I am, in general, a supporter of public transit, and I have, in general, supported Metro-sponsored transit sales taxes before. Measure M is making me crazy. I moderated a terrific panel at USC yesterday with a public finance expert, Mark Phillips, a political scientist, Jeff Sellers, a representative from Metro to make sure we got the agency intel, Stephanie Wiggins, and Executive Director of the Crenshaw Subway Coalition, Damien Goodmon. They were terrific, and I will post the link to the session when it’s online.
So what is Measure M? Here’s is Metro’s informational page on it., where you see how they split the money by mode, what the planned projects are, the increment the tax will cost (about $25 per household). My problems:
1) $25 per household is misleading, and how much wage increase did people get to cover that last year?
2) Too much rail in dumb spots and underfunding/delaying good rail projects for political concessions
3) Deadweight losses at 10 percent are about 4 times the out-of-pocket costs of the tax, and again, wage growth versus housing cost growth; and
4) This is the last increment we are likely to get any time soon…is this how we want to use that increment?
5) I’d really like an answer on the Neighborhood Integrity Initiative before we commit these funds.
6) Metro will be back if this one fails, no matter what they say.
Edited to note: Twitter smarties Erik Griswold @erikgriswold and John Llyod (@boyonabike62)note that Measure M funding can’t go to the Ontario airport LRT as it is out of county. Dang it, and I was having fun mocking it. But that does not help with me with my Vermont grump. I should note that I think LRT is overemphasized in the project list more generally, but that itself wouldn’t get me to vote no. My big one is the NII one.
1)….about that $25 per household
$25 dollars per household, no big deal, right? But let’s keep in mind that’s on top of the existing percentage, which is high. Because California’s sales tax laws are pretty well-crafted, our resident tax economist Mark Philips estimated for the panel that about a third of income is spent on items subject to the tax, so we are, with this measure, essentially taking a total of 10 percent of that third. If I am right there, that’s a decent chunk, and yes, we are already paying the prior 9 pennies/dollar, but Measure R *was* going to sunset, which gives some of it back to us…but not if Measure M passes. That makes R permanent for all practical purposes , and the Measure M hike will be permanent. It is a big increase dressed up like a small increase, and while sales taxes are paid a little at time, it’s already costly to live in Southern California without digging into everybody’s pockets even more.
Just about all the evidence from the empirical research on sales taxes shows them to be shifted onto consumers.
I’d just like to see another couple years of strong regional wage growth before I think we should take another increment of it.
2) LRT where BRT should be, BRT where LRT should be
That said, it might be worth it if we loved the projects, and there are some very good projects on the list.
There are, however, also places that show planning by politics, and while planning is always political, it’s possible that the sausage-making process winds up creating stinkers now and then that should be sent back to the drawing board. Political science faculty \ Jeff Sellers served on the panel, and he pointed out that politically forged project lists at the ballot box may, or may not, reflect good mobility priorities. Everybody hates pork, but pork is the grease that spins the wheels. It’s interesting to me that pork has moved to the regional level now that at the federal level all the discretionary money gets programmed so fast. That said, there is smart pork and dumb pork, and then there is who is given prunes so that others can have pork.** I’m unhappy with one of the prunes, in particular.
Fabulous panelist Damien Goodmon, Executive Director of the Crenshaw Subway Coalition, noted one of the worst (this is so bad, even Metro’s wonderful reps did not have much to say on it.) A dedicated BRT on Vermont is not a real solution. Vermont is one of the most congested corridors near LA’s downtown, and USC is either the largest or the second largest employer in LA County. Yes, it’s already served by the Expo Line, but it would be nice to have a stop somewhere along the northwest side of campus, too, where travelers coming from the westside on the purple line could transfer at Wilshire and Vermont. But with LRT on Vermont, you get both the close-to-DTLA bump, the big employer bump, and the connectivity to exisitng lines bump (Purple Line and Exp Line).
But no, a BRT in the project.
However, that bustling hub of regional importance, the Ontario airport, has an LRT project tucked in. Now, I thought we were doing all these infill projects to avoid sprawl, and LRT out in Ontario strikes me as an obvious way of boosting a regional center way out on the suburban fringe, which strikes me as sprawl-inducing of the first order. (oh noes, rail never causes sprawl! Except when it does.) In fairness, the LAX expansion plans have generally included upping the traffic out of other regional airports, including Ontario. But: didn’t we just promise ourselves the shiny high speed rail system so that we didn’t have to boost all that air travel? Ok, I know: it’s possible we could use both. But that’s one problem of planning spread across fragmented political jurisdictions. CAHSRA can promise one set of things while LAX and Ontario pursue another set of things, and while statewide transportation plans are required, they aren’t really binding and nobody really pays attention to them when there is money on the table.
