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Budget


WMATA budget not a crisis thanks to leadership, though some harmful cuts remain

Last year's budget season was full of emergency appeals to save Metro. This year, there have been none.


Photo by webhamster on Flickr.

Yes, Metro has a budget gap this year. As it did last year, and the year before.

Early projections said that if fares and jurisdictional contributions stayed the same as this year, Metro would be $74 million short of the money it needed to maintain the same level of service. But instead of threatening disastrous service cuts or huge fare increases, Metro proposed a budget where that money came from the entire community, via increases in contributions from state and local governments.

Several local jurisdictions endorsed the required increase in jurisdictional contributions up front. Arlington and Fairfax's budgets included the increases. Last week, Maryland's representatives to the WMATA Board announced that they, too, would come up with the extra contributions. A few days ago, Alexandria dedicated some of its property tax revenue to the needed Metro funding.

The WMATA Board approved a docket for public hearings with relatively few cuts. Late-night cuts, the worst of the initial proposals, are off the table. DC routes E6, K1, and N8 could still be eliminated, and some fares to Anacostia station increased.

There's still an option to increase weekend headways to 18 minutes Saturdays, 20 minutes Sundays, and 25 minutes both Saturdays and Sundays after 9:30 pm. They would cause real damage to Metro and to the economy of the entire region. Riders should forcefully oppose these cuts. But the amount of money involved is relatively smallonly $6 million. We are in the realm of reasonable debate rather than fighting off catastrophe.

While in past years the WMATA Board has delayed decisions on the budget until DC made its decisions as well, this year DC's representatives approved a docket for public hearings that almost forces it to come up with more money for Metro, even though that money hasn't been publicly identified yet.

That share, after the bus cuts, comes to $13.3 million, in a budget that already treats transportation well while making painful cuts for needy residents in areas like affordable housing. Most likely, Tommy Wells' Committee on Public Works and Transportation will need to find that money through revenue increases like graduated RPP fees or the free parking loophole.

Much remains to be done to improve Metro's policymaking. Long-term planning of budgets and service is not what it should be. Local governments still ignore the costs they dump on Metro when they make land use and traffic engineering decisions.

But the new Metro board's approach to the budget puts us ahead of where we were a year ago on these questions too. Transit's needs are now getting put on the table, just as highway departments do their job by pointing out deficiencies in the road network. There is a chance to begin an honest dialogue about priorities among elected officials and the public.

The hearings are May 16 in Hyattsville (by New Carrollton Metro), May 17 in Alexandria (Braddock Road Metro) and upper northwest DC (Friendship Heights/Tenleytown Metro), May 18 in Arlington (Court House) and Wheaton, and May 19 in Barry Farm (Anacostia Metro). All hearings will start with an open house at 5:30, a town hall format at 6, and the formal public hearing at 6:45.

By all means, oppose the weekend rail cuts and call for preserving needed bus service. But it's also worth thanking the Board for what's right about this year's budget process.

Budget


Gray budget generally good for transportation

Mayor Gray released his proposed budget on Friday. It makes deep cuts in many areas, especially social services, but makes some exciting investments in transit funding, especially a big commitment to the streetcar program.


Photo by DDOTDC on Flickr.

Besides a capital investment in streetcars, the budget maintains Circulator funding and gives WMATA a small increase, but not enough to stave off Metro service cuts. Off-street parking taxes raise general revenue and will also create incentives for employers to stop subsidizing parking.

Streetcars. The budget contains $99 million from now until 2017 to make a substantial start on the District's streetcar system. DOT is also hoping to get some federal match and private sector funding from property owners and businesses who would benefit, to magnify the effect of this money.

Which lines will get built will depend on many factors, but DDOT's transit head Scott Kubly said they are hoping to advance lines through Anacostia, over the 11th Street bridge and over to the Southwest Waterfront, and also to extend the H Street/Benning Road on both ends to Benning Road Metro in Ward 7 and K Street downtown.

