It seems that the leaders of the Oregon Business Plan took Harvard Professor Michael Porter’s advice from last year to heart: they have provided an overarching focus for the Business Plan: Sustainability.
The ‘play book‘ (PDF, 869K), released in advance of Thursday’s Business Plan Summit, sets this out on the first page:
As last year’s audience will recall, Dr. Porter challenged the Business Plan and Oregon to develop a distinct competitive advantage that complements the Business Plan framework, our industry cluster network, and our culture of innovation. Porter suggested sustainability as a competitive strength for Oregon, noting that the state already has an international reputation as a leader in sustainability. It’s true. Sustainability is woven into the fabric of our public policy, many of our products and services, and the business practices of our industry clusters and individual firms. Therefore, we present a section here on the potential of making sustainability a competitive advantage for Oregon and a part of the Business Plan.
All well and good (indeed, Bravo!), and the business press is tripping over itself to reinforce the message. Friday’s Business Journal carries with it poll results that say that 63% of readers agree that sustainability is a good way to grow Oregon’s economy.
And this month’s Oregon Business (issue not yet online), also triumphs sustainability.
So where’s the problem? The play book chapter on transportation does not mention sustainability at all, other than to talk about sustainable funding. It goes on to call for new capacity. Apparently, using our existing transportation infrastructure more efficiently is not part of our sustainability plan.
Sigh…
21 responses to “Sustainable Advantage: Sort of”
Someone needs to call these guys on this. The irony is that Portland, if not Oregon, has an international reputation for transportation innovation as well…MAX, Streetcar and Tram are all firsts, not to mention the landuse/transportation connections, etc. How can they just keep talking about “sustainable” funding for more capacity!
To be fair, I would argue that financial sustainability is the root of all other forms of sustainability. If one’s otherwise “sustainable” venture is constantly running itself into the ground financially, then that’s hardly sustainable at all, is it?
I think this is actually a particularly important concept for Trimet to grasp, as they have in the past cut back service on bus lines which were not only self-sustaining, but actually profitable! Meanwhile, they have maintained on suburban and rural routes that really don’t have remotely enough ridership to justify their continuing existence. This kind of planning runs so totally counter to financial sustainability that they really deserve to take some grief for it. Unless they work out a better way of doing things, talking about any other sort of sustainability will all be for naught.
Unless they work out a better way of doing things, talking about any other sort of sustainability will all be for naught.
It seems to me we need to evaluate the real economics of transit, not a theoretical one,
First, the farebox is only one source of income. In Portland, operating costs are paid for through taxes on business payrolls. That includes business payrolls in suburbs with low transit use. In addition, Trimet’s capital budget receives money from federal transportation dollars allocated to the entire region. So while farebox revenue is lower in the suburbs, the revenue Trimet receives from other sources is also higher per rider.
In addition, the trip that starts (or ends) on the “profitable” 14 bus line may well include other lines. Transit, like roads, are a network. The more destinations the network can reach, the more valuable all parts of the network become.
Transit, like roads, are a public service. You can’t expect the farebox to pay the full cost any more than we can sustain the entire road network with tolls.
Ross, I agree that farebox revenue shouldn’t generally be expected to provide the full cost of operating a line. But in the rare cases where it *does*, why on earth would one ever do something to hurt it?
I also agree that the more destinations that one can reach, the more valuable all parts of the network become. (In computing, this is called “Metcalfe’s Law”, and it certainly applies to transit networks as well). The only problem is that timing must be considered as a factor in the accessibility of destinations. For scheduled transit services like buses and trains, more nodes only add value to the network when they are actually *convenient* to reach.
Consider the case of two very frequent bus lines that connect with each. Since the waiting time at the transfer point is minimal, it’s fairly convenient to hop from one to the other. In this manner, each line effectively multiplies the value of the other.
