do so well, since fuel taxes tend fall more heavily on the poor than on the well-off.  But otherwise they appear to do a fairly good job of reducing both fuel consumption and driving -- and all the associated costs for pollution, parking, etc.

But even better than fuel taxes, Litman finds, are strategies such as pay-as-you-drive car insurance (PAYD), which turn some of the fixed costs of driving (such as car insurance) into mileage-based fees.  Under PAYD people who drive less would pay less, which is a pretty good deal on equity grounds, and certainly gives people more control over their driving expenses.  But by discouraging low-value car trips, PAYD does well on just about any other measure one can think of.

I'm not quite to the point of thinking that improved CAFE standards are a waste of time.  But Litman's analysis certainly makes me a bigger fan of PAYD than I used to be.

Tolls for Thee

Via Planetizen News, evidence that the impossible is finally catching on:  according to Governing magazine, more and more jurisdictions in the US and Europe are making drivers pay to use roads when they're congested.  And remarkably, the politicians responsible for instituting the tolls don't seem to be paying much of a political price.

London's experiment is perhaps the most famous:  the city now charges drivers about $10 to drive into the city center between 7 a.m. and 6:30 p.m. on weekdays. Some pundits predicted that the policy would spark a commuter rebellion.  Instead...

Rather than revolting, drivers did one of two things: They either paid up, as 100,000 a day now choose to do, or they changed their commuting behavior. Many people who used to drive to work switched to mass transit, which became a more attractive option because [London Mayor Ken] Livingstone pumped toll revenues into expanded bus service. Other commuters bought scooters or bikes, either of which they can ride downtown for free. All in all, 60,000 fewer automobile trips are made into central London today than before the charge. Traffic moves more quickly, there are fewer accidents, and taxis and buses are more plentiful. Livingstone got re-elected handily last June, some say because of — not in spite of — his congestion-charging scheme.

Closer to home, Minneapolis is adopting a congestion pricing scheme for an urban insterstate, charging variable tolls, dependent on traffic volume, to allow single-passenger cars to use HOV lanes -- a system known as "HOT" (or high-occupancy toll) lanes.  A similar plan was proposed in 1997, but was pulled after a public outcry.  But this time around--after years of worsening congestion with no other solution in sight--the plan passed with bipartisan support.

Minneapolis is not alone in playing with congestion pricing.  San Diego has had a variable-priced toll road in place since 1996, and other congestion pricing experiments are running in Orange County, California, and in Houston. Colorado, Washington State, Georgia and Virginia all have HOT lane projects under construction or review, while Maryland, the Bay Area of California and San Diego are looking at creating regional networks of toll lanes. And San Francisco is seriously studying London's center city toll.

A decade ago, this sort of trend probably seemed impossible.  But since then, congestion has grown, and the cost of building and widening urban highways has skyrocketed, with no end in sight.  So perhaps it's not surprising that so many places are adopting one of the few proven tools for squeezing more transportation capacity out of the same old roads.

Kiwi Carbon

Via Tom Paine comes news of a carbon tax in New Zealand. The fee for emitting greenhouse gases pays for tax reductions for small business. Check it out.

Bush's Latest Energy "Plan" II

Further to my earlier post, here's a national energy plan that I strongly endorse, from the Center for American Progress. The ideas actually come from Rocky Mountain Institute's Winning the Oil Endgame, but CAP has boiled them down to a few salient points. The short-term plan starts with:

1. A scrap-and-replace program for low-income households' clunkers.

2. Vehicle feebates.

3. Better tires.

4. Car sharing.

HOT Lanes, Black Boxes, and Fairy Wings

The golden boy of Northwest news reporters, Timothy Egan, ventures to southern California to compose an excellent overview of the US trend toward high-occupant/toll (HOT) lanes in today’s New York Times. (Money quote: The Gubernator says, "Californians can't get from place to place on little fairy wings.") All across the United States, variable tolls—congestion pricing—are becoming the new conventional wisdom about how to do road expansions. In a few places, existing HOV lanes are up for conversion to HOT lanes.

The article shows the progress that road pricing has made in public acceptance, in part because it passes muster with both libertarians and sustainers. (Something I’ve noted here and here.)

