Category: Transportation

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Economy Transportation

Reform Motor Coach Industry to Promote More Competition

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The Rio Grande Foundation recently completed a report in which it analyzed dozens of state regulations that are holding back our economy and need to be eliminated or reformed. The need for deregulation has never been more apparent with our economy losing jobs and seeing an outflow of workers (according to a recent report from United Van Lines).

Unlike many issues in Santa Fe, deregulation has not historically been a partisan issue. At the federal level, President Jimmy Carter deregulated trucking, freight rail and airlines to positive effect in the 1970s. President Reagan continued those efforts in ways that led to significant economic growth throughout the 1980s.

To further illustrate the point that deregulation can and should be bipartisan, we are pleased to see that Think New Mexico has embraced the concept of deregulation, at least insofar as motor carriers here in New Mexico are concerned.

Think New Mexico has been working to pass House Bill 194, legislation sponsored on a bipartisan basis by Republican Rep. Tom Taylor and Democratic Rep. Carl Trujillo. The bill attempts to overcome many of the most absurd barriers to free competition in transportation services. These barriers harm both New Mexico’s economy and reduce options for consumers.

Today, entrepreneurs seeking to open new taxi, shuttle, or moving companies must gain the approval of the incumbent providers. Imagine Wendy’s having to gain the approval of McDonald’s before opening up a restaurant. One Albuquerque man who dreams of owning his own taxi business has been working for eight years to overcome this barrier.

According to (a staff response in a case before) the New Mexico’s Public Regulation Commission, which is charged with actually regulating motor carriers, “The Albuquerque Cabs appear to operate as a cartel: they are the only certificated taxicab companies in Albuquerque, they share the market evenly, they charge identical rates, and they have the same attorney. As a cartel, their interests may be best served by maintaining rates above the market rate and by discouraging competition, not by ensuring that the public is served by quality, affordable, and plentiful taxicab service.”

Cartels are creatures of government policy, not the product of a healthy free market.

Another barrier is pricing. In a free market, price competition is a primary determiner of market success. Under New Mexico’s arcane motor carrier laws, the state/government must approve all prices charged by these companies. Making matters worse, motor carriers have a special exemption from state antitrust laws that encourages them to form state-sponsored cartels and price fix. HB 194 would change all that.

With an active push for regulatory reform under way, the existing motor transport oligopoly is not going to give up without a fight. They have worked to introduce their own more industry-friendly legislation, SB 328, which muddies the waters and continues to allow existing providers to smother their potential competitors under a blizzard of legal filings using the current antiquated law.

Rio Grande Foundation does not always see eye to eye with the folks at Think New Mexico, but when it comes to regulating motor carriers, we agree that policymakers should stick to safety regulations, not micromanaging a potentially-competitive market for the benefit of a few well-connected special interests.

The aforementioned PRC staff brief concluded, “There has been a great deal of economic analysis of taxicab regulation in the past thirty years, with most experts agreeing that the public is best served by increased competition and limited barriers to entry.” We agree. It is time for the New Mexico Legislature to do what is in the best interests of consumers and entrepreneurs alike by truly deregulating New Mexico’s motor carriers by supporting HB 194.

The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization.

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RailRunner Tax and Budget Transportation

Put Rail Runner Out of Its Misery Sooner, Not Later

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Originally marketed at a price of $122 million and as possibly being “high-speed,” the Rail Runner shuttles (mostly) tourists and government employees from downtown Albuquerque to Santa Fe and from Albuquerque south to the bedroom community of Belen.

Only recently have New Mexico taxpayers been made aware of the full scale of spending that this project entails. The issue has exploded onto the pages of the Albuquerque Journal and other papers. According to newspaper reports, the train will cost a total of $1.3 billion over the next 20 years.

Regardless of whether you think the Rail Runner is worth the money or not, there is no doubt that the process that created the train is rotten to the core.

