As the most expensive of all transportation systems, subway financing is heavily dependent upon federal and state government funding by means of matching funds, grants and other one time expenditures not requiring short or long term repayment by local transportation agencies or governments. The $540 million per mile estimated cost of constructing the Los Angeles subway to Santa Monica far exceeds the cost of any other transportation infrastructure or facilities in Southern California. While the projected expenditures or the Los Angeles County Metropolitan Transit Authority (LACMTA or MTA), shown in the table below, allocate four times the level of bus system capital funds to bus operations, the roughly equal allocation of capital and operations funds to rail corridor development indicates the capital intensive nature of the MTA’s long-term rail system development program. The $8.8 billion, 30/10 federal loan sought by the MTA is intended to supplement and accelerate MTA capital expenditures on a variety of planned rail projects, the most expensive of which is the subway extension to Santa Monica. Adding the $8.8 billion to MTA’s long-term debt would project the expense of marginally effective, grossly over-priced subway development over the next thirty years, thereby eliminating any alternative use of the tax revenues committed to servicing the 30/10 loan, and commit significantly greater rail system funding to capital expenditures than approved in the MTA’s comprehensive development plan.

Attempts to construct and implement subway systems, as well as support their ongoing operations by means of structured, long-term indebtedness will inevitably lead to perpetual indebtedness. Recent decisions to finance extension of the Los Angeles subway some twelve miles to Santa Monica primarily by means of annual sales tax and other fiscal sources of income, is bound to fall short of servicing the $7-9 billion construction costs, let alone the operational and maintenance costs of the project and service.

Historically, public transportation financing mechanisms and obligations allocate government resources to support of all aspects and costs of construction and operation of all types of public transportation systems. No significant private investment, partnerships or joint ventures have contributed to public transportation facilities or systems, while public transportation development and operation have, and continue to be funded by tax-based government revenues.

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