Circulator. There's $12 million in Circulator funding. Kubly believes that's enough to extend the Union Station-Navy Yard line across the South Capitol Street bridge to Anacostia, Skyland and the Giant shopping center.

DDOT has already canceled the Mall route and plans to suspend the Convention Center-Waterfront one. It will also go ahead with plans to expand hours on Union Station-Navy Yard, reroute that line to pick up on Columbus Circle and take a more direct route along 2nd Street, add ADA features to the buses, and the other immediate steps in the plan.

Metro. There's a $6.2 million more for WMATA, which the budget document claims is a 4.7% increase. That just happens to be exactly the same percentage as the Maryland draft budget.

WMATA had asked for a $32.6 million increase to avoid any service cuts. Had the DC budget included a bigger increase than Maryland's, and given that Virginia counties are likely to offer more, it would put pressure on Maryland to do better. Instead, DC seems to be giving tacit agreement that 4.7% is what Metro will get.

Without more, Metro will be forced to increase rail headways and cut buses. While there may be a few bus cuts that make sense, this will surely go farther. We managed to avoid service cuts to transit for two tough years; it would be too bad to lose vital service that people of all incomes depend upon just as an economic recovery seems within reach.

However, I'm not sure this is actually a 4.7% increase. It seems that they only increased the local bus contribution by 4.7%, not the overall subsidy. A 4.7% increase across the board should be $11.6 million, not 6.2.

It's a little bit tricky to tell in this budget. Gray's budget staff have made a strong commitment to transparency in this budget, after being frustrated by some very opaque Fenty budgets. In transportation, however, two things are going on simultaneously that make it hard to follow.

First, they are moving a lot of money from one section to another, like transferring the WMATA subsidy into its own section, moving money between capital and operating, and more. Second, some budget areas are increasing and decreasing. As a result, there are large areas that go from zero to tens or hundreds of thousands of dollars, and others that move in reverse. That makes it difficult to follow which functions within DDOT will end up with more budget and more staff, and which with less.

Capital Bikeshare. The budget calls for accepting advertising on Capital Bikeshare stations, for total revenue of about $500,000 a year.

The money will go into the general fund. That's helpful to close a big budget gap and avoid even deeper cuts to important social services. However, many had hoped the money could go toward expansion and making Capital Bikeshare self-sustaining.

There's an argument that advertising revenue from city programs that can earn some revenue should also help contribute to other functions that can't, like education, public safety or social programs. There's also a strong argument for creating programs which can run like businesses, earn their own money and spend it to grow themselves and also add value for residents.

Off-street parking tax. The tax on parking garage spaces would rise from 12% to 18%. Most of this will actually come from parking operators' profits rather than drivers, according to people familiar with the parking industry. That's because the overall demand for parking governs the rates right now, rather than the costs of the garages and operations.

Nevertheless, Barbara Lang, head of the DC Chamber of Commerce and author of the atrocious transition report about getting commuters in and out of DC, hates the plan. She said that "people that are going to be impacted are people like me who provide parking for their employees."

That sounds like an added benefit to this plan, not a drawback. Not only does DC raise some revenue but the organizations which are most distorting the transportation market get an incentive to stop. People who pay each day to park already are shelling out for parking. They know it's not free. They are making an economic choice between driving and other modes, and some have few alternatives.

But when Lang or another employer provides free parking but doesn't provide free SmartBenefits, the employee isn't choosing between the cost of Metro and the cost of driving. They're choosing between paying the cost of Metro themselves or having their employer pay for the parking. That's a huge incentive to drive even if transit is a great alternative.

In addition to raising the parking tax, DC should also finally get around to closing the free-parking loophole with the "Clean Air Compliance Fee," which would also charge a similar rate to employers who own their own garages and therefore don't pay a parking company for spaces. Barbara Lang hates that, idea, too. That could be another sign that it's another great public policy.

Other taxes. Another measure institutes "combined reporting," which ensures multi-state businesses pay a share of their taxes to DC instead of sheltering it in other states. This is a sensible measure and somewhat overdue.

