Tracy C. Miller is a senior policy research editor with the Mercatus Center at George Mason University.
Virginia recently approved a bill to provide new permanent funding of $154 million per year for Metro. This will be combined with comparable increases in funding from the District and Maryland. This strikes some as a good thing, but it isn’t, because this increased spending on mass transit takes money away from highways.
About two-thirds of Virginia’s new funding commitment — more than $100 million — comes at the expense of improvements to roads and highways in Northern Virginia, which are chronically gridlocked. One hundred million dollars is more than one quarter of all fiscal 2019 revenue of the Northern Virginia Transportation Authority, the primary agency responsible for improving roads in the region.
There are good reasons most people rely on their automobiles rather than transit for the majority of their trips, including commuting. The D.C. area, as with most modern urban areas, is becoming more and more decentralized, with most jobs located outside the urban center. Public transit works well for transporting people from city neighborhoods and inner-ring suburbs to jobs in the District, but it’s not a cost-effective way to transport people to many jobs located in the suburbs, especially when they commute from one suburb to another.
In setting regional transportation priorities, metropolitan planning organizations emphasize getting more commuters to use transit as a way to reduce congestion, air pollution and other problems created by automobiles. Yet only 14 percent of D.C.-area commuters use transit. Area transit use has been declining since 2013 and is expected to fall by another 3.7 percent over the next year. Growing use of ride-hailing services, such as Uber, have contributed to this decline.
The riders and nearby landowners who benefit from transit should pay for it, not the entire base of taxpayers who now pay most of its costs. Transit fares and parking revenue at Metro stations are projected to cover less than 40 percent of operating costs and none of the capital costs that the Washington Metropolitan Transit Authority will incur in 2019. Virginia drivers pay a much larger percentage of highway operating, maintenance and capital costs in the form of user fees such as fuel taxes and vehicle registration fees.
Transit is only cost effective in densely populated parts of the metropolitan area. Dense populations are necessary to fill buses and trains to capacity so they can collect enough fare revenue to pay for drivers and maintenance. Rail service on Metro’s Silver Line, which opened in 2014 and is being extended into sparsely populated suburbs near Dulles Airport, has not attracted enough fare-paying passengers to cover even a small percentage of the resulting increase in capital and operating costs, thus increasing WMATA’s annual deficit.
To fund its maintenance backlog so it can continue providing the same level of service, WMATA needs new sources of funding. Restoring the system to a state of good repair is expected to cost $15.6 billion over 10 years.
If it were better managed, WMATA’s expenses could be less of a burden on taxpayers. Raising transit fares, especially during peak periods, while offering discounts to low-income riders could reduce the need for subsidies. Research has found that the reduction in ridership because of fare increases is a smaller percentage than the fare increase, so those fare increases lead to higher revenue.
Besides raising fares during peak periods, governments in the area could pursue other sources of transit funding. One promising approach is for local governments to find ways to make landowners who reap windfall gains from proximity to transit pay through land value taxes, special assessments or transportation utility fees.
Instead of spending more state tax revenue on transit systems or roads, a better approach is to impose tolls on freeways during rush hour, which can reduce congestion while increasing commuters’ incentives to use transit, even if they have to pay higher fares.
Improving transportation is critical for the D.C. area. While encouraging transit use and promoting denser development near transit stations is a good idea, most people will continue to rely on automobiles for commuting and other trips. It makes little sense to reduce spending on road and highway improvements to provide bigger subsidies for transit. This doesn’t mean, however, that government should spend more tax revenue on highways. Both highways and transit could better serve the residents of the region if user fees or fares covered a larger percentage of their costs.