Post on 19-Dec-2015
transcript
Decision Makingand Finance
Mark Hallenbeck
Director
Washington State Transportation Center (TRAC)
Decision Making
• All public sector transportation decisions are political
– Any decision that involves public funds is political
– Also note: the world moves as a result of decisions, not as the result of analysis or plans
The Ideal Planning Process• A rational and analytical approach
– Make goals / objectives– Determine alternatives– Mathematical analysis ranks alternatives– “Best” alternative is selected
• Producing near term projects taken from long term plans that achieve long range goals
The Reality
• “Ideal” approach frequently does not mesh with political realities
• Consensus on goals/objectives is hard to create
• It is very difficult to weigh the relative merits of diverse goals
The Reality
• Public opinion / attitude changes over time as conditions change, making old plans inappropriate
• This is particularly a problem for long range (20 year) plans
• It also creates interesting artifacts:– Ramps to nowhere off of SR 520
Why “Ideal” Approach Fails
• Many of the key assumptions prove to be invalid– “Eastside of lake will never grow”
• Public attitude changes
Trends Affecting Planning
– Fiscal austerity / tax revolts– Increased need for rehabilitation and maintenance– My quality of life vs. your ability to drive– Changing demographics
• 2 income families, more cars/house, smaller households
– Broadened role of transportation• Importance of “equity”
– Continued suburbanization
So How Are Decisions Reached?
Models for Making Decisions
• Technical– Rational Actor– Satisficing– Incrementalist
• Political– Organizational– Political Bargaining
Decision Making Models
• Each model is “true”
• But only part of the truth
• Real decision making is affected by all of these models (simultaneously)
Rational Actor
• Very technical / analytical / numerical• Assumes rational/unbiased decision maker• Completely informed• Decision based on maximum attainment of
goals and objectives• A clear decision maker
Rational Actor
• Tends to create long term “perfect” solutions
• Structured, highly data/analysis intensive
• All encompassing analysis process and solution set
Rational Actor - Why Not
• Can’t identify all of the alternatives
• Can’t define goals/objectives in a way that they can be realistically compared against each other
• Lack information
Rational Actor - Why Not
• Takes too long to build consensus (sometimes never)
• Lack a single decision maker
• Comprehensive plans don’t deal with specific agency requirements / decisions
Satisficing
• An approach where the “answer” satisfies enough of the participants
• i.e., induces the least harm, while conveying some benefit
Satisficing
• Underlying model is rational/analytical, but…– Don’t need to examine all alternatives
– Actions/consequences are restricted to a range of situations
– Decision making is project oriented
Incrementalist
• Differs from satisficing, in that there is an implicit expectation that this problem will be revisited in future years
• • Decision maker is allowed to adjust the goal
/ objective so that what is possible meets the “goal”
Incrementalist
• Decision makers focus on solutions only marginally different from the status quo
• Only a small number of alternatives are examined
Incrementalist
• No “right” solution, just temporary measures to alleviate pressing problems
• Incrementalist solutions are by nature remedial (fix a “problem,” not a global solution)
Organizational• Political rather than analytical approach
• Assumes organizations do the planning. Each working towards its own goals
• That is, transit authorities always find transit based solutions
Organizational
• The following National Cooperative Highway Research Program title isfor a real project:
NCHRP 08-42 - Rail-Freight Solutions to Roadway Congestion
Organizational
• Think NIMBY for organizations, not just people: – What’s it do to/for my organization? – To me?
• NIMBY = Not in My Back Yard
Political Bargaining
• Decisions / plans are the result of deals struck between decision makers
– Vote for my disaster relief funding bill and I will vote for your gas tax increase
– I won’t vote for your bill if you don’t put in an earmark that pays for my new interchange
Political Bargaining
• Outcomes are not “optimal” except for the interests involved
• Goals of some of the decision makers often have little to do with the “real” problem
– Democrats versus Republicans• Right now, its all about making the other party look
bad in order to win the next election
Political Bargaining
• NIMBY for politicians:
– What does it do for me politically?
– What does it cost me politically?
• Note: organizational thinking asks these same two questions, only phrasing them “what does this do for/cost my organization?
Finance
(Applied within the context of public decision making)
Sources of Funding
• Federal• State• Local• Private
– Developer fees and voluntary payments that make the development attractive
Federal Funds
• Highway trust fund – Federal portion of gas tax (18.4 cents / gal.)