BRT shouldn’t be used as a political sot. It should be used where semi-rapid transit would be a nice idea. I do think you can get really good operating improvements with it. But not on corridors already so congested that the dedicated lane is going to clutter with drivers tempted to jump in. And beyond that, the “having it both ways with BRT” transit advocacy. When transit advocates want rail, BRT gets downplayed and problematized as “only semirapid” transit, but well, it’s good enough for the people along Vermont. It’s not good enough for West Hollywood, but it’s good enough along Vermont. It would be somewhat of an improvement. But not enough; like Wilshire, Vermont is an obvious rail corridor south at least to Expo under current conditions. It would probably work nicely south of Expo, too, buy much of the commercial density is north of that. That said, building south of Expo might be a chance to boost up some of the commercial activity for south LA. So LRT is absolutely vital and the best and worth every penny when it comes to voter-rich suburbs, but BRT is a “viable improvement” in the actual urban core of the region.
3) ….about that $25, it doesn’t count the deadweight loss associated with going up to 10 percent, which is a big threshold in the empirical literature on sales taxes
Deadweight losses occur because a tax stops people from doing something they might have done had there been no tax. Mark Phillips has a great example he shared with me from his class: if we tax move tickets so high nobody goes to the movies anymore, nobody would be out any money, but people will probably miss going to the movies. That second is the deadweight loss.
The empirical evidence on deadweight losses suggest they grow, in an nonlinear way, as the tax rate gets higher. When Prop A and C were passed, we were at a lower threshold overall rate. At 10 percent, we are generally talking about deadweight losses at about 4 times the amount of out-of-pocket costs (again, quoting Dr. Phillips, but that jibes with what I’ve read.)
Now, with good, strong wage growth, this effect may not dominate. But it would be nice to see a stronger showing there, esp vis-a-vis housing cost inflation in the region. Alternatively, we could try to tell ourselves that this wonderful set of plans in Measure M would make it so that people could ditch their cars and that would be a big, big savings. That is a very sound argument, and I am generally sympathetic to it, except for the futureness of the car savings and the presentness of the costs to LA residents. Give me another couple years of good regional growth, and I would feel better about the nowness of the cost stream.
4) Because of #3, I think this is the last increment on the local option sales tax that we are going to get, and do we really want to use it this way?
Not on our schools, not on an earthquake rebuilding fund…not on any of those things? I actually don’t know that I would rather use it for something else. It’s just got me a little worried.
5) I’d really like an answer on the Neighborhood Integrity Initiative before we commit these funds.
This is not Metro’s fault. They try to place these measures during presidential election years because those years give us good voter turn-out, and that’s worked to Metro’s favor in general. I get it, I do.
But NII ballot-hopped to the March ballot, and damn it, regardless of what its proponents say it will do, it is unpredictable whether it will pass, and if it does, what it will do. As I have noted, supply-side housing people say that the NII will stop development and worsen housing supply constraints, thereby worsening LA’s affordability crisis. I believe them. NII proponents say that will not happen; they say it will just prevent developers (not naming any names here, but his name rhymes with Effry Almer) from putting up monstrosities. They don’t want to stop housing; they just want to stop behemoths from being planted on them. Who to believe? Both. (It’s possible, btw, that if the NII succeeds, it will make the westside unavailable for development so that the money people will have to start looking at places along the Blue Line, for instance. That wouldn’t be terrible.)
Anyway, to the degree that the NII might delay land use changes even more in LA, it’s a problem looming on the horizon for Metro. What Measure M does is increase transit supply. That’s a good thing…but only if there is demand, and the NII could well make it hard to redistribute housing geographically in the region to support transit. That means, if both Measure M and NII pass, we would be committing billions to supplying a system permanently hamstrung on the demand side.
I’d be a lot easier in my mind voting on M if I knew for sure the NII had failed, or, if it passes, how it was functioning in practice in LA development.
6) Metro will be back if this fails this time out, no matter what they say.
Phil Washington, Metro CEO, has said Metro won’t be doing this again if this doesn’t pass. #blesshisheart. It’s a hassle for Metro, and I get why he’d see things that way: it’s an expensive, time-consuming process to keep doing these project lists and negotiations.
However, Mr. Washington will ride off into the sunset in a few years. Like all public managers of high profile agencies, he will pass as they all pass. In Mr. Washington’s case, I suspect his will be to another high-ranking, plum position because he seems good at his job. But he, as all others before, will not be CEO forever. And with billions out there in the LA County tax base, Metro will come back if this one fails. It would be silly of them not to.
Then I would have my answer on NII, and I would know what regional growth is shaping up to.
I honestly do not know how I am voting on this one. I’m sad, too, because normally I can count on myself to say yes on these things.
*I should note that I vastly prefer prunes to pork, but I don’t think most people do.