Rather than paying the train off in equal annual payments over 30 years as a family would do with a mortgage, Gov. Richardson set up the train’s financing so that he got the credit, but future generations would pay the bills. Future taxpayers are on the hook for two lump sum payments of $230 million per year in 2025 and 2027. These $460 million payments do not include replacement costs for the train sets and track which, according to transportation expert Randal O’Toole, must be replaced at something approximating their original cost every 30 years.

Such shady financing schemes must be prohibited from happening in the future. If a particular project is desired, payments on that project should be spread out evenly over the life of the project, not designed so that current generations reap the benefits while future generations are stuck with the bills.

While it would be painful to do so, the best possible decision at this point is to shut the train down right away. We can’t throw good money after bad forever and, if we shut the train down right away, taxpayers will save $453 million over the next 25 years.

In addition to the system’s shady and costly finances, there are several other reasons to shut the train down sooner than later.

Buses would be more flexible and faster: A system of buses running between various parts of Albuquerque and Santa Fe would be able to transport people at a fraction of the cost and much less time than it takes the Rail Runner to take people from a fixed downtown location to Santa Fe. The train takes 90 minutes to make this trip while a bus could make the trip in 60 minutes. This disparity doesn’t even consider time needed to drive to the train station and wait for the train.

The Rail Runner isn’t really “green”: Amtrak trains (the best available analog available for the Rail Runner when it comes to energy usage) uses 2,700 BTUs per passenger mile, while automobiles currently use about 3,300. That is a slight advantage for rail, but by 2035 (due to federal requirements), the train will still be using 2,700 BTUs, but cars will be using approximately 2,500 BTUs per passenger mile. Amtrak trains – the best comparison available – emit approximately the same level of CO2 gas as automobiles do today.

The Rail Runner has not and will not do anything to reduce traffic on I-25. That’s because daily traffic volume on I-25 (both immediately north and south of town) is so massive as to dwarf the impact of the Rail Runner’s ridership. More than 80,000 cars travel daily on I-25 just north and just south of Albuquerque, while the train’s daily total ridership of 3,397 for the entire system is essentially a rounding error.

New Mexico’s economy is still in the doldrums. Only oil and gas are holding steady. Rather than letting the Rail Runner suck up more money and resources, it’s time to throw on the brakes and stop the wasteful spending.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

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RailRunner Tax and Budget Transportation

New Rio Grande Foundation Study: Time to Stop the Rail Runner in its Tracks

(Albuquerque) The Rio Grande Foundation has long been critical of the Rail Runner and its finances. A new report from the Foundation outlines the top “Ten Reasons to Shut the Rail Runner Down Now.” The report is available here.

Originally marketed at a price of $122 million and as possibly being “high-speed,” the Rail Runner shuttles (mostly) tourists and government employees from downtown Albuquerque to Santa Fe and from Albuquerque south to the bedroom community of Belen.

Regardless of whether you think the Rail Runner is worth the money or not, there is no doubt that the process that created the train is rotten to the core. For starters, the train has been operational for five years, but only recently have the system’s true finances been explained in any detail.

Most egregious among the revelations is the fact that rather than paying the train off in equal annual payments over 30 years as a family would do with a mortgage, Gov. Richardson managed to set up the train’s financing so that he got the credit, but future governors and legislators would have to pay the bills. New Mexico taxpayers are on the hook for two lump sum payments of $230 million per year in 2025 and 2027.

According to newspaper reports, the train will cost a total of $1.3 billion over the next 20 years. This does not include the replacement cost of the train sets and track which transportation expert Randal O’Toole estimates must be done at approximately their original cost every 30 years.

If the train is shut down, taxpayers will save at least $18.12 million in annual taxpayer-financed operating costs beginning with the system’s shutdown. This would add up to $453 million over the next 25 years if the train is shut down right away. The train’s total per-passenger subsidies come to $50 per-passenger, enough to purchase a car (costing more than $18,000) for each passenger annually.

Said Rio Grande Foundation president Paul Gessing, “As painful as it might be in terms of prestige, the Rail Runner is not an integral part of New Mexico’s transportation system and is simply an unaffordable luxury. It is time to shut it down.”