Finally, the budget contains a tax increase on incomes over $200,000. I've endorsed a tax on high income earners before. Several councilmembers, including Kwame Brown and Jack Evans, and several candidates for the at-large seat have already come out against the budget on those grounds. It'd be interesting to see if they can find an alternative to the $35 million this will raise.

Already, this budget does hit the poor fairly hard, including cuts to affordable housing and homeless services. Some of this could end up costing DC more in the long run, like homeless people who might end up in emergency rooms far more often as a result.

In upcoming articles, we'll look at some other potential revenue sources and other elements of the budget.

This article originally said the Convention Center-Waterfront Circulator had already been canceled. DDOT is proposing to suspend it but has not yet done so.

Budget


Got any big ideas for the DDOT budget?

DC faces huge budget gaps, and every agency is being asked to make cuts, most of which take a little from everything. For DDOT, do you have any ideas for bigger cuts that should be considered, or revenue increases to look into?


Photo by Steve Rhodes on Flickr.

The DC Council held a marathon hearing yesterday to listen to feedback on closing DC's massive budget gap. Most of the witnesses just asked for specific programs not to be cut, rather than presenting ideas for different cuts in their place. Many advocates called for tax increases, which I think should be part of the final package along with many cuts.

In transportation and planning as well as many other areas, the cuts generally spread the pain out across the board rather than cutting specific programs far more or eliminating any governmental activities entirely, though a few do get completely wiped out. For DDOT, for example, these are some of the cuts:

  • $2.2 million from road, sidewalk, and alley repairs
  • $300,000 out of $1.5 million from bike-ped safety programs
  • $416,000 from traffic control officers around the ballpark and convention center
  • $244,000 from school crossing guards
  • $620,000 from street trees (see below)
  • The entire $7 million "streetscape survival fund," payments to small businesses affected by recent streetscape projects to help them weather the hit to their business from the construction.
  • $500,000 from a parking rate increase at Metrorail lots in the District, which is a nonstarter since it requires WMATA Board approval and the Board won't even have time to consider this in the brief timeframe, let alone whether outer jurisdiction members would approve a hike that some of their residents would have to pay.
This is painful but most of the smaller cuts are probably a reasonable way to spread out the pain. But here are a few ideas for areas to cut more deeply or raise some revenue to restore a few cuts:

Eliminate poorly performing staff in IPMA. IPMA is the Infrastructure and Project Management Administration, which handles the repavings and the streetscapes and all that. Almost any neighborhood activist has a host of stories of poor presentations by IPMA engineers and project managers who lacked good communication skills. There are also many people at IPMA who are locked in the old style of transportation engineering, building everything to a standard in a manual and not really listening to residents who want safer streets instead of higher speed traffic.

At the same time, there are good people at IPMA too. Sometimes it's hard in government to get rid of just the bad people, but to the extent this is possible, DDOT could use a good housecleaning in IPMA. Since fewer streets and alleys will be repaved and fewer sidewalks reconstructed, the department could probably make do with fewer people for a few years. Then, when things pick up again, they can hire high quality people in place of the bad ones they got rid of.

Reduce regular tree trimming. Some trees really need trimming, but there are also many cases where people don't actually want their trees trimmed. I was pretty dismayed to find a crew cutting whole limbs off the tree in front of my house one day, limbs which shade my windows in the summer. Since I work from home, I was able to stop them though now some limbs are oddly truncated. Meanwhile, another set of friends who just bought a house in Logan Circle came home one day to find almost half their tree lopped off, a significant aesthetic decrease.

It could be that pruning helps trees live longer, but when I spoke to the Urban Forestry Administration about my tree, mainly they simply said that this was their "standard" and they have all contractors trim all trees to the "standard." We can probably do with a little less adherence to that standard, at least for a while.

The budget takes $200,000 out of tree trimming, $300,000 out of tree planting, and $120,000 from hazardous tree removal, saying there has been low demand for removing hazardous trees. I wonder if DDOT scale back even more its payments to the contractors who do this trimming. Its in-house arborists could spend less time on trimming and more on making sure the trees that are planted get watered.