But now consider the limitations of HOT lanes as a congestion pricing strategy. They have to be done lane by lane, road segment by road segment, and against considerable opposition and expense. The Cascadia region has more than 200,000 miles of streets and highways. It’ll be decades before congestion pricing can be widespread through HOT lanes alone.

A long shot alternative, which looks like the odds-on favorite when you look far enough into the future, is comprehensive, technology-based, road-use pricing such as that being tested experimentally by the Puget Sound Regional Council  and Oregon State University.

The PSRC pilot project has several hundred black boxes installed in the cars of Puget Sound area volunteers. Each month, the black boxes are replenished with about $100 of credit. Over the month, a satellite monitoring system sends instructions to the box for debiting road-use fees, in real time, based on the participant's driving: congestion and other factors on each segment of road driven. The entire road network is priced, virtually—most miles are very inexpensive; a few are very expensive. (A bonus for the volunteer participants in this pilot is that they get to keep any of the $100 credit that they don't spend by driving.)

Somewhat lower tech is the OSU technology. It’s a mileage meter with a small radio transponder installed in test vehicles. Sensors at gas stations read each test vehicles’ mileage at each fill up and add a per-mile charge to the gas bill—in place of fuel tax.

The political constituency for comprehensive road pricing is smaller than that for HOT lanes, because the highway-building industry likes HOT lanes (or any other means of generating millions of dollars for new roads). But technology trends could bring comprehensive road pricing into the real world more quickly than you’d imagine.

Consider a few things. Information technology is moving rapidly into new vehicles. Virtually all new luxury cars and half of all new GM cars now have GPS navigation systems installed in them when they roll off the assembly lines. The cost of these systems is falling (possibly in accordance with Moore’s “Law”). Car alarm companies are starting to offer satellite monitoring that’s connected to onboard navigation systems: if your car is stolen, the security company can tell you—or police—exactly where to find it. (Or, if you forget exactly where at the mall you parked, you can phone in to the security center and get directions.) With the fancier car security systems, the security center can even turn off and disable the engine if the car is stolen.

In the last twenty years, home security systems have swept the new house market in the Northwest. Virtually all new-construction homes have remote-monitored home security systems. It seems likely to me that new cars will be next, certainly within the next 20 years if not the next five.

Wireless connectivity through information technology is riding into the vehicle fleet on the horses of navigation and security. But once it’s there, it seems a small step to use the same technology for other purposes, such as pay-as-you-drive insurance (GM is starting to do this with its proprietary OnStar system, as we noted here) and such as road user charges.

In the end, it becomes technically possible to charge drivers in fairly direct proportion to the social costs of their driving: The per-mile charges could replace fuel taxes and vehicle registration fees and taxes entirely (and could also replace some general levies such as local sales taxes). They could be adjusted for time of day or roadway congestion, fuel economy, emissions ratings, and even engine noise.

Now, the convergence of all of this Buck Rogers technology is still some years in the future. But it’s probably a lot closer to us than a comprehensive system of road use charges built up one lane segment at a time.

Gas Tax on the Little Guy

In all the heated debate about Washington's new gas tax increase of 9.5 cents per gallon, one thing has been generally overlooked: the effect of another sales tax on lower-income residents. Today, however, the Seattle Post-Intelligencer ran an interesting article on the subject. But I'm still left wondering whether the tax increase is a good idea.

According to the Economic Opportunity Institute, Washington has the most regressive tax structure of any state in the nation. Because the Evergreen State assesses no income tax, but relatively hefty sales taxes, the burden of taxation falls more heavily on poor people here than anywhere else in the U.S. According to this study (pdf) from Citizens for Tax Justice, which is a tad dated now, the lowest-earning fifth of Washington residents pay more than 17 percent of their income in taxes, while the wealthiest 1 percent, pay less than 4 percent. So slapping on another 9.5 cents to the price of gasoline is conceivably a tough blow for lower wage folks.

But when I read the examples of people hurt by high gas prices I mostly didn't have the reaction I expected to. Instead, I was struck by how our reliance on cheap fossil fuels has lured us into wasteful ways.

On the one hand, it seems tragically unfair for low income workers to face yet another financial hardship. On the other hand, typical examples are of people commuting 15 miles to daycare and another 15 miles to work (presumably, a total of 60 miles each day). Another person complains that her husband drives an hour each way to work.

