According to a Denver Post article, RTD (mass transit entity for the Denver, CO area) may be unable to build a number of lines it proposed back in 2004 as a part of FasTracks. A study was conducted by BBC Research & Consulting, and was prepared for the North Area Transportation Alliance. The group was formed in response to announcements in the past couple of years that the taxes passed by Denver metro-area voters back in 2004 wouldn’t cover the cost of all the planned light-rail and bus lines.
Commodity prices skyrocketed in the years after 2004 – that certainly didn’t help the plans laid out during good economic times. But what is really threatening the plan is the Great Recession. Tax receipts have tanked in the past two years. The 0.4% tax passed remains in effect, but is producing considerably less money because people simply aren’t spending. Those that hate everything government does and stands for have wasted no time in attacking RTD in the Post article’s comment section.
I’m sympathetic to the very large set of hurdles the FasTracks and RTD is facing. I think the system is good, but not perfect. I like light-rail; I like the idea of high frequency bus service. But the article shares the following view that I think deserves attention:
“Simply stated, and now repeatedly stated by others, RTD needs to contemplate and discuss Plan B, and perhaps Plan C and Plan D,” said Ford Frick, BBC’s managing director, in the report. “If revenues fall short, or costs rise, what’s the plan? At what point will it be triggered?”
I agree with this assessment. RTD has lined up three pathways to get all the lines built on time and close to originally advertised. If one of the three falls through, what happens to the project? Which lines get the axe? Which lines get reduced service? Are most contingencies well planned for or not? Because I know a large number of north metro-area folks are going to be very upset if we’ve been taxed to pay for lines that we’ll rarely, if ever, use. Opening two or three lines by 2017 and having the remainder wait until 2034, as proposed earlier this year, isn’t a viable solution. Perhaps asking voters to increase the tax from 0.4% to 0.8% is, but in this economic environment, it faces strong headwinds. I maintain that those two solutions aren’t and shouldn’t be the only two available. But whatever the solution set looks like, RTD needs to be more aggressive to engage the public. Communication looks to be stagnant or intermittent. The apparent lack of fall-backs doesn’t engender confidence that RTD will be able to handle further shifts in the picture.
When I wrote about FasTracks’ financial difficulties last week, I wasn’t expecting the story to stay in the headlines the way it has. I suppose it was inevitable: a $2.2 billion shortfall is nothing to sneeze at and something has to be done sooner rather than later if the entire project is to continue as originally envisioned.
The longer this story goes, the more parallels to similar stories become apparent.
First, here are the facts from the Post story. A majority of the Metro Mayors Caucus voted to ask voters this year for a second 0.4% sales tax increase in order to make up for the shortfall that is the result of bad economic forecasts and even worse economic conditions.
The commitment from the Metro Mayors Caucus is perceived as necessary so RTD can present a unified position to the federal government when they seek additional funds to help pay for the project. Without that commitment, those funds could be shifted elsewhere and FasTracks would have more financial distress. The mayors’ acted yesterday because they want to see the entire project finished by 2017.
A large, looming question is whether such a sales tax could pass in this economic environment. To that, I’ve answered that if a campaign is properly run (a big if, I know), I think voters will continue their support of the project. An easy point to make is that if the tax isn’t passed, a number of transit lines won’t be finished until 2034, if at all: 3 FasTracks lines would be finished by 2017 and the remainder might be started afterward.
Here is a second easy point to make: another option is to shorten all the lines. That makes no sense either. Why would a line go to Stapleton and not DIA? Why would a line go to Westminster and not Boulder? I think those arguments could be presented in such a way that a majority of voters would see the imperative of finishing FasTracks as it was originally proposed.
Okay, onto the part of the article that I was fully expecting to read.
The prospect of a vote reinvigorated FasTracks opponents.
Independence Institute president Jon Caldara, a longtime critic, said backing another tax increase would “reward RTD for lying to us and deceiving us” before the 2004 vote on the original FasTracks tax.
I will mince no words: Jon Caldara is one of the most disingenuous pundits out there. Caldara lies and makes stuff up every chance he gets as long as it advances his ideology. Caldara issues a number of lies here. Backing another increase would in no way reward RTD for anything approaching lies. RTD relied on a variety of economic forecasts when they were drawing up the plans for FasTracks.