Increase the Circulator fare. The Circulator costs $1. Metrobus costs $1.70 or $1.50 with SmarTrip. Yet the Circulator is more reliable and draws more tourists and people in well-off neighborhoods, where it primarily runs. This wasn't intentional but it's totally unfair.

Raise the Circulator fare to $2 cash (which is easy for tourists to pay and is still far cheaper than a cab) and $1.50 with SmarTrip, the same amount as on any other Metrobus. If a Circulator runs on a better schedule or a better route than other buses, people should ride it, but not because it's cheaper.

Increase the off-street parking tax. Jim Graham suggested this yesterday. He suggested raising it as high as 18% from the current 12.5%, which could bring in $19 million in revenue per year.

The Post's Nikita Stewart writes that "The amount does not account for the loss of customers who could balk at an increase," though given the amount of competition for commercial garages, a tax increase here may not lead to as much of a consumer price increase. It could just cut into the profits of garage owners and the revenue that building owners get from garages. In the long run, that could create more of an incentive to redevelop large surface parking lots.

DC could also grant garage owners a full or partial exemption from the increase for implementing certain measures like automated cash collection systems to ensure the tax is being correctly reported. In addition, the new zoning code requires certain numbers of bicycle spaces and car sharing spaces, and requires surface lots to have a certain amount of landscaping. If an existing lot complied with these rules, perhaps it should get some relief from the added tax.

Close the free parking tax loophole. This is another longer-term measure that keeps getting kicked down the road and then is too long-term to implement in any budget cycle. But the off-street parking tax contains a big loophole, leaving out facilities that provide free parking to employees rather than contracting through a commercial operator. In the downtown area, these spaces should be taxed at a similar rate to commercial spaces.

This proposal has been introduced in the Council in the past as the "Clean Air Compliance Fee." It wouldn't help with the immediate budget, but it seems that the most meaningful budget measures get little attention outside budget crises, and then during every crisis it's too late to implement it.

Contract out local bus routes. This is another longer-term issue, but again worth talking about while people are seriously thinking about budgets. If DC took over its local bus routes and contracted them out, DDOT believes it could save quite a lot of money.

What else? Do you have other ideas for ways to make bigger cuts or raise revenue in transportation?

Parking


Revenue increases should also internalize environmental externalities

This week, the DC Council will decide how to close a $190 million shortfall in the FY2009 budget, and discuss how to begin tackling the additional $150 million projected gap for 2010. Lawmakers are inevitably going to look for a mix of spending cuts and revenue increases. This morning, Jenny Reed suggested ending the special tax exemption for other states' municipal bonds as one possibility. Are there other revenue options? Whatever mix of cuts or revenue increases you prefer, there will be some of both. Which revenue sources would be better than others?


Photo by Shira Golding.

Any tax or fee would ideally also internalize an economic externality. When there's no consequence for polluting, for example, people pollute more and every taxpayer shares in the cost of cleanup whether he or she polluted or not. Ideal economic policies would internalize these externalities, making sure that each good's price includes the cost of cleaning up its waste. If the good is valuable enough, people will simply pay the cost, and taxpayers won't have to shoulder the cleanup burden. If people can easily shift to a less-polluting alternative, they now have an incentive to do so.

Locally, the main sources of such externalized pollution are trash and auto emissions. Are there tools that could raise some revenue to close the budget gap, but more importantly, internalize some of the cost of the emissions or trash resulting from existing externalities? Here are a few possibilities, some of which are better than others:

  1. The gas tax. This is a simple and obvious one. DC's tax is 20 cents per gallon. Maryland charges 23, while Virginia charges 19 (17 cents in gas tax and 2 cents in sales tax). If DC raised its gas tax 3 cents to match Maryland, it would bring in about $3 million.
  2. The streetlight fee. During the last round of budget cuts, Mayor Fenty proposed charging all electric customers a flat rate to cover the cost of lighting streets. That would have been incredibly regressive, charging people living in a small apartment the same as those in a huge mansion, even though there are more streetlights per person in less dense areas. Last week, Councilmember Jim Graham floated the idea of resurrecting this idea, but charging proportionally to the actual street frontage of each property instead. That's still not really a streetlight fee but a kind of property tax (and as several commenters pointed out, doesn't internalize any externalities), but it's at least more progressive.
  3. Close the parking tax loopholes. Today, DC charges a tax on the sale of off-street parking. If you pay to park in a commercial garage, the garage operator has to give a percentage to the city. However, if a business leases parking in a commercial garage and gives it away for free to their employees, there is no tax. That makes no sense. Close that loophole. Better yet, scrap the existing system altogether and institute the "Clean Air Compliance Fee" which would apply to all downtown spaces, both paid and free. After all, trips to and from parking spaces pollute whether the space is free or not, and free spaces actually induce more driving.
  4. Congestion pricing. While trips to and from parking spaces pollute, it's really the trips that are polluting, not the spaces. A congestion charge in DC's downtown core would come closer to actually internalizing the real externality here.
  5. Residential parking permit fees. We charge $15 per year for the privilege of parking one's car on the street. San Francisco charges $76. $15 is so cheap it poses no disincentive to garaging three or four cars on the street. We could raise the fee or, better yet, institute a sliding scale for high numbers of cars.
  6. Driver license registrations. The price of new driver licenses and license renewals doesn't actually cover the cost of administering the program. DC could at least charge enough to cover its direct costs.
  7. Increased enforcement of bike laws. DC should write more tickets to drivers who block bicycle lanes and bicyclists who engage in unsafe riding, like blowing through a red light at a busy intersection without stopping or even slowing down.
  8. Enforce the existing bus-only lanes. 7th and 9th Streets have bus and bike lanes, but drivers routinely drive in those. We should enforce this law.
  9. Downtown performance parking. Some meters downtown are too cheap, while others are too expensive. More often, they're too cheap. We could adjust rates to market prices. I'm less comfortable using parking rates as a generalized revenue source, however, because meter rate increases do deter people from shopping in an area, and the right policy is to apply that money to improving transit, pedestrian, and bicycle access to that area to counterbalance the effect.
  10. Enforce commercial recycling. Commercial buildings generate most of the trash in the city, including recyclable trash like paper. But when DC writes a ticket to a building that's not recycling adequately, 76% of the time the business never pays. They ignore the ticket, and it gets mired in DC's Office of Administrative Hearings. Let's fix this.
  11. Charge by volume for commercial waste. San Francisco restaurants are extremely eager to try composting and other waste-reduction mechanisms because it's very expensive to dispose of trash in California. Here, it's cheaper. A tax per pound for the commercial haulers, with a lower or zero rate for recyclables, would create an incentive for buildings to reduce trash and increase recycling.
  12. Make the Circulator fare the same as Metrobuses. Does anyone really take the Circulator over a Metrobus because of the 30 cent fare difference? Also, the Circulator generally draws a more affluent ridership and more tourists. Why should bus commuters, especially poorer ones, pay more for their bus rides?
  13. Eliminate local parking tax exemption: Added: DCFPI's list includes a recommendation to end DC's match of the federal tax exemption that lets employees pay for parking in pretax dollars. The federal exemption isn't going to change, but DC doesn't need to also encourage driving by providing a tax exemption for it.
I'm sure some commenters are going to say, "Aha! I knew that all this talk about making parking easier or creating an economic incentive to save plastic bags was just a smoke screen to grab more money." Remember, taxes and fees serve two goals. They raise money, and they create a disincentive to do something. It's possible to make a charge completely revenue-neutral by rebating all of the revenue evenly to each resident, as some have suggested with a carbon tax for emissions at the national level, for example. An ideal gas tax would charge a high, set amount per gallon, then give every American an equal share of the revenue. Those who drove less would end up ahead on balance, or could use the money for transit or housing near their jobs.

