Posts about Parking Taxes
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.
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.
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?
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:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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?
- 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.
proudly touted Obama's support for Dulles rail, Metro funding and infrastructure investments in a Q&A with WTOP's Adam Tuss, while the McCain spokesperson danced around his candidate's constant opposition to transit projects.
It wasn't me: WTOP's Tuss encountered a really terrible driver on U Street. Tuss writes, "The reckless, "me first" driving has to be kept in check." I agree, and would also agree if we deleted those first four words.
Height limit debate #538: Kojo Nnamdi and Roger Lewis discuss the height limit some more on today's show.
the Economist reports, researchers studied Boston's road network and determined that too many alternatives create more delay than fewer roads would; closing one of six streets (out of
Baltimore funding free shuttles with parking tax: Parking taxes will rise in Baltimore, under a plan approved this week by the City Council, with the revenue funding free circulator-type shuttles to get people around downtown and to and from the parking garages. Despite making downtown more desirable, garage owners predictably oppose the idea. Via Richard Layman.
"Right to enjoy her property": Upset about a pending teardown and building of a new "McMansion" near her Chevy Chase (MD) home, one woman is threatening to sue. Chevy Chase had a moratorium on teardowns from 2005 to 2006. According to the Gazette article, "she will defend her right to enjoy her property, as well as the tree canopy and green space in the neighborhood." I'm all for enjoying property, trees and green space, but the right not to have a big house next door is not a legal right courts ought to invent. (In fairness to the potential plantiff, reporters get legal issues wrong all the time, so this might not be her actual grounds for a suit.) If Chevy Chase does't want McMansions, they can pass zoning laws against them.
Bloomingdalians debate new tavern: At this week's Bloomingdale Civic Association, residents discussed the liquor license application for a new restaurant/bar at 1st and T. Bloomingdale (for now) is enthusiastic (and not just for now) about more commerce coming to Bloomingdale; some others are not. But all agreed that the owners need to better engage with the community to build support for their project.
Montgomery County Councilmember Nancy Floreen has proposed taxing business parking spaces in the county, reports the Gazette. The proposal would charge $250 per space per year, but give discounts to businesses if they make employees pay market rate for their parking, provide mass transit benefits, or subsidize parking for carpools.
Floreen plans to dedicate the tax revenue to transit, creating a reliable funding stream. It's still possible the county could reduce transit contributions in other areas, so the money wouldn't necessarily increase transit funding. The Council should commit to making these funds improve transit, such as by dedicating this revenue to new projects or service expansions which aren't funded today.
Besides the predicable reaction from business groups, there are some fair criticisms of the plan. Montgomery County requires businesses to build a lot of parking, even in dense downtown areas like Bethesda. To turn around and tax them for parking they may not have wanted to build is unfair.
At the very least, the County should relax or remove parking minimums so that future developments don't have to both build unnecessary parking and then pay to offset its environmental impact. Wayne Goldstein, of the Montgomery County Civic Federation (the same person quoted last week opposing accessory dwellings), recommends the same reform in the article.
The proposal also exempts local governments. Montgomery County and local jurisdictions ought to have the same incentives to encourage transit use as any other business. Plus, when legislators or agency administrators get free parking, they ride transit at much lower rates and see the world differently from their constituents who don't receive the same perks.
A dedicated revenue source for transit is a great idea. And coupling it with programs that encourage switching away from cars
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