Read the full report and all 10 reasons to shut the train down here.

Categories
Research Transportation

Are Interlock Devices Helping Solve New Mexico’s Drunk Driving Problem?

(Albuquerque) Over the past few decades, drunk driving has been one of the most pressing problems facing New Mexicans. Laws have been passed on an almost yearly basis in efforts of reducing the incidence of drunk driving and drunk driving fatalities and some progress has been made.

In fact, drunk driving fatalities in New Mexico generally decreased from 2005 to 2009, but the cause of this decline is poorly understood. It may be due to a statewide emphasis on policy modifications and media campaigns, more responsible attitudes about driving drunk nationwide or just plain luck.

The Rio Grande Foundation, in order to bring an economist’s perspective and economic thinking to bear in the discussion, decided to take a closer look at one particularly intrusive and expensive mechanism for reducing drunk driving, interlock devices. The full report is available here.

According to the study’s author, Harry Messenheimer, PhD, “Given these unproven/small reductions in recidivism and fatalities, it must be asked whether the benefits of interlock devices outweigh the costs. This is especially true since there is a limited pool of resources available to combat drunk driving.”

Continued Messenheimer, “Some direct costs of the interlock mandate may be reasonably estimated. Monitoring costs are a major component of direct costs. In New Mexico they amount to $13.1 million per year based on the number of interlocked offenders in 2010. Nationally, such a mandate is estimated to cost over $432 million annually. And that does not consider other direct costs and indirect costs (the unintended consequences).”

As Messenheimer concludes in his new report, “Are Interlock Devices Helping Solve New Mexico’s Drunk Driving Problem,” based on the studies of Richard Roth et al and his own research, he cannot yet recommend that states adopt laws mandating interlocks for all offenders. New Mexico’s interlock law has not been linked to a reduction in fatalities. New policies especially those that involve high costs, should aim to substantially reduce fatalities.

Economics involves making tradeoffs due to the fact that we all live in a world of limited resources. Therefore, all public policies must be made with an eye to generating the best possible results using limited resources. It does not appear that interlock devices rise to this level in New Mexico.

Categories
RGF Events Transportation

Transportation Expert Randal O’Toole’s Presentation in Albuquerque

There was a lot going on last week when transportation expert Randal O’Toole spoke at a Rio Grande Foundation event in Albuquerque on May 6th. If you did not get to come out to hear what O’Toole had to say, here is the next best thing – O’Toole’s presentation is online at Youtube below:

Categories
Transportation

Scale Back Train to Fix Highways

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The state faces “a perfect storm” as far as paying for transportation infrastructure is concerned, according to several lawmakers interviewed for a recent Journal story on funding.

With that in mind, it only makes sense for the state to divert scarce transportation dollars from the proposed Rail Runner extension to Santa Fe and plow those dollars into road construction and maintenance.

While such a move is not a panacea, it is a very important starting point and will determine whether New Mexico is serious about avoiding the type of incident that occurred when a bridge collapsed in Minnesota.

One overlooked point about the Rail Runner is that while its projected total cost is $400 million, those costs are not evenly-distributed. Phase I of the project from Belen to Bernalillo, which is now in service, cost $135 million. The Bernalillo-Belen segment of the proposed Rail Runner route is approximately 51 miles long— more than half of the system’s proposed length— and comprises just one-third of the project’s cost in part since the track was already in place.

Phase II from Bernalillo to Santa Fe is where the Rail Runner’s costs rise quickly and for a relatively small gain in potential passengers. Original estimates for Phase II were between $240 and $255 million which includes money for the construction of 20 miles of brand new railroad track. Laying new track can only be considered a major public works project and $255 million must be considered merely a starting point, especially with material costs on the rise.

