Opinion: Daily Journal

A Better Way To Use A Bad Tax

RALEIGH – If the Triangle Transit Authority is going to continue getting millions of dollars from the local tax on car rentals, there are certainly worse ways to spend the money than investing in new buses and vans.

Like continuing to buy land for train stops.

With $4 gasoline, demand for transit service is understandably up in the Triangle area and in other North Carolina metros. Some of the increased demand comes from “choice” riders, those who own automobiles but can be induced to ride buses or vanpools if fuel costs and traffic congestion are high enough. Although political activists and environmental extremists are prone to exaggeration about transit ridership – even huge percentage increases on a tiny denominator still translate into only a small number of folks commuting by transit – there is no doubting the trend.

For years, TTA spent the car-rental taxes to help purchase right-of-way for its planned rail system linking North Raleigh, via Cary, to the Research Triangle Park and Durham. Then it became obvious, even to the true-believers, that the envisioned system wasn’t going to receive federal funding. The forecasted ridership and effect on vehicular traffic were too small to justify federal dollars.

In my view, the best idea would have been to repeal the car-rental tax altogether. It never made sense to force rental-car consumers – not just visitors but also local businesses and people awaiting car repairs – to finance a disproportionate share of local transit development. If public subsidy for transit is justified, it should be financed with broader taxes. And because the original selling point for the tax was the rail plan, I think the best course of action would have been to rescind the tax and start over with new plans and institutional arrangements.

But government agencies rarely stop collecting taxes or cease operations of their own accord. TTA doesn’t run local bus systems, which remain under the control of municipalities, but it does provide regional service. It isn’t going away anytime soon. The next-best policy, then, would be for TTA to spend the tax dollars on assets that have immediate, practical uses and won’t lose most of their value in the future if economic conditions change.

Plowing more money into rail preparation fits neither bill. Buses and vans do. Right now, they can be productively employed to carry willing customers. In the future, they can either remain in service in the Triangle or be sold to other jurisdictions, depending on what happens to gas prices and local commuting patterns.

In general, North Carolina transportation policy should be built with an eye to flexibility and a nod to unpredictability, rather than assuming that politicians today can confidently guess what development patterns and technology will look like 25 or 50 years from now. That argues for multi-use infrastructure, such as dedicated high-occupancy-toll (HOT) lanes in high-traffic corridors that can also be used for express bus service if demand is sufficient. It argues against single-use infrastructure, such as new tracks and rail stations.

Before transit advocates get too carried away with themselves, they need to think more clearly and cautiously about the current transportation environment. Even today, with transit usage up markedly in some places, far more people telecommute to the office than take the bus. Even in Charlotte, the hoopla about the new Lynx line has obscured its minor but relatively expensive role in moving commuters in and out of the city. (You’ll see a detailed JLF analysis of the Charlotte rail experiment soon.)

So will TTA makes sensible use of its future tax revenues? As the eternal optimist, I’ll have to say, uh, maybe.

Hood is president of the John Locke Foundation.