Friday, April 6, 2012

Southwest LRT and the Constraints of Delivering Large Public Projects

            Through the study of large capital investment in public transportation infrastructure, it is possible to understand how determinants such as income elasticity and tax price affect the demand of public services.  To study these phenomenon, the development of multiple light rail projects in the Twin Cities provide good case studies to evaluate the public demand and perception of such projects.  In addition to income elasticity and tax price, the case studies of the Central and Southwest Corridor Light Rail projects also highlight the constraints that exist in the delivery of public services.  In the case of the Southwest LRT, these constraints are political and intergovernmental in nature.

            Funded by the Federal Transportation Administration’s New Starts Program, the Southwest LRT is currently in the preliminary engineering phase of development.  Within the New Starts Program, the FTA makes funding available for capital investments related to transit infrastructure.  The funding for the New Starts Program is structured so that the FTA will shoulder 50% of the costs, while the state and local partners will come up with the other 50%.  If the local partners are unable to match the Federal funding, then the transit project will not proceed.

 In the case of the Southwest LRT project, the State of Minnesota must come up with 25 million dollars for the project to stay on track.  In a plea for the Southwest LRT to make it in this years bonding bill, Sue Haigh, the Chair of the Met Council, highlighted the fact that the state will get 9 dollars in return for every 1 State dollar spent from Federal and local partners.  However, the political will to contribute to these transit projects may not be present from many State Senators and Representatives.  More information about the funding of this project can be found below:

When studying the case of large capital transit investment in the context of income elasticity, it would make sense that the demand for transit, an inferior good, would rise as income has shrunk.  Considering the effects of the recent recession, it is not surprising that calls for increased spending on transit were quite common.  In respect to tax price, the Southwest LRT also provides a good case study.  For example, when the County Transit Improvement Board (CTIB) voted to institute a .25 cent sales tax for transit projects in 2008, Carver and Scott Counties voted against the tax because they did not feel that the revenue would be equitably shared among the region.  In other words, they did not believe that they would receive a dollar's worth of benefit for every one dollar paid.

This case also highlights the political and intergovernmental constraints that are common in restraining the delivery of public services.  In regard to political constraints, rural members of the Senate and House did not have any interest in supporting a bonding bill that included funding for the Southwest Corridor LRT.  Also, if the presidential election this fall favors the Republican candidate, it is likely that funding for large transit projects may dry up.  Clearly, political constraints are quite prevalent.  Additionally, the lack of support from the State illustrates the fact that large public project are usually dependent on partnerships of many Federal, state, local, and private partners.  If one drops out or does not fulfill their funding obligations, then it can be difficult to put the house of cards back together, so-to-speak. Overall, in order to deliver projects as large as the Central and Southwest LRT there generally has to be a perfect storm of support. 


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