While the costs of running the train another 40-plus miles will cost more than $100 million higher than the existing route, the net gain for such expenditures will be quite small. With the current route serving a population base in excess of 700,000 and the extension to Santa Fe to serve a base of only 80,000 people, it seems highly unlikely that extending the system to Santa Fe will do much to boost current ridership far beyond the 2,000 or so daily riders the system currently attracts.

There is no doubt that even an abbreviated version of the Rail Runner will still lose money over and above the $135 million it took to build the first phase. In fact, the estimates that annual operating costs for the train will rise from $9.5 million to $20 million— on top of the $255 million necessary to compete the project.

Considering those costs, it makes sense to reconsider the Santa Fe extension.

A permanent network of buses running between the government buildings in Santa Fe and the Bernalillo Rail Runner stop and/or Downtown is a logical alternative. Buses are far less costly and far more flexible than rail. And, with increased coordination of stop lights in and out of Santa Fe, buses may actually be faster than the train as well.

While saving hundreds of millions of dollars on the Rail Runner would be helpful, such a move will not solve our long-term transportation problems. In order to do that we need both more resources and lower costs.

The transportation task force now working on the transportation funding issue has discussed toll roads and how they might be used. There is a right way and a wrong way to use tolling. The wrong way is to set up government tolling authorities as was done along the Eastern Seaboard. Anyone who has traveled by car between Boston and Washington, D.C., can attest to long lines and poorly-maintained roads that can also be quite expensive.

The right way to do tolling is to work with private firms that build and maintain toll roads as an investment. Roads constructed in Southern California and elsewhere rely on innovative technology to eliminate toll booths while maintenance and landscaping standards exceed those of other roads.

Lastly, while the task force has not considered it yet, any effort to improve New Mexico infrastructure should include a close look at repeal of our Little Davis-Bacon Act. These “prevailing wage” laws drive construction costs up as much as 10-15 percent. Repeal of this law in New Mexico would allow the market, not the unions, to set construction costs.

Maintaining and improving New Mexico’s infrastructure is very important to the state’s economy. While no single solution will solve our problems, implementing the solutions listed above would be a good start.

The Rio Grande Foundation is a nonpartisan, tax-exempt research and educational organization dedicated to principles of limited government, economic freedom and individual responsibility.

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RailRunner Transportation

Reports of Rail Runner’s success greatly exaggerated

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Gov. Bill Richardson has been touring New Mexico touting the “success” of the taxpayer-financed Rail Runner commuter train. Recently, he has promoted the idea of transforming the train from a regional, commuter rail system operating between Santa Fe and the southern suburbs of Albuquerque to one that bisects the state traveling through Las Cruces on to El Paso and keeps going far beyond Santa Fe all the way to Denver.

Ambitious goals indeed, but they are founded on the assumption on the part of Richardson and other policymakers that the Rail Runner is a “success.” The problem arises in defining what success should look like.

In financial terms, it would be extremely hard to say the train is successful. After all, the infrastructure needed just to set the current 100 mile system up from Belen to Santa Fe cost average taxpayers, whether they use it or not, $400 million. This is a sunk cost that will never be paid back. That’s because the system operates at a significant and growing loss.

As the Rio Grande Foundation points out in a new study, “Red Ink Express,” according to information obtained from the managers of the Rail Runner, from the first date of service in July 2006 through May 31, 2009, the average daily “ridership” on the train was a mere 2,539. That number shrinks even further when its meaning is clarified. The Rail Runner’s “ridership” is calculated based on each individual boarding. That means a roundtrip commuter to Santa Fe from Albuquerque is counted twice, since they get on the train coming and going. The actual average number of daily commuters using the Rail Runner for its three years of operations is just under 1,270.

In addition, its annual operating and maintenance deficit is exploding. The data received from the Rail Runner’s management show that in 2006, the train’s first year of operation the operating deficit was $7.8 million. Its operating deficit last year was $10.8 million. Its operating losses for its third year of operation to May 31, 2009, already exceeded $13.4 million. That is a total of $32 million in operating losses so far.

