Oberstar tweaks transit's federal funding formula

Transit

Oberstar tweaks transit's federal funding formula

by David Alpert • May 20, 2008 12:37 pm

When the federal government decides which transit projects to fund, they use an arcane formula called the CEI, or Cost-Effectiveness Index. In theory, this tells which projects are the best and which aren't, so that scarce transit funds (only 3% of federal transportation money goes to transit) can build the best projects.

Photo by Ma1974 on Flickr.

In reality, though, the formula rewards the wrong things. As The Overhead Wire put it in comments on Mary Peters' speech, "Why are we trying to solve for x (congestion) when we should be solving for y (livability). Reducing congestion does not equal livability." The CEI rewards projects that move many people the farthest for the least money. And that's the wrong goal.

For example, a short light rail line that goes to a sparsely populated warehouse district might be a great investment because of the potential to stimulate high-density development and enable many people to live close to work. But to the CEI, there are not very many people on the line and they wouldn't go very far, denying federal funds for the project.

Minnesota Public Radio reports that Rep. James Oberstar, the Chair of the House Transportation Committee, has made some changes to the federal formula to consider other factors beyond the CEI, including "environmental benefits and the potential for economic development". While the effect of this bill is not clear (the CEI isn't going away), it's good to hear that Oberstar understands and wants to fix the problems with our current system. Congress will be passing a new transportation bill in 2009, and this arcane formula will have a huge impact.

2 comments — Share	— tags: Congress, FTA, James Oberstar, transit, USDOT

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Comments

A lot of federal grant money is distributed by formula; this is really the best way to do things, when you consider how inefficient and arbitrary the alternative would be (with politicians cherry picking projects they want to give money to). That said, using a formula makes it very difficult to balance the needs of a community with incentives for improvement.

With the example of transit funding, we see the current formula using a simple and relatively sensible metric. However, because it's simple it neglects some things (such as potential for increased development and increased transit usage). In this particular case, I think a good way to adapt the funding mechanism would be to account for local support. If the people in a neighborhood want to build a light rail, and are willing to tax themselves to do so, we can be confident that they will use that light rail once constructed and that they will allow the necessary density increases. I know that the current transportation funding framework requires local match, but if that system could be modified to further emphasize local support, I think it would be a big improvement.

by PJ on May 21, 2008 12:15 am

Or, it might be a big waste of money, a environmental catastrophe because of low ridership, and a big giveaway to the developers who own the warehouses and want to build condos. That's the problem; you do need studies and a formula somehow.

I agree with PJ; local support should be considered more. But it's not all the feds' fault, either; local Virginia politicians seems a lot more willing to spend local dollars (including special tax districts) on road upgrades (VA 28, Fairfax County Parkway, etc.) than on transit.

by John Thacker on May 26, 2008 3:46 pm