I contend that this doesn’t really work with low-frequency bus lines, however. Who has the time to sit around for half an hour or more, waiting for their next bus to arrive? This can only benefit travelers with highly predictable commutes that just *happen* to line up with the rare well-time transfer; for any kind of unregimented or incidental travel (which is the bulk of all travel), such routes are basically worthless. Because of this, they don’t multiply the value of the network. They barely even add to it. Therefore, de-funding a frequent-service bus line that pays for itself, multiplies the value of the network, and is useful for incidental travel — in order to fund a once-per-hour bus line that does none of these things — is unsustainable from pretty much any way of looking at it.
“transportation innovation as well…MAX, Streetcar and Tram”
None of these technologies are new, their use is not either. They are merely the same vehicles used at turn of century with a new funding method, i.e. taxpayer vs. private enterprise. If you mean transit funding of today is an innovation I would also digress, but on that note nothing else is really new.
“To be fair, I would argue that financial sustainability is the root of all other forms of sustainability.”
It is fair, and factual to say that financial sustainability based on actual demand of service or product is a major American ideal that only recently has gotten the short stick. It seems people want to manipulate demand, ideals, and other such notions by using tax money, which I find abhorrent.
But in today’s world of unbalanced and market irrelevant industry sectors (transportation) we haven’t much choice left except to beg from the powers that be.
“Transit, like roads, are a public service. You can’t expect the farebox to pay the full cost any more than we can sustain the entire road network with tolls.”
History has and stands to prove otherwise. Where it not for intervention we would still have privatized systems abounding everywhere – and I can marketedly say that mass transit would still be options in far more places, but I digress. No one seems to like to look at the fact that history shows a rather different tale than what many like to believe or learn of.
“Ross, I agree that farebox revenue shouldn’t generally be expected to provide the full cost of operating a line.”
Why not? It pays far in excess of operations for Amtrak (they just can’t afford their inefficient use of labor, otherwise with parallel operations of Amtrak similar to Virgin rail they’d have enough to cover operations AND infrastructure), it pays for airline operations and enough to cover runway maintenance and operations (it doesn’t cover some of the gaudy ridiculously expensive airports we have though), it covers TGV in France to the profits of $500 million last year, and in many cities the transportation operations are still covered. Unfortuantely infrastructure is covered in none of the available transit systems in America anymore, but even the infrastructure used to be covered! …and amazingly auto operations are covered by private citizens. So far nobody steps in to make your maintenance, warranty, and other operational cost payments.
So seriously, why not? What good reason is there to legitametly not have operations covered by fare box recovery? Do we as a society devalue mass transit so much as to demand that it be subsidized instead of paying for its use? Is it really so worthless to us to find it not valuable enough to pay the measly operational expenses?
This comment isn’t directed at you Nathan, but in all seriousness the unbalanced nature of transportation as it is only expands further and discourages progress for new methods when people devalue something on such a large scale as to demand to not pay for something used.
Hi Adron,
Why not? Mostly because of the reasons I address in my comments in this post. Essentially, the idea is that because transportation can create benefits that extend far beyond what it possible to measure with a farebox (such as enhancing property values and facilitating economic transactions), it is rarely appropriate to require 1:1 relationship between the farebox revenues and transportation expenditures.
Although it is true that most transportation infrastructure used to be covered by revenue, it isn’t necessarily the case that those were the good old days. America is far more economically productive and vital than it was in those days, in part because it discovered the multiplier effect that good investment in public infrastructure can yield. If each dollar of streetcar subsidy produces sixty dollars of private development (and associated tax revenue), then that is a GREAT investment on the part of the city, worth vastly more than whatever meager ticket fares might be collected. Would this same multiplier effect occur if the streetcar were privately funded and had to recoup its capital and O&M costs at the farebox? Almost certainly not. And it *certainly* wouldn’t produce the same multiplier effect if private industry failed to build it in the first place, as would presently be the case.