This means that the taxpayer subsidy per commuter has also been increasing as the Rail Runner produces ever higher operating and maintenance costs far in excess of the fares it charges. The subsidy has grown from $6,128 per commuter in its first year to more than $10,500 this past year.

Taxpayers are effectively paying a select few to ride the rails instead of a taking a bus or driving. At the average daily ridership of 2,539, taxpayers were kicking in $16.89 per ride during the past year.

Considering that the trip from Las Cruces to Belen — the current southern terminus of the Rail Runner — is 191 miles, nearly twice the system’s current length, and that the proposed Raton to Santa Fe leg is an additional 176 miles, such an expansion of train service would cost an additional $1.5 billion just to construct. Since the prospective Rail Runner service areas are far more sparsely populated than the current service area, operating losses would likely exceed $50 million annually. These costs would, of course, be financed by New Mexico taxpayers, whether they ride the train or not.

The fact is that New Mexico faces a $300 million budget shortfall for the coming fiscal year. We could really have used the $400 million that was spent to build the Rail Runner right now, but we are beyond that point. With money scarce and the economy still in bad shape, it would seem that we should do the wise thing when one finds oneself in a hole: stop digging.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

Categories
RailRunner Transportation

Red Ink Express: Rising Losses and Low Ridership Show Rail Runner is an Increasingly Bad Deal for Taxpayers

The Rail Runner’s losses are mounting and its relatively low ridership makes it an incredibly inefficient mass transit system. Information obtained by the Rio Grande Foundation through a public records request shows the Rail Runner is proving to be the grossly expensive, low benefit waste of money critics predicted.

According to information obtained from the managers of the Rail Runner, from the first date of service in July 2006 through May 31, 2009, the average daily “ridership” on the train was a mere 2,539. That number shrinks even further when its meaning is clarified. The Rail Runner’s “ridership” is calculated based on each individual boarding. That means a roundtrip commuter to Santa Fe from Albuquerque is counted twice, since they get on the train coming and going. The actual average number of daily commuters using the Rail Runner for its three years of operations is just under 1,270.

The Rail Runner cost $400 million to get rolling. That start-up investment will never be recovered through the fares charged passengers. In addition, its annual operating and maintenance deficit is exploding. The data received from the Rail Runner’s management show that in 2006, the train’s first year of operation the operating deficit was $7.8 million. Its operating deficit last year was $10.8 million. Its operating losses for its third year of operation to May 31, 2009, already exceeded $13.4 million. That is a total of $32 million in operating losses so far.

This means that the taxpayer subsidy per commuter has also been increasing as the Rail Runner produces ever higher operating and maintenance costs far in excess of the fares it charges. The subsidy has grown from $6,128 per commuter in its first year to over $10,500 this past year.

Taxpayers are effectively paying a select few to ride the rails instead of a taking a bus or driving. At the average daily ridership of 2,539, taxpayers were kicking in $16.89 per ride during the past year.

Governor Richardson recently announced that since the Rail Runner added Santa Fe service, its daily ridership has grown to 4,700, which equals 2,350 commuters a day. This is still less than half the number of passengers who daily use Albuquerque’s Rapid Ride Central Avenue buses. It pales in comparison to the number of people moving along the Rio Grande Corridor every day. And, compared to Albuquerque’s overall mass transit system, the Rail Runner looks as expensive and exclusive as the Orient Express.

Over the past twelve months, more than 10 million rides were provided by the city’s buses. And Albuquerque’s entire transit department operating budget (which includes the purchase of buses) is only about a tenth of the $400 million it cost to build the Rail Runner and purchase the engines and cars. And while it carries more than ten times as many passengers as the Rail Runner, the city’s transit department budget is less than three times what taxpayers lose each year in keeping the Rail Runner on the tracks.

Even based on the new, higher ridership numbers, the Rail Runner will underperform and cost far more per passenger than buses. Rail Runner ridership is growing, but its losses are growing, too. The Albuquerque bus system is also experiencing growth in ridership but without the same sort of soaring deficits being suffered at the Rail Runner. The experience of both systems during the coming twelve months will show whether the Rail Runner was as bad a deal for taxpayers as predicted, or an even worse boondoggle than anyone had expected.