While I might agree with Caldara that the economic forecasts were probably too rosy, Caldara fails to call out the correct culprit. Caldara perpetrates what I’ve come to call the Economists’ Infallibility Syndrome. People suffering from this syndrome find themselves unable to hold economists accountable for their forecasts. They instead direct their energy to non-responsible parties when those forecasts bust. In Caldara’s case, he attacks the only thing his extremist ideology allows him to attack: any entity that receives tax dollars. In Caldara’s warped worldview, RTD apparently knew this recession was going to happen and decided to try to bilk the taxpayers anyway. It makes for a cute bumper sticker, Jon, but it doesn’t work in the real world.
This misguided criticism reminds me of the Jon Stewart – Jim Cramer story (which I totally love, btw). Cramer, just like Caldara, has totally missed the point of Jon’s original piece. The vast majority of players in the financial industry didn’t have any idea that their sector was about to crater. Some of us argue that they should have. More of us are arguing that given their horrible track record, little confidence can now be placed in their opinions today.
The article does contain a worthy response, the first part of which did not appear in the print version of the Post:
In response, RTD spokesman Scott Reed said, “Jon is concocting a statewide conspiracy that would have included the Office of State Planning and Budgeting, the Colorado Legislative Council, the Denver Regional Council of Governments and two different highly-respected financial firms.”
“All of the RTD estimates were based upon their collective work,” Reed said. “The financial plans were public and there was no upside for RTD to over-estimate finances or low-ball costs.”
Whether it’s RTD or climate change, Jon Caldara and his ilk are fond of concocting grand conspiracies which could not and cannot possibly exist. The obvious question is why the Denver Post continues to use nut cases for quotes and present them to the public as serious people. Such is the extent of the mis-named “Independence Institute”. Independence from rational thought, perhaps, but nothing more.
So to sum up, I’m glad the Metro Mayors Caucus has decided on a course of action. The next step is for the RTD board of directors to approve a tax increase ballot measure. In the meantime, there is no time to waste working to build support for such a request. The sooner the public is educated, the more likely I think the increase will be approved. Support must start high now because we know it will taper off as election day draws near.
Aurora’s mayor has publicly put forth a 3rd option to the current FasTracks funding problems. This was exactly what I was talking about in my post about the Denver Post’s Gatekeepers approach: lots of complaints, no solutions. The original reporting about the funding problems offered only two solutions: build 3 lines to their original completion by 2017 and drop the remainder of the lines (and possibly finish them in 2034) or ask voters for additional funding to complete all the lines by 2017. Ed Tauer has put forward a 3rd option (and there are others that are obvious): introduce a slight delay to the Gold, West and DIA (East) lines of about one year while asking voters this November for additional tax money to finish the entire set of lines as originally designed. The reasoning is actually pretty strong: what incentive do voters along the Gold, West and DIA lines have to tax themselves further for the remainder of the system when their lines are already nearly guaranteed to be finished on time?
As community-oriented as I am, I was kind of put off by this reasoning at first. But as I thought more about it, I realized that Tauer has a point here. As much as I want to think that voters approved the original tax in 2004 because it would build out a transit system, it’s likely that many voters thought only of the line that would service their community. From this vantage point, I am inclined to agree with Mr. Tauer that perhaps a more realistic approach would be to introduce a slight delay to more or less force an incentive on some folks.
This Post article does a good job of correctly identifying the culprit: falling tax revenues. It’s something, if you read some of the comments below the article, that some people just don’t want to understand. They somehow think that RTD managers are deciding not to wave their magic money wands, and thus they must be removed! This scenario actually plays into my pet peeve that economists are infallible but the weatherman can’t forecast a thing. RTD based their estimates off of a 4.4% decline in sales tax revenues from 2008 levels. So far in January of 2009, those revenues are down 13% from Jan. 2008. Yet who gets the majority of the blame – the economists or RTD? The Infallibility Syndrome marches forward.
The current estimated shortfall to operate the system for the next 8 years comes up to $6.9 billion. With current tax receipt levels, only $4.7 billion is expected to be generated. All the management in the world isn’t going to alter area residents’ spending habits in this economy. Did the economy in 2004 lend confidence to voters that an ambitious project like FasTracks would be straightforward to fund and build? It probably did. Will the economy in 2009 take away confidence from voters that FasTracks should receive additional funding? That’s the answer nobody knows right now.
The fact that isn’t in dispute is the metro area needs alternative methods of transportation such as mass transit. Our roads are congested and falling apart. Our environment is incredibly stressed by the greenhouse gas emissions and other pollution from our over-reliance on gas-powered vehicles. The Denver area is far behind the mass transit curve. FasTracks won’t solve all our problems, but it’s a decent next step, I think. I don’t think Mayor Tauer’s proposal is the best possible solution. But it is another potential solution – one that should continue the conversation of what to do to fix the problems the entire area faces. I don’t see three complete lines as an acceptable addition to our current transportation system. All the FasTracks lines should be completed in the shortest amount of time possible.
