Grace Ross: How to Rebuild Public Transportation in Massachusetts
Wednesday, October 10, 2012
Public transportation across the state is in serious financial trouble partly because of state funding cuts, but largely because of financial debt. Somehow, regional financial planners believed the snake oil that the big financial institutions were selling and got themselves into deeper financial trouble than they were already in.
When the Big Dig happened, there was huge cost overruns because our state (unlike Oregon for instance) does not have a commission that makes sure the really large ticket public projects do not just go to the lowest bidder, but are reviewed for whether the lowest bid is realistic. The lowest bidder for the Big Dig overran in the hundreds of millions of dollars. For reasons that I suppose were clear to legislators at the time, they managed to convince the MBTA, Mass Bay Transportation Authority, to pick up the tab in return for getting a chunk of the sales tax in the state.
The Big Dig was supposed to have a public transportation component, but while the rest of it got finished, they have not finished that part yet. Somehow the MBTA ended up carrying the load for the Big Dig debt, then their financial planners went off and took this debt and decided to bet against the banks!
They took out what’s called a swaption. The bank took over paying their variable-rate long term loan for the hundreds of millions of dollars in debt, and the bank gave them a fixed loan. Essentially the MTBA bet that the bank was going to underestimate the costs on their loan versus present interest rates and that their financial planners were going to guess better than the bankers, then get the bank to pay out more money on the loan than they would have. Anybody knows that betting against the bankers when it comes to financial planning is probably not the best idea.
So they got even deeper into insurmountable debt: apparently, debts around the rest of the state also have become unaffordable. Just like Oregon wisely has a commission that avoids major cost overruns, California was smart enough to turn to the big banks and say “…you know what, those debts that you have on our transportation, maybe we shouldn’t have gotten into them but we certainly can’t afford to pay them, so you will have to make a deal with us…” Much like we keep trying to get the banks to do principle write down because it would save more money for everybody than foreclosure, California basically put the transportation debt to them the same way and got them to rewrite the debts.
Massachusetts legislature has not yet been willing to stand up to the banks. So instead we’ve got the Massachusetts Department of Transportation trotting around and asking people what they want.
Here’s what we should want: we are in a bad economy and we are facing bad environmental consequences from our dependence on cars and, thus, oil. And because the way we pave our roads is with asphalt which uses lots of petroleum, even our roads to dependent on oil and continue to get more and more expensive to repave.
There are areas of the country where they do not have a road paving formula so dependent on petroleum; the cost of repaving their roads has not gone up at the rate that our costs have gone up.
So our transportation costs a lot for oil: private cars instead of shared or efficient public transport, private individual cars and asphalt roads. And I haven’t seen figures in the last few years, but the estimate was that keeping a private vehicle costs each of us about $6,000 a year. This is why zip cars and similar car sharing schemes have caught on.
It would be much cheaper to have a very broad public transportation system not based on expensive repaving of roads and expensive gasoline.
Obviously, switching over from dependency on one type of transportation dependent on one type of fuel and paving is expensive; it would take a lot of work including working with the asphalt union so that we have workers prepared to lay a different kind of pavement.
But this a great time to do it. Like California, get a much better deal from the banks especially, when it’s phenomenally cheap for the government to borrow money, (almost zero interest with government ‘good faith and credit’) and incentive reduction of present debt. As well, with tons of folks who need work and tons of work to be done to be a really good time to switch over an entire transportation system.
The economy of New England could not have been built without trolleys, light rail and heavy rail. It’s possible that the economy of New England cannot be rebuilt without moving back toward electric based transportation; charging up all those batteries it turns out is far less energy gluttonous even with petroleum-burning plants than our cars and paving our roads. And if we continue to transfer over to cleaner energy plants and conservation that will be cheaper and cleaner in addition.
The transportation transition can be made smoothly – anywhere where there’s a thriving Zip Car system there could be an equivalent public car sharing system. There are thriving public bike sharing systems in major cities in Europe. There’s light rail tracks under most of our major roads – we may need newer light rail tracks (though I’ve heard tell that they are useable but would need modern trolleys). There is a cost about lights at intersections and a little bit more inconvenient for those who are in private cars, but a good transportation built in a logical way makes more sense.
We start by trying out public buses on the routes. Where use turns out to be supported, build light rail. This is much more efficient than continuing to have a scattershot public transportation system based on fuel we cannot afford that is also hurting our environment and not putting to work the people who we could be.
The legislature was more farsighted by authorizing spending on transportation and infrastructure and authorized spending in green economy development – although the governor has mostly not borrowed those dollars.
Imagine if we put that money to work building a light rail industry that could not be matched anywhere else in the country? We create our home market here first in the state and then be positioned to provide the technology for decades to come across the rest of the country. We provide the jobs now when borrowing the money for those jobs is incredibly cheap and when we have fewer cars on the roads because fewer folks are working.
This is a winning strategy at so many levels: actually switch over our economy when we can afford to do it, when we can put people to work doing it. And we can enter the way we were supposed to the 21st century with new technology getting our people from here to there locally for local jobs in a way all of us can afford.
Go to those hearings folks. Worcester’s happened on 10/4 but Fitchburg’s is 10/16. This is your chance.
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