I'd personally prefer to see actual government revenue rely as much as possible on progressive income taxes, and then keep all of these incentive-based systems revenue neutral. That minimizes the impact on the poor by making the tax code more progressive. Even more importantly, it ensures that the government isn't actually dependent on the bad behavior (like parking in a street sweeping area or running red lights) for ongoing revenue. Politically, however, that's not feasible. The next best approach is to institute targeted fees that internalize existing externalities, ensure that their impact is progressive rather than regressive, and fight hard if the government crosses a line and starts pumping them for revenue at the expense of the economic incentive effect.

Parking


"Hanging on to the last vestiges of a car-based economy"

DC Councilmembers Jim Graham, Tommy Wells, and Phil Mendelson had sharp questions for representatives of numerous industry groups at yesterday's hearing on the parking tax loophole.


Photo by Curtis Perry on Flickr.

Clearly coordinated in advance, industry reps from the hotels, universities, hospitals, building owners, Pepco, and even nursing homes and Covenant House (always good to pull the heartstrings with those) got up to say that this "was a tax, not a fee", and would have "unintended consequences" because their poor working-class workers rely on this "important benefit" of free parking.

"I think this is the wrong benefit," argued Mendelson. Wells asked whether the testifying industries also provided entirely free health care to their workers in addition to the entirely free parking. And what about MetroChek/SmartBenefits? "You subsidize people to drive into the District of Columbia," said Wells. "I think you have an obligation to also subsidize people to take mass transit."

Barbara Lang of the DC Chamber of Commerce wasn't even sure if she provides SmartBenefits to her employees, first testifying that she doesn't, then correcting herself after the hearing. But SmartBenefits usually only means the employee pays for the transit pre-tax, with no cost to the employer (they actually get a tax benefit); she doesn't provide completely free transit passes as an alternative option to completely free parking.

For that matter, Lang doesn't even believe her employees would want to take transit. Her staff often attend evening functions, working as late as 10 or 11 in the evening, and many are female; it's not safe for them to be taking Metro. (Lang apparently never takes the often-overcrowded Metro in the late evening, perhaps because she has free parking).

"You have to challenge yourselves," Wells said. "Are you hanging on to the last vestiges of a car-based economy?" He pointed out the excess capacity on the east side of Metro (like the Orange and Blue Lines east of Capitol Hill), the "steady stream of cars" driving through neighborhoods, and even held up his copy of Donald Shoup's The High Cost of Free Parking.

The most ironic part? It turns out that Lang's Chamber of Commerce pays $200/month per space to their garage to subsidize employee parking. That means she's already paying the existing tax right now, and this bill wouldn't apply. In fact, as Graham pointed out several times in the hearing, the industry groups fighting this proposal so strongly didn't even know how many of their members would be affected, how many free parking spaces there are, or which employees receive them.

Many industry groups stressed their commitment to the environment, through green roofs, emissions reduction programs, and more. The hospitals, of course, especially stressed their support for reducing air pollution and asthma. But their environmentalism and public health interest stops at the parking lot's edge.

Cheryl Cort from the Coalition for Smarter Growth wrapped up the discussion with some concrete suggestions to improve the bill. She recommended applying this only to downtown and to large parking facilities (over 100 spaces) outside. Downtown has the clearest opportunity for reselling the spaces if employees stop receiving them for free, and the richest transit alternatives.

We should also require office buildings to stop bundling parking in leases. When the spaces aren't bundled, if the employer pays for free parking (as Lang does) they are renting the spaces directly and already paying the existing tax. But when spaces are bundled, they don't because we don't know the value of the spaces.

Knowing the value of spaces has additional benefits. Once spaces have a clear market value, it's easier to create parking cash-out programs that let employers give employees the $200/month in lieu of a parking space. In transit-poor LA, 20% of employees chose that option when given the choice. Employees could use the money to pay for transit, rent the occasional Zipcar or take the occasional taxi, or even better afford a home nearer transit or within walking distance of work.