Categories
Transportation

RGF President Paul Gessing Responds to Richardson, Udall Request for High-Speed Rail Study

The Rio Grande Foundation recently published a study explaining why President Obama’s plans for “high speed rail” would leave New Mexico taxpayers paying the bills for a system from which they will not benefit. In response to this study and a press conference being held by Governor Richardson and Sen. Udall, Channel 4 interviewed Gessing for this story in which I got to outline the many drawbacks of the proposal.

Categories
ART Transportation

Voters Won’t Board Streetcar II

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Back in 2006, the Rio Grande Foundation was one of the leading opponents of the original streetcar. Since then, the issue has been “below the radar screen,” still on the agenda of many policymakers, but lacking the momentum to move forward due to public opposition. So, it was with great interest that I read J.W. Madison’s article on these pages in which he laid out the case for a scaled-back “Streetcar II.”

Rather than laying out a clear and compelling case for the streetcar, the author makes a series of points without citing where the data come from or how the supposedly positive traits associated with rail transit will manifest themselves here in Albuquerque. His initial point about the relative efficiency of buses and train travel is indicative of this problem. He states that trains are three times as efficient as buses, but fails to back this assertion up with any citation or data.

With a few Internet searches, I found this from transportation analyst Randal O’Toole, “U.S. data show that buses consume about the same energy, per passenger mile, as SUVs. Buses and SUVs use about a quarter more energy than cars, which are about the same as light rail.” So, the streetcar would be about as energy efficient as an automobile per passenger mile. That last phrase is the key because a fully-loaded train is indeed very efficient, but trains are almost never full outside of peak hours. Worse, when transportation analysts say “full,” it means that you are cheek to jowl with your fellow passenger and standing, not just that every seat is occupied.

Without going through each of Madison’s points, each of which could be attacked individually with greater space, his concluding point that rail transit returns $4 to $8 for every dollar spent seems dubious at best. There is no mention of how this number is derived or justified, simply an assertion. According to the U.S. Department of Transportation, for every thousand passenger miles, transit receives $118 in subsidy while highways actually subsidize other modes to the tune of negative $2. In other words, highway users pay more than they get back through gas taxes, vehicle registrations, etc. If transit returns $4 to $8 for every dollar spent, it would seem that $1 spent on a highway returns an exponentially greater amount.

The fact is that Albuquerque’s bus system, which is based on “express” Rapid Ride buses operating on a few major arteries and “local” buses in other areas of town, serves the community quite well and at a cost that is several times lower than the proposed streetcar ever could, even in a limited area. An expensive new streetcar could jeopardize this system, not complement it.

Los Angeles found this out the hard way in the late 1990s. That is when the city was sued by the NAACP and a coalition of bus riders, angry that expensive light rail projects were eating up scarce resources and causing the city to cut back on bus routes. The same thing could easily occur in Albuquerque as resources would have to be shifted and taxes would be raised in order to fund the construction and operation of a rail project benefitting one small area of town.

Ultimately (and unfortunately), for many people, rail is no longer just a method of moving people from one place to the other. Instead, advocates assert it will solve our environmental problems by being green, renew our city centers, make us thinner by encouraging us to walk more, and improve our moods by eliminating traffic. Given these outsized expectations, it is no wonder that such projects don’t live up to expectations.

Trains are indeed useful. For example, they move thousands of tons of freight every day in this country. But all modes of transportation should be judged based on an open and realistic cost-benefit analysis, not unrealistic expectations. Most citizens knew that the streetcar was not a good idea back in 2006. I believe voters are smart enough not to fall for the unrealistic promises made by a few train buffs.

Paul Gessing is president of New Mexico’s Rio Grande Foundation, a non-partisan, tax-exempt research and educational organization dedicated to principles of limited government, economic freedom and individual responsibility.