While I wouldn’t want to do without the disproportionately large benefits that come from good transit subsidies, I also don’t think subsidies should be used indiscriminately. If a transit option (be it bus, rail, roads, or anything else) *isn’t* producing a desired multiplier effect, then why on earth should society subsidize it? By all means, let it pay for itself. And where transportation *is* subsidized, I would prefer that those subsidies go towards multiple private entities that are directly competing with each other — and reaping all the benefits of competition — rather than going towards noncompetitive public agencies that have no particular incentives to innovate or use their subsidies wisely.
I would point out that even private transit almost always operated in a public right-of-way. Even the early street cars were often built to enhance the value of land by connecting it to commercial centers. The land, of course, had initially been given away by the government at no charge. And that was also how the railroads were built – financed by free land that appreciated in value when serviced by a railroad. There really isn’t a lot that has happened in the history of the United States that didn’t have both public and private involvement.
TriMet has been going towards quality over quantity, having less lines that run more often. See, for example, the DJC article that was posted here and the “Frequent Service” concept. Line 158-Stevens Road in Clackamas and some westside shuttles have been eliminated.
However, public transit is also provided as a social service. Some lines don’t make financial sense, but they are the only transportation option for some, even if it means they have to wait 30 minutes. A “Frequent Service” line is useless if there is no service at all where you need it.
Overall, when it came time to cut service, they cut “fat”–lines that would still have good service, instead of lines that would have no service. Line 14 is still “Frequent”.
The problem with this is that cutting service for lines that are financially self-sustaining is that doing so doesn’t save any money. How could it? If a route is breaking even, then it costs nothing, and thus nothing is exactly what you save by cutting back its service. And if a route is actually profitable, then cutting back its service only reduces Trimet’s net revenue. How could this possibly be beneficial for the limited-service routes?
The fact that Trimet’s ridership has remained flat, even as gas prices have risen precipitously, seems to me to be sufficient proof that Trimet’s routing strategy is not working. I know that I personally ride the bus and the Max a lot less than I used to, despite the fact that they are my only forms of transportation. Commuting is still relatively easy on Trimet, but late-night travel has become unacceptably slow and difficult. If I didn’t live within walking distance of essentially everything I need — or if I weren’t physically able to walk long distances — then I’d honestly be pretty screwed. I’m sure there’s plenty of people who are; why are their needs less important than the needs of rural residents?.
So, while I do understand that public transport has an element of social service to it, I don’t understand why crappy service over a wide area is any more socially serviceable than good service over a smaller area. Either way, if routes have to be cut, then people are going to be hurt. The question is: do you cut routes in a way that still allows ridership growth to keep occurring, thus paving the way to expand service again in a financially sustainable fashion — or do you cut service, so that ridership will remain confined to the “riders of necessity,” with no potential for ridership growth or financial sustainability?
Trimet has made the latter choice, and it’s the wrong one.
Nathan Koren said: “To be fair, I would argue that financial sustainability is the root of all other forms of sustainability. If one’s otherwise “sustainable” venture is constantly running itself into the ground financially, then that’s hardly sustainable at all, is it?”
I totally agree!!! If transit is to be considered sustainable, then transit fares must support a considerably larger amount of funding towards providing the service. If bicycling is to be considered sustainable, then bicyclists must be directly taxed to pay the majority of the costs for bike lanes and bicycle infrastructure. The continuation of government escalating subsidies that fund these services without receiving more revenue from the transit fare box and directly from bicyclists is just digging a bigger and deeper tax sink hole. This can hardly be called sustainability.
The problem with this is that cutting service for lines that are financially self-sustaining is that doing so doesn’t save any money. How could it?
It may make the remaining service on the line more profitable. If you can get nearly the same number of riders on three buses that you used to get on four, you have saved money. I would assume there are reasons for the routing decisions Trimet makes, whether you agree with them or not. Since they get money from every business in the region, they obviously need to strike a balance between the quality of service in the areas of heavy transit use and serving areas where transit use is not “profitable”. You can call providing service in Washington county a political decision, but the businesses there are paying for transit service just like the ones in downtown Portland.