In one bizarre example, a person complains about pumping $10 worth of gas to drive her minivan 14 miles. Yikes. Even though minivans are as fuel-wasting as SUVs, I'm highly skeptical of her claim. According to AAA, Seattle's fuel is $2.51 a gallon, on average. So she must be getting only 3.5 mpg or else she's wildly exaggerating. (For comparison, giant Hummers get about 10 mpg.)

To cite another example, of a landscaping business, "their four pickups log 400 to 500 miles a week, petroleum is in the PVC irrigation pipes and even woven into their fertilizers." My thought was: our vehicle fleet is inefficient, our homes are widely scattered (necessitating that 500 miles/week), and we have yards so big that we hire others to tend them, often with intensive chemicals.

Certainly, it's not good that small businesses are struggling to stay afloat or that folks can barely afford to get to work. It's more evidence of the serious economic consequences of energy inefficiency. As I've argued before, with respect to energy consumption in an era of rising prices, our economy is not in an enviable position. Japan can generate 3 times as much wealth with the same amount of energy; Germany can generate about twice as much.

Simply put, as prices rise, whether through taxation or market forces, it's doubtful that we can sustain lifestyles where people typically drive 60 or more miles a day, just for essential travel. We'll either need to live much closer to work, drive vastly more efficient vehicles, or rely on better transit networks.

For the sake of lower income workers and many small businesses--not to mention the environment--we need to restructure our energy use. Especially, we need to consume less petroleum, which can be accomplished in a variety of ways: efficiency, denser neighborhoods and better transit options, and alternative energy.

So to the extent that this new gas tax encourages better development, greater efficiency, and less consumption, I suppose it's probably worth the pain. Of course, there are other (and better) ways of restructuring our energy use than raising gas taxes. Plus, it seems unfair that most of the hardship of this approach is shouldered by those who can least afford it. 

Traffic Jam

I've been putting off commenting on Washington State's recently-passed $8 billion transportation package -- funded by a 9.5 cent per gallon increase and new weight-based vehicle fees -- until I could figure out exactly how I feel about it. I still can't. It's complicated.

In general, I like taxes on gasoline.  Gasoline carries many costs -- security, air and water pollution, climate-warming emissions, and the like -- that aren't captured by the market price.  Which means that, no matter how high the market price for gasoline goes, it's still not high enough to account for all the externalities. So in theory I should be in favor of a gas tax increase.

In practice, though, it matters a lot how the money raised through a gas tax is used.  In Washington state, gas taxes are dedicated to roads and car ferries.  As a consequence, gas taxes in the state have tended to accelerate sprawling development at the ever-receding urban fringe -- in precisely the places where residents have to drive most.  So even though gas taxes increase the cost of gasoline, they've also, in effect, increased its consumption.

This time, however, some anti-sprawl advocates in Washington seem genuinely pleased with the transportation package, touting it as a "win."  They give three reasons:  the package focuses on fixing existing highways, rather than building new ones; it provides nearly half a billion in funding for non-car-centered projects such as bike and pedestrian investments, special-needs transit, and a safe routes to school program; and, while it does provide nearly a billion dollars to I-405, the money is flagged for managed (i.e., tolled) lanes that encourage carpooling and transit.

I'm a little less sanguine, though.  And not just because increasing highway capacity on I-405 may foster sprawl, but more because the package provides $2 billion for my pet peeve: rebuilding the Alaskan Way Viaduct.

I think that the city's preferred option for replacing the Viaduct with a tunnel -- which would cost $4.5 billion to replace 2.2 miles of highway, plus some work to reconnect the street grid -- is wildly expensive, especially given that transportation planners think that they could raise at most $100 million by tolling the facility.  (In other words, the tunnel's supporters think that it's worth 45 times as much as drivers themselves would be willing to pay for it.)  Construction is likely to cause serious disruptions from 2009 through at least 2016, and according to the Seattle P-I, during construction itself...

traffic will likely be shifted off the old structure onto downtown surface streets and onto Alaskan Way past waterfront businesses. A temporary bypass may be built between Broad and Pike streets.

Which of course makes me wonder -- if the Viaduct is so darn crucial that we have to spend $4.5 billion to fix it, how is it that the city thinks it can survive during constrction, with all of the Viaduct traffic forced onto city streets?

