At Grade Rail-Finance

Right of way, property and construction costs, which can reach $150 million per mile for at grade rail systems continue to be funded nearly entirely through a combination of federal, state and local tax-based revenues. With the majority of construction and development expenses historically granted to local governments and transportation authorities by federal and state governments, regional and community transportation agencies have not been required to develop cost-effective or self-sustaining public transportation systems and services. Deficits and short falls in fare and other revenues required to support ongoing maintenance and operation of completed rail systems erode the abilities of local transportation system operators to service debt or maintain their respective share of annual expenses associated with passenger systems and services. When the ratios and percentages of federal, state and local contributions to rail system developments are inverted, from the 85%-15% federal-local contribution ratios of past decades, to the 80%-20% local-federal split proposed under the Los Angeles County Metropolitan Authority’s long range development plan and the 30/10 accelerated development proposal, the financial burdens of transportation systems development and operation are dramatically shifted onto state and local taxpayers.

Transportation development and operation funding that previously took the form of substantial grants that were not required to be paid back or financed, are being increasingly imposed on local taxpayers and general funds of local governments. Further extending and compounding local tax base obligations, regional transportation authorities are beginning to project transportation system development obligations and payments decades into the future by means of bonds and other instruments, while the Los Angeles County MTA (LACMTA) is proposing to borrow $8.8 billion to accelerate groundbreaking of several planned transportation projects, with debt service on the loan to be made with revenue derived from a ½ cent LA County sales tax over the next 20 to 30 years.

This imbalance, or disconnect between the subsidized expense of developing mass transportation systems, and the actual benefits that the systems bring to local economies and communities is exemplified by the Los Angeles County Metropolitan Transit Authority’s plan to spend 300 billion dollars over 35 years developing a network of transportation facilities and services that connect and serve a small percentage of the county or its 14,000,000 residents.  Assuming that the vast majority of the funding for implementation of their regional plan will be from the local economy and taxpayers, the LACMTA has committed an additional $30 billion of special local sales taxes to the plan. Emerging competition for local shares of these funds reveals the limitation of the vast expenditure, as well as, the limited transportation services that the system will actually deliver to the residents and taxpayers of the Los Angeles region.

With few incentives to plan or deliver cost effective services to local communities, transportation authorities continue to commit ever-increasing amounts of revenue to their development plans as if the funds were from unlimited outside sources, thus relieving regional transportation authorities of obligations to justify the expenditures to local constituencies or taxpayers, or solicit their approval. The gross inefficiency of public transportation planning, operation and financing that characterizes virtually every taxpayer-funded system in the country, challenges the authority and leadership of the public transportation establishment of the Untied States.



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