Terry, I don’t think we’re actually in agreement on this. Farebox revenue is only one form of sustainable revenue. In the right situation, taxes are another. For example, gas taxes sustainably and legitimately provide much (but not all) of the money needed for auto infrastructure expenses. Similarly, if businesses and property owners along the streetcar route decide that it’s worth their while to fully subsidize the streetcar and just eliminate its fairbox entirely — as many of them indeed want to do — then that would also be a perfectly valid and sustainable form of finance.
I’m just saying that self-sustaining farebox revenue is another form of finance that transit agencies should reach for when it’s in reach. It should be a major variable in the overall equation, but it should still one be of many variables that are considered. Right now, I have the nagging suspicion that Trimet treats it a minor variable at best.
Ross, do you know where I can find year-by-year service and ridership statistics for Trimet? I’d be curious to see whether 3/4 as many buses on a self-sustaining route actually carry nearly as many passengers as before — which, you are of course correct, would save money, even if it makes the bus service less convenient and attractive to use in the long term — or whether 3/4 as many buses end up serving 3/4 as many passengers, in which case Trimet wouldn’t have done itself any favors at all. In that situation, I would honestly question whether the tax revenue from Washington county is truly worth abandoning the farebox revenue from Hawthorne.
In any case, my opinions on this have mostly been formed through personal observation, and that single depressing data point about Trimet’s lack of ridership growth at a time when almost all other transit agencies have been experiencing considerable growth. But if there is a better source of data for ridership numbers along with service schedules, I’d love to see it. A while ago I spent a day searching through Trimet’s website for such information, to no avail. I found year-by-year ridership and expenditure numbers for the system as a whole, but not for individual routes.
Oh, and Terry — compared to the billions spent on mass transit and the trillions spent on highways, the public expenditure associated with bicyclists is so utterly and completely trivial that I honestly can’t imagine why you would waste a single neuron on it.
Taxes are only a part of sustainable revenue “IF” taxes and fees are paid by the users and the direct beneficiaries. As an example, the taxes that pay for policing offer the public security. However the taxes paid to support transit have a much broader base than the circle of users and direct beneficiaries. Furthermore, transit user fares do not contribute to maintaining the roads the busses run on everyday. Maintenance of streets and roads is an indirect subsidy from motorists that is not even included in the costs of providing transit service. On the other hand, bicyclists using bicycle infrastructure pay nothing in direct user fees and are 100% subsidized. The neurons that continue to be wasted on this form of transport is that bicyclists should continue to have a free ride. Fundamental reasoning is that bicyclists have the obligation to pay their own way for specialized infrastructure instead of feeding off of other sources of revenue. The latter would also free up money and resources for things such as fixing potholes, repaving streets and increasing highway capacity.
It has become quite evident that Terry’s wife ran off with a cyclist. Nothing else can explain this level of animosity.
Really, Terry, if you can present a rational argument showing that a system for taxing cyclists would actually bring in more revenue than it would cost to enforce, please do. Otherwise, for the love of god, drop it.
Well, let’s see: bicyclists have less than 1% of the dedicated road area that cars do, and bicycles create essentially no wear and tear on a road surface. So, what bicyclists ought to pay for, under a “fair” system, is less than 1% of some fraction of road maintenance costs that are due to the weather and natural aging, but not to wear-and tear. Furthermore, since a portion of gasoline taxes is supposed to go towards health & environmental remediation of the consequences of pollution — which bicyclists do not cause — then a proportional discount should be subtracted from the hypothetical bicycle usage fees. What this all adds up to is a pittance, a rounding error. And as ElGordo rightly points out, just creating the bureaucracy necessary to implement it (annual bicycle licenses, patrolling license-checkers, et cetera) would obviously cost far more to implement than it would produce in revenue.
Now I’m all in favor of fairness and cost-efficiency, but life is short, so you’ve got to choose your battles, man! If you want to make a crusade over chasing down some insignificant rounding error, then be my guest, but there are a more or less infinite number of bigger and better fish to fry.