Now, really, a tunnel isn't the worst thing in the world.  By 2016 or so, Seattle might have a reasonably attractive waterfront -- though a high-speed highway nearby, coupled with a decade of neglect, may mean that not too many people will be inclined to live there. 

But what really gets me is this:  the $2 billion in state funding will disappear within two years if the region can't find the rest of the money to build the tunnel.  The state's just going to take it away, and spend it somewhere else.  So the region (mostly Seattle) is going to have to commit another $2 billion, at least, to lock in the state funds.  Seattle residents are already taxing themselves for the monorail; we're helping to pay for light rail; the state is phasing in a 14.5 cent per gallon gas tax; we're facing expenses for repaving I-5 and rebuilding the 520 bridge; and on top of that, Seattle is still going to have to come up with a couple of billion extra to pay for the rest of the Viaduct.

Here's the risk: with all of the expensive transportation mega-projects underway right now, there's a distinct chance that Seattle residents will balk at the cost of the tunnel -- which was the most expensive of the proposed designs for replacing the Viaduct.  But with $2 billion in construction money already on the table, the city may opt for one of the lower-priced options:  a surface highway, or simply rebuilding the existing structure.  Which would mean that Seattle would be saddled with a waterfront highway for the next 50 years, just as it had one for the preceding 50.

One hundred years of highway. Ugh.  I'd much rather have nothing than that.  It would be much better to use the $2 billion to replace the seawall, tear down the Viaduct, and invest in a plan to move people into and through downtown without a gold-plated highway. 

Any takers, Seattle?

A Tunnel of Money

For a couple years now I've been obsessed, on and off, with the fate of the Alaskan Way Viaduct:  its history (Seattle's first major urban highway), its present (a seismically unstable eyesore that cuts off development options on Seattle's downtown waterfront), and its future (still a conundrum--the city and the state want to replace it with a $4 billion tunnel, but nobody can figure out how to pay for it).

It seems to me that there are two separate issues concerning the future of the Viaduct.  The first is this:  in fiscally straitened times, is it even possible to raise $4 billion to pay to replace 2.2 miles of highway?  And the second is, even if it were financially possible, would replacing the viaduct with a tunnel really be a good idea?

I have no special insight into either question, and I'll leave the second question to a subsequent post, or posts.  But it's seemed to me that the answer to the first is, quite likely, no.  That is, it's going to be really, really tough to raise enough money to pay to replace the Viaduct. 

Even if the project stays on budget (which highway megaprojects rarely do), $4 billion is a lot of money.  The federal government might contribute a little bit; the project might pick up a couple of hundred million from a land improvement district (collecting taxes from landowners who'd benefit from removing the existing structure); the state's already dedicated $177 million from a recent gas tax hike; the Port of Seattle might add a little more; and tolling users of the new might pay for $100 million in construction costs, on the outside.

Now, you'd think that, with a hundred million here and a hundred million there, you'd pretty soon be talking about real money.  But you'd be wrong.  Even with all these funding sources, someone's going to have to come up with well over $3 billion.

Tunnel proponents tend to remain publicly hopeful that most of that $3+ billion will come from the state or a Puget Sound regional transportation district.  I've argued before that that's a mirage -- the main way that the state or region would pay for the viaduct is by raising Seattle residents' taxes.  Folks outside of Seattle -- who rarely drive on the Viaduct or even through downtown -- are going to be reluctant to pay for a project they never see.  (Like salmon, taxes for transportation tend to return to the places where they were spawned.)

So when Seattle Viaduct boosters say that someone else is going to pay for the tunnel, what they really mean is that someone else is going to take blame for raising Seattleites' taxes.

Of course, I could be mistaken.  The state senate is making noise about raising gas taxes by 15 cents per gallon in order to contribute $2 billion more to the Viaduct -- a prospect that I think is unlikely to pass, but which would wind up giving considerably more to the Viaduct than Seattle residents pay in gas taxes (a fact that I'm sure will not remain unnoticed by legislators from other parts of the state).

But let's say, just for fun, that four-fifths of the unaccounted-for funding -- roughly $2.7 billion -- will have to come from Seattle taxpayers.  And let's say that those taxes will go to pay off 30 year bonds, at today's high-quality municipal bond interest rates (4.7%).