• Other motor vehicle funds– Heavy vehicle fees
• Registration by weight versus weight-mile fee• Allowable weight versus actual weight carried • Drive as many miles as you wish
– General budgets
Federal Funding
• SAFETEA-LU– Current surface transportation bill– Safe, Accountable, Flexible, Efficient
Transportation Equity Act – a Legacy for Users
• Followed TEA-21– Transportation Equity Act for 21st Century
• Which followed: ISTEA– Intermodal Surface Transportation Efficiency
Act
Federal Funding
• Used to encourage specific types of actions
– By formula– By grant– By earmarking
SAFETEA-LU
• Formula– Most federal money, divided by apportionment
(population and vehicle miles traveled – or VMT)
– Formula money is divided into specific pots
SAFETEA-LU – ‘pots’
• Separates funding by mode and by intent• Funding allocations include
– Interstate maintenance– National highway system– Surface transportation program (STP)– Congestion Mitigation and Air Quality (CMAQ)
SAFETEA-LU
• More Funding Allocations– Bridge Replacement and Repair– Metropolitan planning– Recreational trails– Highway Safety & Safe Routes to Schools– Transit capital assistance / New Start program– Transit formula grants– Equity bonus (ensures minimum return on federal gas
taxes paid)
Federal Funds
• Why this specificity?– Politics – allows politicians to funnel money to
what they believe is important
Flexibility
• Federal programs have been getting more flexible in how they allow funds to be spent
• It is not clear whether the bill after SAFETEA-LU will continue that trend
State Funding
• State gasoline tax• Vehicle mile tax• License and Registration tax• Vehicle weight tax (trucks)• Commodity excise taxes
– Car purchase, tire purchase, etc.
• General funds
Local Funds
• Local option gasoline tax• Local option registration tax (Sound
Transit)• Other taxes• Tolls• Congestion pricing (HOT, managed
lanes)
Who Wants a New Car?
Who is willing to pay for your own new car right now?
Who is willing to pay for someone else to have a new car?
Finance – What’s important
• Who pays and when do they pay?• Is it a Direct or Indirect cost to the user?
– Highway tax (gas tax, registration tax, vehicle miles driven tax)
– User fee (tolls, parking charge)
• Other– Non-user fee (sales tax, income tax)
Willingness to Pay?
• When any question of raising more money occurs, key questions for determining the acceptability of that mechanism are:– How much benefit does someone get relative to
their cost?– How much will they actually notice that
payment?– How does that payment effect their behavior?
Finance
• Distribution of Funds:– How are funds collected and redistributed?
• For taxes this is a BIG issue– Are taxes “spent” wisely?– Who subsidizes who?
• Is there support for that subsidy?
Good or bad funding mechanism?
• What is the intention of the funding mechanism?– Fund a (specific/general) transportation
improvement?– Create a specific economic result? (decrease use of
oil)– Recover specific expenses? (weight-distance taxes)– Penalize “bad” behavior– Generate the most money
Good or bad funding mechanism?
• Who pays?• Does it cover the cost of the services
received?• Where does the money go?• Is it voluntary or mandatory?
Good or Bad Funding Mechanism
• How easy is it to collect the revenue?
• How much does it cost to collect the money?
Good or bad funding mechanism
• Can it be evaded? (Fair enforcement)– How easy is it to avoid paying the tax?
• How will that funding change over time?– Inflation– Maturation
Who pays?
• User?• General taxpayer?• Those with the most money?• A specific cost generator?
– Trucks– Polluters
• Are there tax breaks? For whom?
Who benefits?
• Geographic distribution• Socio-economic distribution• Modal distribution
– Where are the subsidies?– Who wins / who loses?
Gas Tax
• Who pays?– If a regional tax exists– What happens when you cross borders?– Over time what happens?
• Should gas tax be used for non-transportation purposes?
• Should gas tax be used for non-highway purposes?
Vehicle Registration Taxes
• Should they be value based?
• Should they be allowed to be used for non-transportation purposes?
Tolls
• Are tolls a fair form of revenue?• Should toll revenue be used to support costs
other than facility specific costs?• Is peak pricing fair? • Pricing by vehicle classification? • Pricing by occupancy level?
Regional taxes
• Should regions (city’s, counties or groups of those entities) be allowed to adopt additional tax structures?
• Should they be allowed to charge non-residents additional fees?