The whole argument about bicyclists is silly. People who use their bike instead of their auto save the public money. We ought to be paying people to ride their bikes where its cheaper than providing space for another car.
Ross & Terry,
Giving this issue a bit more thought, it occurs to me that the least that we should be doing is giving bicyclists a refund on their taxes, equivalent to what would otherwise pay for oil wars and other automobile-necessitated foreign policies.
I mean, fair’s fair, right?
The irony is that in just about any other context “sustainable” means efficient, low impact, environmentally friendly, etc. Only in the “Transportation” arena are folks twisting its meaning to denote steady cash flow to do projects.
At the Bi-State Summit at PSU last year the Energy panel spent its 20 minutes talking about conservation, while ODOT and WashDOT talked exclusively about getting projects built…they are still in the 70’s mind set when the experts’ projections showed that we needed 10 nuclear power stations. They got us WOOPS, the largest bond default in US history instead.
Nathan said “bicyclists have less than 1% of the dedicated road area that cars do”
But they are allowed to use all road surfaces that motor vehicles do (except freeway travel lanes) in addition to options like the Eastbank Esplanade and the Springwater Trail, both of which have consumed transportation funds that bicyclists do not directly contribute to. Furthermore, 100 million dollars plus to include bicycle infrastructure as part of the Columbia Crossing project is no small amount – one that bicyclists themselves should pay if they want the connection.
Ross Said “People who use their bike instead of their auto save the public money”
That was probably true 20 plus years ago when there were NO bike lanes or specialized bike infrastructure such as currently are in place, and bicyclists do not pay for or to use.
Nathan “I mean, fair’s fair, right?”
Since one in every 8 or 9 jobs in America is tied to the auto industry, most of them in the private sector held by people that pay taxes, and since the jobs tied to bicycling are miniscule in comparison, bicyclists should actually be taxed double compared to what others pay to cover the costs for the negative impact bicycling has on employment.
There is no reasonable argument for NOT directly taxing bicyclists to pay for bicycle infrastructure. The absence of such a direct tax is nothing more than a socialistic political agenda. I dare anybody to put it to a public vote!
Since one in every 8 or 9 jobs in America is tied to the auto industry, most of them in the private sector held by people that pay taxes, and since the jobs tied to bicycling are miniscule in comparison, bicyclists should actually be taxed double compared to what others pay to cover the costs for the negative impact bicycling has on employment.
You’ve just tossed any credibility or consistency you may have had on “free market”, “equality” and “social engineering” arguments. You want to A) punish people for making market decisions that you don’t like and B) disproportionately tax users of one mode of transportation. These were supposedly government/taxation practices which you did not support, but apparently now you do. Your anti-bicycle agenda is now clear.
I dare anybody to put it to a public vote!
I dare you to put it to a public vote. You are the strongest advocate for a bicycle tax that I’ve seen in any Portland or Oregon-centric forum. We have an initiative process in this state… get a group together and go for it. I’ll even sign your petition. (But I don’t think you’ll win.)
I suggest you start by gathering signature in Wal-Mart parking lots. This is not a slam on Wal-Mart or its customers… from what I have read of their demographics, it just seems like a logical place to find sympathetic ears for cause.
– Bob R.
Terry, am I understanding this correctly? Having too few taxes is a socialist conspiracy? Um… What?
I don’t really know how to respond to this, other than to mark it down as on of those “only in Portland” kind of moments, and get on with the rest of my life…
Also, just a tip: damning something by labeling it “socialist” is a strategy that went stale in the late 80s. There are relatively few self-identified socialists around these parts, and I myself am a fairly ardent capitalist. So the whole “socialist” shtick really doesn’t give your argument any traction — quite the opposite, in fact. If you want to convince people of something, first try to figure out what their underlying motivations and desires are, and then find a way to work for or against those. If you generically ascribe their underlying motivations to “socialism,” they will immediately decide that you are full of hooey, because they know, much better than you, what it is that actually motivates them.