I did a little playing with the numbers over the last few days.  Factoring in the costs of issuing the bonds, and assuming that the nominal amout of tax collected will rise gradually over 30 years, it looks as though, once all of the bonds had been issued, city residents would have to pay at least $150 million per year to finance the construction debt.

To put this in perspective:  $150 million is about three-quarters of all property taxes (pdf link, see page 31 for exact figures) Seattle expects to collect for its general revenue fund in 2005.  And it's about $25 million more than local taxpayers' contribution to the city's public schools.

On a per capita basis, the story is just as grim.  An annual payout of $150 million amounts to about $270 per person -- or nearly $1,100 for a family of four.  And that's just the first year -- payments would continue for 30 years, though the per-capita share would likely decline with inflation and population growth. 

[Geek note:  When I was playing with the numbers I structured Viaduct tax collections so that they'd rise by 2% per year in nominal dollars -- meaning that they probably fall in inflation adjusted dollars.  But there seem to be lots of ways of structuring a debt repayment schedule:  you could increase the payments faster than inflation, meaning that payments would be smaller in the early years; you could start them out high and reduce them over time; you could shorten or lengthen the term of payment, etc., etc.  Which schedule the Viaduct would choose would depend on a lot of factors that I'm not qualified to judge.  But the bottom line is this:  my family's per-capita share of Viaduct construction costs would probably be at least $1,000 per year, once all the bonds had been issued.  Also note that the municipal bond interest rate that I used is much lower than what's assumed in this study (big pdf) of how tolls could finance the SR-520 floating bridge, so this is probably a low estimate.]

We could, of course, turn to the reconstructed Viaduct's drivers to help pay for the costs. That would only be fair--the people who benefit most directly from the Viaduct are the drivers themselves.  But transportation planners have already concluded that tolls on the new tunnel could finance less than $100 million in construction costs.  And if you did expect tolls to finance the full $4 billion for the Viaduct, drivers would have to pay about $6.50 for a one way trip (again, with tolls maintained over 30 years to pay off the construction costs.)

To me, these exhorbitant figures make me wonder:  is there anyone in city government who's seriously looking into whether rebuilding the Viaduct is worth the cost?

UPDATE:  Some typos fixed -- though I'm sure there are more.  Thanks to folks who emailed me about them.

Taxy Crab

Earlier this week I grumped that this Seattle Times editorial misled readers about the finances behind a four-cent per gallon statewide gas tax.  Among other problems, the editorial overstates how much a four-cent per gallon gas tax could accomplish.  Over 30 years, it would finance less than $2 billion in infrastructure projects, which would only begin to pay for the highway projects--such as rebuilding the Alaskan Way Viaduct (expected to cost $4 billion without cost overruns) and the SR-520 floating bridge ($3 billion or so)--that the editorialists supported.

Now, it looks like the Washington Senate is considering a 15 cent per gallon gas tax hike, as part of a larger package that would raise about $8 billion for transportation projects -- with nearly half of that money slated for the Viaduct and the floating bridge.

That's getting a little closer to reality.

Still, this proposal would pay for only about half the costs of those two megaprojects.  The state might be able to scrounge up a little more money from tolls, federal grants, and the like.  But it would still leave a tab of at least $3 billion or so for taxpayers in the Seattle area.

And it still wouldn't pay for other projects, like resurfacing I-5, which is also near the end of its design life, or many of the other major projects that the state is itching to take on in the Puget Sound region.

I'm wondering if this isn't just the opening gambit in a strategy to push through a much smaller tax hike.  State legislators must be aware of how easy it would be easy to whip up an anti-tax furor over this.  A tax of 15 cents per gallon adds up to about $65 per person each year.  You could argue that, in a big economy, that's a drop in the bucket.  But over a decade, it's a tax hike of $2,600 for a family of four -- nearly half of which will be spent to replace a few miles of highway in central Puget Sound.  Just try selling that in Tacoma or Everett, let alone the Tri-cities or Spokane.

And consider:  a couple of years ago, state voters trounced a proposal to raise gas taxes by 9 cents per gallon--and those tax revenues would have been distributed fairly broadly around the state. Given that lesson, if I were a legislator I'd be really cautious about endorsing a 15 cent tax--especially if my constituents rarely drove on the Viaduct or 520 floating bridge.

