Thursday, March 13, 2014

The Destructive Fiscal Irresponsibility of Inertia or Doing Nothing



Idiocracy, filmed in future Texas.

There is an important new study out from Smart Growth America about how state DOT's are using their increasingly under pressure budgets.  The full study is linked here.  I'll call out a few points from it in a bit.  It is also linked to at the Dallas Morning News Transpo blog here.  The key point is that Texas is happily building and expanding roads while letting others fall into disrepair.  I'm going to discuss the reasons for this as well as the repercussions.

Before we dig into it, let's recall that city staff just presented a report to Dallas city council that $900 million is required to get existing city roads up to acceptable standards.  The state, apparently, is $35 billion in the hole when adding up debts and deferred maintenance (from the kind of source that would know these things).  The state is planning on letting rural roads, the historic farm-to-market roads, go back to gravel.

Lastly and perhaps most importantly, the state is trying to push maintenance of state roads within city boundaries onto the cities.  To which I say, let's have 'em.  But we also want the land too.  If cities take on the maintenance they should be able to take on the control of the design and scale of the roads so that they can leverage the highest and best use along them.

Do you see how it's all unraveling?

Let me help a bit more.  The key data point from the SGA study is that from 2009-20011, TxDOT spent $3.377 billion in total.  Of that money, $2.765 went to road expansion, new roads and widenings.  82%.  Conversely, that means 18% went to maintenance of existing facilities.

Also, in the document it shows that Texas is not in nearly as bad of shape regarding the percentage of roads in poor condition.  That's because so many are so new because Texas is so young.  However, we're sewing the seeds of future failure into the system by building roads we can't even maintain today.  I suspect most of the new highways and interchanges we've built recently will have but one generation life span.

Here's a key line from the DMN piece:
TxDOT typically expands highways to keep ahead of projected population growth. That’s expected to change as the agency continues to work with lackluster funding for its needs. Yet Texas’ population is expected to double in coming decades, meaning more people will be driving state roads and highways.

That's a typical line of defense that is used to justify the expansions.  However, it has many flaws within it.  One of which is that it's dependent upon hypothetical future growth statistics.  It is founded upon a formula of unconstrained supply and unconstrained demand, making it truly insane policy.

The unconstrained supply comes from that hypothetical new tax base to pay for the current debt.  However, the question is can that population growth continue in perpetuity without hitting carrying capacity, like how much water do we actually have?  How many people can we feed with loss of arable soils?  How many homes can we power?  Further, will that growth continue when the bills for all of these debts come due?  Those are all supply limits to growth.

On the other hand, their model follows unconstrained demand.  96% of trips in DFW are by car currently.  Similarly, 95% of trips in Houston are by car.  These are two of the most car-dependent metros in the entire country.  The projection models used, don't foresee any changes to that number.  They ignore demographic shifts showing less demand for driving as well as whether any city can even afford (or want) that kind of car-dependence.

It's the exsanguination of cities, their wealth, and their ability to create new wealth.  It's happening right before our eyes when we see the increasingly common news of our inability to maintain the antiquated infrastructure we've created.
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So the question remains, why this March of Folly?  Why do we continue following policies despite all evidence to the contrary that it's a good idea?

I have one theory and its rooted in the way we tie road building with economic growth.  And it's also fatally flawed.

I was watching a presentation the other day by a pre-eminent economist who used VMT as an indicator of rising GDP.  GDP is used as an indicator for economic growth as it measures economic activity (without actually measuring whether it's good economic activity or not.  It's merely just a measure of spending, rather than creating.  Sometimes it's both, but there is no measurement within that quantifies the waste leaving the local economy.

Therefore, if VMT = GDP and GDP = economic growth than VMT = GDP.  That's the line of thinking.  One reason is because we also equate VMT with increased mobility.  But that's also incredibly flawed thinking as it externalizes all other forms of travel.  What if I'm far more mobile on foot in a city based on proximity than if I have to drive everywhere?  Shouldn't the goal be to maximize everyone's mobility while minimizing the costs to do so?

It makes sense however that VMT up = GDP up.  Because that means more spending on gas and insurance and cars and traffic accidents, which means more hospital bills and thus more economic activity.  Even if it's horrifying.  However, and I hate this overused phrase, correlation is not causation.  Driving more does not mean a healthier economy.

Both GDP and the traffic models measuring mobility and used to justify new construction have significant externalities that might be subjective or even entirely incalculable.  Can't compute? Don't compute.  It's a bit of a crisis that both financial markets and transportation forecasting rely so heavily on models that don't or won't calculate.  That's what we're seeing play out before our eyes.

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So let's look at this an entirely different way.  How can we be more mobile while reducing car-dependence and that 96% of trips by car.  That should be GOAL NUMERO UNO.  First, I've found that car-dependence costs the national economy 2 trillion dollars a year.  Pro-rating that to the Dallas area, that's $7.25 billion per year.  What if we could cut car-dependence in half, keeping 3 to 4 billion in the local economy, while improving mobility via proximity and more walkable, bikeable communities?

Another example.  As we discussed, 95% of trips in Houston are by car.  96% in DFW, so we're using Houston as a proxy here since on the global scale, the statistical behavior patterns of Hou and DFW are virtually identical.  I believe this is the case because of statewide policy rather than Houston and DFW independently arriving at the exact same conclusions.

On the other hand, 54% of trips in metro Copenhagen are by car.  Why does that matter?  Well, CPH also only uses 4% of its local GDP on transportation.  Houston uses 14%.  CPH is making all of the same trips to the store, to jobs, to parks, facilitating social and economic exchange.  Therefore, that 10% difference is all waste.  In Houston's economy, 10% of GDP is about $40 billion (!!!).  Wasted.

Cities are machines of exchange.  CPH runs much more efficiently than our Sun Belt cities.  CPH is also approaching zero traffic fatalities (their stated measurable goal) for a calendar year.  Texas' traffic fatalities are over 3,000 and rising in a calendar year.

CPH is a well oiled machine.  A bicycle, which just so happens to be the single most efficient form of travel ever invented.  Shouldn't we be building cities of safety AND prosperity?