In the short run, cash-outs could mean more parking spaces downtown available for short-term shoppers; today, many garages are full during the day and only allow monthly parkers. In the longer term, we wouldn't need to build so much parking; Howard University, for example, could then redevelop some of their many surface parking lots into more productive uses.

This was not a formal hearing on a bill. The Council actually passed the same bill with no opposition in 1994, but suburban Congresspeople forced DC not to implement the law; in 2003, Mendelson and Graham proposed the same bill, which received no opposition then either. Due to the opposition raised today, Graham decided to hold a "public roundtable" to solicit input, which will lead to a new bill and an official hearing in the fall.

Parking


Testimony on parking tax loophole

The hearing is at 2:00. Comments?


Photo by tantek on Flickr.

Mr. Chairman and members of the Committee,

I urge you to close this loophole in our parking tax system. Residents of our region make a decision every day to drive, take transit, bike, or walk to work. Research has clearly demonstrated the obvious link between the price of parking and how many people choose to drive or take transit.

Workers are three times as likely to drive if they have free parking than if they make a real economic decision between transit and driving. With our air quality deteriorating and our downtown completely choked with traffic, we must increase non-automobile commuting for our city to continue to grow.

There's also a simple question of fairness. We are taxing some people and not others; that isn't fair and it isn't right. We should level the playing field and this bill aims to close this loophole.

I encourage the Council to add language explicitly dedicating the revenue from this fee to specific programs. I have written several times about this issue on my Web site, Greater Greater Washington, and numerous residents have voiced their concern that this money will simply vanish into the black hole of the enormous DC budget.

To assuage this fear, I urge you to dedicate revenue from this fee to new initiatives that will meaningfully reduce pollution. One option is transit. If the revenue pays for specific, visible service improvements, that will make transit a better option at the same time we discourage driving, and provide some of those impacted by the fee with a meaningful alternative. It's using the stick to pay for the carrot.

We could also use this money to encourage hybrid taxis. As you are aware, taxis emit a considerable percentage of our pollution since they are on the road almost constantly and idle frequently. The ANC in my neighborhood, Dupont Circle, will be considering a resolution next month asking the DC government to promote hybrid taxis. Two of our ANC commissioners wrote to me in support of this; unfortunately, both have day jobs and were unable to make it today.

In the long run, we should move toward a citywide parking cash-out system for all workers, downtown and elsewhere, that gives people with free parking the opportunity to forego their perk in exchange for a share of the money their employer saves. In the meantime, this bill is a good, market-based first step. It will reduce our subsidy of driving over other modes and close the existing loopholes in our system.

Thank you.

Parking


Testify to close the free-parking tax loophole

Tomorrow, the DC Council will hold a hearing on the "Clean Air Compliance Fee" bill. Currently, DC (and other jurisdictions) tax parking garages and paid employee parking. But there's a loophole: if an office gives out free parking, there's no tax, even though the impact of the cars on the roads and the environment is just as great (or greater, because free parking encourages driving).


Photo by Simone Ramella on Flickr.

This bill establishes a charge for free parking that is close to, but a little less than, the comparable parking tax for similar downtown parking spaces. People close to the issue expect that the bill will end up applying only to downtown for now, where congestion is high and the price of market-rate parking is well known.

The revenue from the fee would likely go to transit improvements or to encouraging hybrid taxis; both would make a major impact on air quality. Ideally, employers would pass on the parking fee to employees (or give them a "cash out" option where they can forego parking and share in the savings), creating a direct incentive to choose transit, carpool, walk, bike, scooter, or rollerblade.

The hearing is tomorrow at 2 pm, and the witness list is full of owners of big buildings with big parking garages. Please come testify if you can. To sign up, call Marcus Goodwin at 202-724-8195. You can also email mgoodwin@dccouncil.us with written testimony (and please CC Councilmember Jim Graham at grahamwone@gmail.com) if you are unable to attend.