The irony in all this is that a tax hike of 15 cents per gallon is much, much too low.  It won't pay to replace the existing road infrastrucutre.  It won't affect drivers' behavior much, or do much to reduce the region's reliance on imported fuels.  It will barely affect the fuel efficiency of the vehicle fleet.  It won't pay for national defense costs for the petroleum supply.  It won't pay for pollution, for CO2 emissions, for you name it. 

But it's still, if I had to bet, more than the amount that Washington voters are willing to swallow.

Feebates, not Fuel Taxes, are Key

Thomas Friedman’s usually pitch-perfect commentary on energy and security hit some high notes yesterday, but it also went off key twice, in disappointing ways.

First, the sweetest passage from his New York Times column:

By doing nothing to lower U.S. oil consumption, we are financing both sides in the war on terrorism and strengthening the worst governments in the world. That is, we are financing the U.S. military with our tax dollars and we are financing the jihadists--and the Saudi, Sudanese and Iranian mosques and charities that support them--through our gasoline purchases. The oil boom is also entrenching the autocrats in Russia and Venezuela....Finally, by doing nothing to reduce U.S. oil consumption we are only hastening the climate change crisis.

Now, the ear splitters:

We need a gasoline tax that would keep pump prices fixed at $4 a gallon, even if crude oil prices go down. At $4 a gallon (premium gasoline averages about $6 a gallon in Europe), we could change the car-buying habits of a large segment of the U.S. public, which would make it profitable for the car companies to convert more of their fleets to hybrid or ethanol engines, which over time could sharply reduce our oil consumption.

What's wrong with that? I like the sound of it and the general drift. And I don't take issue with very high fuel taxes, if they are offset with cuts in conventional taxes and if their regressivity is offset.

But Friedman goes sharp here in one important detail: he suggests that fuel taxes are mostly about changing car-buying habits. In fact, they're a pretty poor instrument for influencing purchases. (They do a better job of influencing day-to-day driving decisions, but even there, other things might be more effective, such as pay-as-you-drive insurance.)

The reason fuel taxes fall down as an incentive for buying more-efficient vehicles is that consumers are notoriously short-sighted in their estimates of the value of future energy savings. Typically, consumers will only pay extra for vehicle fuel economy if the investment pays itself off within three years. (In economic lingo, their "discount rate" is well about 50 percent for future energy savings.) According to Rocky Mountain Institute (huge pdf, see page 139), consumers underinvest in fuel economy by roughly 60 percent--at any given fuel prices.

So simply raising fuel taxes, as Friedman suggests, will certainly factor into consumers' calculus and encourage them to buy slighly more efficient vehicles. But it won't have the mammoth effects he suggests. The cost of fueling remains fairly modest: perhaps one-eighth of the cost of owning and operating a vehicle. Hiking fuel taxes might raise that fraction to one-fifth or even one-fourth, but it won't make fuel-economy the overriding factor in purchase decisions.

As RMI writes, “The difference between a 30-mpg and a 40-mpg car, though consequential for society, will seem to the short-sighted buyer to be worth only about the price of a set of floor mats.” So, if Friedman gets gas up to $4 a gallon, the difference may double to about the price of two sets of floor mats. But that's not going to set off a dramatic change in car buying habits.

Fuel taxes won't close the yawning chasm between consumers' payback requirements and the economically justified level of efficiency investment. But feebates can: they make the lifecycle energy costs of new vehicles powerfully evident in the one price that matters most to car buyers--the sticker price.

These point-of-purchase incentives charge fees to the buyers of inefficient vehicles and refund the resulting revenue as rebates given to the buyers of efficient vehicles. The fees and rebates are directly proportional to the efficiency of the model, so there's a continuous and market-wide upward tug on fuel economy. They're on the docket in Canada, the United Kingdom, France, and -- most recently -- Connecticut.

So here's Friedman rewritten:

We need a gasoline tax vehicle feebates to turbocharge gains in fuel economy. that would keep pump prices fixed at $4 a gallon, even if crude oil prices go down. That we would change the car-buying habits of a large segment of the U.S. public, which would make it profitable for the car companies to convert more of their fleets to hybrid or ethanol engines, which over time could sharply reduce our oil consumption.