There will be a meeting on Wednesday for the entire 38-member metro-area mayoral caucus. There has to be a viable solution in between the two extremes proposed prior to this. I look forward to hearing what solutions were discussed and what the eventual choice will be.
FasTracks, the multi-billion dollar mass-transit project that Denver metro area voters approved back in 2004 is losing the support of some mayors if certain conditions aren’t met.
The second problem is the more recent lack of sales-tax revenues thanks to the deepening recession the Cons caused. The lack of revenues means that RTD will have a budget gap to operate its system even if the $2.2 billion difference is solved.
The meat of the Post piece is about recent parting of opinion by some metro-area mayors. While I’ve characterized the Post’s coverage of most material as searching for the he-said, she-said kind of stories (and as the Rep. Polis – Rocky article showed, they like to manufacture controversy), I think their coverage on this issue is closer to the truth. Broomfield’s and Aurora’s mayors, among others, are justifiably frustrated that planned lines to their communities may be placed second-in-line to have their portions of FasTracks finished.
RTD’s most recent proposal calls for the Northwest, the North Metro and the I-225 lines to be reduced in either of two different ways. The tracks would be halved from two to one along most of the route (it looks to me like the entire route still wouldn’t be finished) or the routes could wait until 2017 for a new measure to be passed, under which they would be completed in 2034. That second solution isn’t a solution at all, in my opinion. The metro area cannot afford to wait until 2034 to have a mostly functional transit system. After all, how many more people would live in the region in 25 more years? Whatever is in FasTracks now would be unable to handle that growth, I’m afraid.
So RTD is asking the caucus of mayors to put their support behind the DIA and the Gold lines. RTD is expecting $1 billion in federal money and private construction/operation that will bring another $1 billion to the projects.
I can certainly understand the lack of enthusiasm that some mayors would have in putting their support behind lines that wouldn’t support their communities. In one way, it certainly is selfish of them. But they worked in their communities to pass the overall project with the idea that they would receive mass transit in areas they were elected to represent. Broomfield Mayor Pat Quinn was quoted as saying,
If money cannot be found to close the $2.2 billion FasTracks funding gap, Quinn said, “we want all corridors to share the deficit.”
I can see his point. FasTracks was presented as a group of transit lines. Why should some of the lines be completed on-time, while other lines capabilities’ are scaled back dramatically?
One solution would of course be to go back to the voters and ask them to support additional tax money to finish the projects as originally planned. Is that guaranteed to work? Of course not. In this economic environment, nothing is guaranteed. However, with President Obama demonstrating leadership at the national scale on pushing transit systems, voters might understand the situation – they’re affected by the downturn as much as RTD is.
What is lacking is what the mayors were elected for: leadership. If they want the lines so bad, they should be banding together to put something before the voters following an intensive education campaign. If presented correctly, I would imagine voters would approve additional money by as large a margin as they approved the original plan. Left unsaid so far is the ridiculous run-up in gas prices last year. People shifted their driving habits in the midst of $4 gas. I think most people realize gas has a higher chance of going back up to that price than remaining where it is. If it happens again this summer, I think voters would approve quite a bit of money to get some relief in the future.
Look, I know mayors have more than enough on their plates right now. But in times of hardship, we need more than ever people who can stand up to the occasion. This is one area where that can happen. Expecting the feds to bail them out of their problem isn’t doing anybody any good. I’m also a resident along what would be the Northwest line. I want additional mass transit up the US-36 corridor. I want additional choices to get to work and into Denver and I’m willing to pay a little more to do it.
The same speculation that has pushed oil prices high are pushing other commodity prices up: corn, wheat, steel, concrete, copper, and labor. As a result, the most ambitious (currently) mass transportation construction project, FasTracks, is going to be more expensive to implement than when it was approved to be financed by voters in Colorado in 2004.
The initial estimate delivered to voters for the West Corridor was for $511.8 million, not a small sum, to be sure. The first readjustment increased the price tag to $634.7 million. The most current auditing found that the cost has increased again to $707.6 million. In order to compensate, RTD is reducing some of the amenities that were in the original design. The functionality of the system will not be affected. All FasTracks Corridors are scheduled to be open in 2016.
As unfortunate as it is, this scenario shouldn’t come as any large surprise. Everybody is paying more for the items they buy, from gas to groceries to airline tickets. Entities like RTD and businesses have to increase prices for goods to pay for the increases in raw materials they face.