Parking


Debating the free-parking "clean air fee"

My endorsement of the DC Council's "clean air fee" proposal generated some lively debate. Here are some of the objections raised, and my responses.

  • Objection: "In the regional context, [the bill] puts DC at a disadvantage compared to other office districts."

    First, it's important to note that non-free parking is already taxed. What this bill does is simply to equalize free and non-free parking, so that we're not further encouraging free parking by making it even cheaper. It's a loophole that needs to be closed. Plenty of offices already provide paid parking, which is taxed; I haven't been hearing reports of offices fleeing because of that existing tax (or because of the burden on employees having to pay to park their cars).

    In fact, DC's downtown office market is extremely strong. Coupled with the height restrictions, there's no incentive to create mixed-use residential buildings downtown because office space is so valuable. Downtown is spreading into new areas like NoMa and Near Southeast because of a lack of land. And if anything, rising gas prices are making it more appealing for businesses to locate in downtowns here and elsewhere.

    With limited office space, DC doesn't need to attract offices that think free parking makes the difference between locating in DC versus a suburban office park outside the Beltway. Besides, we should lobby other jurisdictions to follow suit, especially the dense areas like Arlington, Bethesda, or Silver Spring.

  • Objection: "If they said they'd use the money for transportation improvements only, then it might be palatable."

    The bill directs the money to the DDOT general fund "in order to fund transportation projects that will help the District meet national ambient air quality standards." I agree that the language should be stronger. In particular, anything that increases the cost of driving (like parking taxes or a congestion charge) should be dedicated to increasing alternatives to driving. Not only is it good policy, it's a good equity move to ensure that the people who pay the tax can benefit from alternatives.

  • Objection: "We already have a tax for "wear and tear on the roads and pollution." It's the gas tax."

    Richard Layman responds to this one in the comments: "Disabuse yourself of the notion that roads are fully paid for by gas taxes and registration fees. Nope. About 50% of the cost of roads comes from general fund revenues."

  • Objection: Unless employers pass along the cost to the workers, "it will have no impact at all on travel behavior."

    There are other ways a business can pass on the incentive not to drive without actually charging employees for parking directly. Maybe one will institute a free shuttle like Google's in Silicon Valley. Maybe another will decide to give a parking cash-out to employees. (A cash-out is where the employee can receive the cost of the parking in added pay or other benefits instead of the free space.)

  • Objection: $25/month might be too high in lower-rent commercial areas.

    A better bill would establish the true market rate of the parking being given away, and either mandate or provide and incentive for employers to create parking cash-outs. An ideal bill would minimize unnecessary drag on business in the District, but would also ensure that employees have a true choice between driving and transit, without a subsidy to driving.

    Between free parking, free bridges, and an inadequately funded Metro system, our government continues to push the driving option in many small ways. This bill is a good start in an effort to correct those hidden subsidies.

Parking


Taxing the parking subsidies of free spaces

If a parking garage in DC rents out spaces, they have to pay a sales tax. But if an employer gives away the parking, they pay nothing. Yet they are still consuming space that could be used for other purposes, are still creating wear and tear on the roads and pollution. Is this fair?


Parking garage on L Street.
Photo by AlbinoFlea on Flickr.

Councilmembers Jim Graham, Phil Mendelson, and Tommy Wells don't think so, and just introduced a bill to tax those spaces and devote the revenues to air quality improvements.

This is a great step toward reducing one aspect of the pervasive subsidy of driving. The Apartment and Office Building Association of Greater Washington called free parking "an added incentive to attracting and retaining employees in the District." So is transit, but when parking is free, the scales are weighted on the side of driving.

Ideally, employers will choose to pass along the cost to the employees, or create parking cash-outs letting employees receive the cost of their parking spaces in transit subsidies or added salary. This bill adds an incentive for employers to do just that.

After passing this bill, Graham and the rest of the Council should take the next step and mandate employers provide parking cash-outs to ensure employees can make a fuller economic choice between driving and other forms of commuting. And our next President should bring Federal agencies in line.

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