Next, Friedman goes flat by most of an octave, inserting an ill-informed note on nuclear power: “We need to start building nuclear power plants again. The new nuclear technology is safer and cleaner than ever."

Nukes have largely died from market forces, so why any market-savvy thinker like Friedman would want to resurrect them (presumably through further subsidy)I cannot fathom. Our energy future should flow from least-cost planning that tries to incorporate social and environmental costs such as climate change and national security.

Under least-cost planning, nuclear power does not fare well. Efficiency and renewables beat nuclear power on price alone in almost every application, because nukes are extremely expensive. Add environmental and security costs and nukes fade to a footnote. Generating electricity through a technology that creates wastes still deadly for thousands of years seems like folly. Peppering the countryside with such facilities in an age of global terrorism seems, well, like lunacy. (A recent National Academy of Sciences report on the terror threat of one aspect of A-plant management was summarized in the Washington Post yesterday.)

Fortunately, Friedman finds the tune again at the end. I'll give him the last word:

And we need some kind of carbon tax that would move more industries from coal to wind, hydro and solar power, or other, cleaner fuels. The revenue from these taxes would go to pay down the deficit and the reduction in oil imports would help to strengthen the dollar and defuse competition for energy with China.

My Four Cents

The Seattle Times editorializes today in favor of a four cent per gallon hike in the Washington state gas tax.

Now, I'm typically in favor of higher gas taxes, on the grounds that the fuel's massive externalities--ranging from overseas defense costs, to government subsidies to oil companies, to infrastructure costs for roads and highways, to global warming and air pollution--aren't reflected in the price that consumers pay at the pump.

So in principle I should be in favor of a gas tax hike.  But, in this case, I think the editorial is doubly mistaken.

First, the editorial suggests that the reason to support gas taxes is that they can help pay to rebuild the region's crumbling transportation infrastructure -- most notably, the Alaskan Way Viaduct and the SR-520 floating bridge. And according to the editorial, other infrastructure needs "abound", including "structural changes to allow passage across Interstate 90 at Snoqualmie Pass during winter storms, bridges that need upgrades and the Interstate 5 bridge to Oregon...". 

But let's do some simple arithmetic.  Washington state residents burn about 2.6 billion gallons of gas each year.  (That's about 1.2 gallons per resident per day.)  So a four cent per gallon tax on gas would bring in about $105 million per year.

That may seem like a lot.  But it isn't.  Take just, for instance, the current $4.1 billion plan to replace the Alaskan Way Viaduct, the aging highway that hugs the Seattle waterfront, with a tunnel.  If that project is ever undertaken, it's likely to be financed with long-term bonds -- meaning that taxpayers would have to pay interest on the bonds over the next 30 years or so.  As of today, municipal bonds are earning a 4.7% rate of return.  So the interest alone on $4.1 billion would be $192 million per year.  To pay back the principal plus interest (see, for example, this handy mortgage calculator) would take $250 million per year.

In other words, a state gas tax of four cents per gallon wouldn't even begin to pay for one of the projects mentioned in the editorial. Four cents is just the tip of the iceberg.

And this is doubly true, given the political reality that gas taxes are generally parcelled out by population; that is, it's very unlikely that a single project in downtown Seattle would command a disproportionate share of the entire state's gas tax.  As we've argued before, most of the costs of the Viaduct will likely be borne by people who live in or close to the city itself -- meaning that a four cent gas tax might be enough to contribute $10-$15 million per year to the Viaduct.  Chump change.

So if the editorialists really wanted to pay for the infrastructure wish list they mention in the article, the honest thing to do would be to support a major gas tax increase, not just a piddling one of four cents per gallon.  They're off by a factor of 10.  Maybe they think a small gas tax hike is better than none at all -- but at least they should be honest, and say that it won't even begin to pay for what they say the state needs.

My second objection to the editorial is that it perpetuates what I think is fundamentally a mistaken way of looking at gas taxes:  namely, that gas taxes are simply users fees, and that gas tax receipts should automatically be plowed back into building and maintaining highways.

