Starving from The Road Diet, Gorging on Mass Transit

Starving from The Road Diet, Gorging on Mass Transit

Caltrain, a commuter rail in the San Francisco Peninsula, has announced a grandiose plan that would remake, says The Mercury News, “a once-sleepy suburban line into a truly urban transit system.”

“Caltrain’s vision contemplates BART-like ‘show-up and go’ service, whisking passengers from San Francisco to Gilroy on trains that run at least every 15 minutes all day long.”

The plan was unveiled in late July at a town hall event. There will more public meetings, says The Mercury News, “before the agency’s governing board officially adopts the plan.”

According to Laura Tolkoff, a policy director with SPUR, the San Francisco Bay Area Planning and Urban Research Association, the expansion “would really move Caltrain from an infrequent, ephemeral, commuter-focused service to an outstanding transit system that serves many different people for many different kinds of trips.”

The aim is to provide transportation that will keep up with the job growth forecasts in the region. Caltrain Policy Director Sebastian Petty has said the rail line believes “we’re looking at a lot of potential riders in the future.”

But there will of course be costs. Caltrain told the media that to reach this lofty goal, it will need “$90 million per year in operating subsidies, in addition to state funds and revenue from fares.” It already takes in $22 million a year from San Francisco, San Mateo, and Santa Clara counties because revenue from fares covers less than 70% of its operating costs.

It’s unclear where the funds will come from. But it’s possible planners are hoping to tap into a proposed $100 billion “mega tax increase” that supporters imagine will pay for “a truly regional transit system that would seamlessly connect the Bay Area’s network of rails, buses and ferries,” says David Kersten, president of the Kersten Institute for Governance and Public Policy.

Call it the there’s-more-where-that-came-from pot of money. California history, says Kersten, shows that “successful tax hikes beget higher and higher tax hikes, and still ‘bolder and bolder’ tax proposals that will continue to increase the already exorbitant cost of living and doing business in the state.”

What is clear, though, is that those involved are convinced they’ve come up with a visionary plan. CEO Jim Hartnett says this is a “very exciting time for Caltrain,” a “transformational moment,” and a “foundational step in the realization of a larger future for Caltrain.” But if expanding Caltrain service is such a good idea, why does it need to be subsidized by taxpayers? Solid business plans don’t require dollars from the public fisc. They attract investors who see an opportunity to make a profit.

Public subsidies are the enemy of innovation. They’re not capital from which investors demand a return, but a tax that leaves fewer resources available for genuine investment. Subsidies “end up,” says Mercatus senior research fellow Veronique de Rugy, “distorting economic activity and generating failures of their own.”

Not every business plan that relies on private investment will succeed, of course. But in the case of failure, the losses are limited to only those who voluntarily invested their capital. Taxpayers, however, have no choice but to let politicians take their money.

As is almost always the case when money is being sought from taxpayers to fund projects, Caltrain planners argue the subsidies will more than pay for themselves. According to Trains:

Hartnett said Caltrain has been critical to the success of Silicon Valley’s economy and the plan would more than pay back the money raised to fund it by even more economic activity. The plan estimates the improved service would produce $40.8 billion in economic impact on the Peninsula and would add between $25 billion and $37 billion in value to residential and commercial property within a mile of its 28 stations outside San Francisco.

But transportation expert Randal O’Toole says the promises tend not to materialize:

While some studies have found that heavily used transit lines can influence property values, research published by the Federal Transit Administration has shown that this is a zero-sum game: Higher property values in one part of a city are balanced by lower values elsewhere.

Not only does transit not promote overall economic growth, the high taxes required to subsidize transit may actually slow growth down. Data from more than 300 urban areas show that the regions that grew fastest in the 2000s were ones that had spent the least on transit in the 1990s, while the regions that spent the most on transit in the 1990s were among those that grew the slowest in the 2000s.

While we can appreciate the need to improve transportation in a growing corridor, the Caltrain plans look more like another instalment in the state’s effort to force California drivers out of their cars and into mass transportation than it does a legitimate response to consumer demand. Its uncomfortable similarity to the high-speed rail boondoggle goes beyond its express service, which just happens to be called the Baby Bullet.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.