More thoughts on transportation district funding

So the same day that I wrote about transit withholding taxes, a judge in New York State ruled that the creation of the mass transit district that included outlying counties was not an appropriate act by the state government.  See "MTA payroll tax ruling met with joy; transit authority plans appeal" from the Poughkeepsie Journal. From the article:

In his ruling Wednesday, Nassau County Justice R. Bruce Cozzens Jr. called the payroll tax a “special law” passed by a 60 percent majority vote in the Assembly and 52 percent majority vote in the state Senate that does not serve the entire state’s interest. “This law should have been, according to the state Constitution, passed with either a Home Rule message or by message of necessity with two-thirds vote in each house. This did not occur, therefore this law was passed unconstitutionally,” Cozzens wrote.

I don't agree with the judge as transit/transportation is not a legitimate state interest and because services typically cross jurisdictional boundaries, higher level governmental coordination is an appropriate state function and action, but then, I am not a lawyer, and maybe on technical grounds, the law wasn't passed properly.

We'll see what happens in the appeals process.

2.  I have been meaning to write yet again about the Allegheny County Regional Asset District in the context of the successful initiative in the Detroit area, where voters in Wayne, Oakland, and Macomb counties agreed to a small property tax to fund the Detroit Institute of Arts.

While other arts institutions are interested in pursuing something similar ("Why Arts Managers Short of Cash Are Looking At Detroit " from the Wall Street Journal), for the most part they are looking at this issue in a piecemeal fashion.

Instead, the RAD as a concept addresses arts and cultural uses and funding in a very systematic manner, which for the most part is unprecedented at the center city-county level (Chicago has a Park District, but it's only operative within the city).

From  "Transit bailout with RAD funds does not pose threat to arts, Allegheny County executive says" in the Pittsburgh Post-Gazette.

For 2012, RAD allocated $84.1 million to 89 groups and amenities. About 32 percent went to libraries, another 31 percent to parks, 17 percent to sports venues, 10 percent to arts and cultural groups and 9 percent to big regional attractions such as Phipps Conservatory and Botanical Gardens.

(Sacramento City and County have a combined Sacramento Regional Arts Facilities Financing Authority that funds capital improvements, not programs, in a similar fashion.) 

Because transit in Allegheny County has been barraged by massive cuts in funding and service since the 2008 real estate crash, it has been proposed that the Regional Asset District, which is funded by a 1% sales tax, also begin providing some bridge funding to the transit agency.  Also see "Pittsburgh Mayor Ravenstahl cautious about idea to fund transit via asset district" from the Pittsburgh Post-Gazette.

Obviously, transit is a regional asset, and combining it with arts/culture/parks funding mechanisms isn't unreasonable.  Although arts groups, justifiably, are concerned about competition and likely over time the sales tax amount dedicated to the RAD would have to increase.

Michael Henninger/Post-Gazette.  Old and new arenas in Pittsburgh.  The old arena, and the 28 acres of land it takes up, will be redeveloped.  (From "Hiring in the Hill District: the new arena and hotel are meeting goals: A community benefits agreement places Hill District residents, minorities in jobs at Consol Energy Center and Cambria Suites hotel.")

3.  Many places have parking districts, and I argue that such districts should be termed "transportation districts" and that systematic plans for improving transportation and streetscape infrastructure be devised and funded over time with revenues from these districts.  When they are parking districts, for the most part (DC's performance parking districts are an exception) monies are only spent on parking.

Anyway, the neighborhood association in the Hill District in Pittsburgh is arguing that some of the revenues from parking at the Consol Energy Center Arena should also be to fund neighborhood improvements.   See "Hill District seeks more arena-area parking money for development" and "SEA urged to use a portion of parking revenue to support Hill" from the Pittsburgh Post-Gazette.  (The creation of special taxing districts for such improvements are not unusual.)

From the second article:

Carl Redwood lobbied the SEA board Thursday to get behind his "A Dollar A Car For The Hill" campaign and to ensure that the plans to redevelop the former Civic Arena site include affordable housing and space for Hill businesses.

This is a great point, and one that should become part of standard practice when it comes to the placement of sports arenas and stadiums.

A parking tax fee could be part of a mitigation package related to the insertion of stadiums and arenas into neighborhoods.

Of course, when those facilities are inserted somewhat seemlessly into the urban fabric, like the Verizon Center in DC or Madison Square Garden in Manhattan, it might be harder to justify this as a parking tax, because most people get there by other means.

Therefore, a general mitigation tax on each ticket--not just on parking--is something to consider as well.

4.  Given how the Washington Nationals continue to refuse to consider paying towards the extension of subway service for patrons attending late games that go beyond the time the system normally closes ("Nationals ask District to pay to keep Metro open late for fans" from WTOP Radio), it's worth rementioning how, also in Pittsburgh, Alco Parking, Pittsburgh Stadium Authority, the Pittsburgh Steelers Football Team, and Rivers Casino are subsidizing the provision of free T transit to the new transit stops there, the Allegheny and North Shore stops on the new North Shore Connector, which opened up a few months ago.  See "Trips on North Shore T will be free" from the Pittsburgh Post-Gazette.  (Pittsburgh has a free transit zone where riding on the T is free within Downtown.  This zone used to cover bus service as well, but that was ended in the face of revenue losses.)