That's a fair enough description of how things are right now.  But it singles out gas taxes for special treatment.  Sales taxes, income taxes, property taxes, and the like wind up paying for a huge range of social and political ends -- defense, medical care, parks, you name it.  So why is that gas taxes alone are considered to be "user fees" that have to be devoted to building roads?  As it turns out, the special treatment for gas taxes is an accident of history, not a logical necessity. 

And even if gas taxes are just users fees, then how come they're just devoted to roads?  That leaves out all of the other external costs of gasoline & driving -- pollution, international defense, and the like. A real users fee would go to pay for all of the external costs of driving, not just the cost of roads.

I'm for gas taxes.  But I'm also for honesty -- and a four cent gas tax, devoted exclusively to road-building, deceives drivers about the true costs of maintaining a gasoline-powered lifestyle.

Feebates in United Kingdom?

Just like Canada, the United Kingdom is seriously considering vehicle feebates, reports the invaluable newsletter Green Budget News. 

To recap, feebates (sometimes called "freebates") are a great way to harness market forces to encourage energy efficiency and discourage pollution.  The article above gives a good explanation of how they'd work:

The proposal would require owners of more polluting vehicles to pay an extra levy, while drivers of environmentally friendly cars would reap the benefits and receive a grant as a reward for buying fuel-efficient vehicles.

So people who buy gas guzzlers pay a fee that's refunded to people who buy gas-sippers--creating a powerful incentive for continual improvements to automobile efficiency.

One of the great features of feebates is that they pay for themselves -- taxpayers don't even get involved.   In fact, the UK proposal is to use feebates to replace the existing vehicle excise duty, which apparently has had little effect on consumers' vehicle choices.

And by the way--I can't recommend Green Budget News enough.  Almost every article holds some fragmentary insight into tax shifting and market oriented sustainability.  And while it's focused on the European Union, it's chock full of ideas that could be adopted in this part of the world as well.  The current edition of the newsletter, which is published by Green Budget Germany, also contains informative updates on congestion pricing in Scotland and Austria and vehicle, pollution, and energy taxes in Denmark.

"The High Cost of Free Parking"

As the Seattle Post-Intelligencer reports, professor Donald Shoup of UCLA has just released his magnum opus on the consequences of free parking. Judging by its table of contents, the book sounds important. Shoup is perhaps the world's leading expert on parking, so I'm optimistic. More when I've read it...

Why parking matters so much is summarized here (registration required).

Heavy, Man

According to the Seattle P-I, Washington State legislators have introduced a bill that would raise taxes on vehicles to help pay for streets and highways.

Now, part of me likes this idea. As it currently stands, cars and trucks don't pay their own way.  The state gas tax doesn't even cover the cost of building, maintaining, and operating the state's road network. To break even, the state department of transportation consistently relies on general tax revenues to supplement gas tax receipts. Finding new ways to make drivers pay for the true cost of driving should make the system fairer, and ensure that people who don't drive much aren't forced to subsidize those who do.

So in theory, I should like the general idea of raising taxes on vehicles. But the problem is that, in this case, I find the specifics a bit disheartening.

First off, the bill would create a flat annual "vehicle fee"--essentially a tax for owning a car or truck--of $20.  Most of the public costs of vehicles, however, come from driving them, not owning them.  Under this scheme people who rarely drive would pay the same rate as people who drive a lot--meaning, essentially, that the more you drive, the more other people subsidize your driving. 

Plus, a flat tax of this sort winds up being regressive: it's irrelevant to the well-off, but an extra burden to the poor. Washington already has one of the nation's most regressive tax systems, and a flat tax on vehicles just makes matters worse.

Second, the bill proposes a vehicle weight tax -- essentially charging more for vehicles that weigh more. The rationale for this is fairly clear:  heavier vehicles create more wear and tear on the roads, increasing road maintenance costs. But here, too, what matters is not just how heavy a car is, but also how much it's driven. If two vehicles weigh the same amount, but one is driven 3 times as much as the other, then the one that's driven more creates 3 times the damage--but under the bill's scheme, they'd both pay the same amount of road maintenance tax. Again, people who drive less wind up subsidizing those who drive more.

And there's yet another problem with the way the bill structures the vehicle-weight tax.  Heavy vehicles cause much, much, much more damage than do light vehicles. In fact, [beware: math ahead] a good rule of