Commuter/mobility tax discussion for DC

I didn't write about this when Congressman Darrell Issa, a Republican, said that a commuter tax on nonresidents working in DC should be on the table ("Rep. Darrell Issa proposes hearing on D.C. commuter tax," Washington Post) because I intended to write a letter to the editor to the Post to the effect that a commuter tax likely is a nonstarter (and yes, that's what happened, see "Proposed D.C. commuter tax dealt another blow" from the Examiner and "Talk of D.C. commuter tax finds opposition in Maryland" from the Baltimore Sun), but instead the city should focus on proposing a tax on commuters that likely could pass.

Such a tax would be a mobility withholding tax.  It would be charged to employers, not employees (although you could argue it could slightly depress wages as employers would make up for the cost by reducing paid wages).

Parking garage sign image from CBS Philadelphia.  

I call it mobility because it could support more than just transit improvements.

Currently, while many transit systems are supported by sales and real estate taxes of various sorts and fees on car registration as a part of the creation of transportation benefits districts (Washington State, e.g., in Seattle), or parking taxes (the Baltimore Circulator bus service, which is free to riders, is paid for by a tax on parking, see "Baltimore Hotel Tax | Increases in hotel, parking taxes draw complaints" from the Baltimore Sun), I am aware of transit withholding taxes only in two places, Oregon, in Portland and Eugene, and in New York State, in the MTA service area, to pay for transit services a withholding tax of 33 cents/$100 of wage income was instituted after the precipitous fall in tax revenues associated with the financial crash which was particularly acute in New York City.

Besides the difficulty in getting such taxes approved, the big problem with transit withholding taxes is that so many employers get exemptions or in the case of state and federal government agencies, are exempt from local withholding taxes.  In the case of DC exempting federal employees from the tax would significantly reduce revenues, making the exercise somewhat futile. 

But if Congressman Issa could push such a tax forward, and get the federal government to accept paying such a tax, it could happen.

I wrote a paper in 2007 on creating a linked transportation and land use planning paradigm in DC and this was one of the funding sources I wrote about (blog entries:  "A payroll tax to fund transit" and "More on funding subway improvements within DC").

I didn't think a congestion tax was a good way to go because it would displace commerce to the suburbs and more importantly, many more areas in the suburbs are congested than are roads in DC, with some exceptions of course, mainly the main entrypoints into the city, along with some roads downtown.

I don't remember the numbers off hand, but I calculated that as much as $250 million/year could be generated from such a tax, which I proposed could be used both to support improvements of the current system as well as transit system expansion such as the separated blue line, streetcars, etc.

I suggested that possibly, surface bus transit could be free, but that would absorb a huge proportion of the revenue and at least in the intermediate run, it wouldn't be a good use of funds--besides current system improvements, my biggest priority would be the creation of the separated blue line.

Note that separately, there is a review of DC tax policy ("Tax-reform panel aims to untie D.C. code's 'knot'," Washington Times).   From the article:

Among other priorities, Mr. Gray wants the commission to consider a decrease in commercial real estate taxes to fill vacant space and drive up values.

Many of the mayor’s proposals ask the commission to weigh the loss of direct revenue from lower tax rates or abatements against the added revenue gained by retaining or attracting residents and businesses to the District.

Former D.C. Council Chairman Kwame R. Brown had been a vocal supporter of the commission, arguing a piecemeal approach to tax policy was inappropriate.

His successor, Phil Mendelson, said the board should look at whether everyone is paying his or her fair share under the tax code of the city. He also asked the commission to look at whether the city’s tax system actually drives people away from the District, since that long-standing belief seems to be “more anecdotal than evidence-based.”

Image from study for Sarasota County, Florida on the tax yield per acre by different types of development.  In DC, income taxes on residents generate additional income.  

But I expect very little from this review, which ought to be very expansive in terms of how it considers:

1.  Tax revenue generating capacity of various types of development ("Mixed Use Reduces Infrastructure Costs and Increases Tax Receipts," SvR company blog);

2.  Commuter tax issues;

3.  Tourism taxes and the systematic planning and funding of visitor and cultural services (blog entry: "Cultural resources planning in DC: In the land of the blind, the one-eyed man is king");

4.  Taxes that fund mobility (parking tax, tax on parking benefits, mobility withholding tax, etc.);

5.  How the commercial property tax methodology negatively impacts properties in neighborhood commercial districts because the national-international property market in the central business district drives up prices across the entire city (blog entries: - Testimony -- Historic Neighborhood Retail Business Property Tax Relief Act (2006); - A solution for the overtaxing of properties in neighborhood commercial districts  (2009); Displacement of retail businesses through increasing property tax assessments (2005); Forcing Displacement by the disconnection of tax assessment models from public policy goals (2005); Globalization of the DC real estate market catches neighborhood commercial districts up in the wake (2006); Avoiding the real problem with DC's property tax assessment methodologies (2007)).

It's unclear that these more fundamental questions will even be asked, based on the Mayor's stated interest in various commercial property tax reduction schemes.