Category: Transportation

Testimony on HB 4001/SB 1507 Regarding Energy Rationing for Environmental Quality

Testimony of John A. Charles, Jr.

President & CEO, Cascade Policy Institute

 Regarding HB 4001/SB 1507

February 7, 2018

Members of the Committee: I have spent the last 45 years of my life promoting environmental quality. I began my career working for the Environmental Defense Fund, a group that was an early innovator in market-based mechanisms. From 1980 through 1996 I was CEO of Oregon Environmental Council, where I helped pass dozens of environmental laws. Since 1997 I have worked for Cascade Policy Institute, promoting concepts such as congestion pricing of roads.

If I thought that HB 4001 and SB 1507 could deliver significant pollution reductions at reasonable cost I would support them, but they will not. To summarize the problem in one sentence, the bills require Oregonians to pay a significant tax that will be certain, immediate, and local; for benefits that are speculative, long-term, and global.

This stands in sharp contrast to environmental policies such as drinking water regulations. Provision of safe drinking water does have a major cost, but the benefits are substantial and they accrue 100% to those who pay. Oregonians are quite willing to bear the expense of such programs because they demonstrably make us all better off. This will never be the case with carbon dioxide regulation.

Moreover, even assuming that reducing CO2 has some local benefit, the relevant trends are already moving in the right direction. According to the most recent legislative report from the Oregon Global Warming Commission, the “carbon intensity” of Oregon’s economy – that is, greenhouse gas emissions/unit of state GDP – dropped 64% from 1990 through 2015. This is a spectacular achievement, and it is driven almost entirely by market forces.

Last week the Environmental Protection Agency released its latest update of automobile emissions trends for carbon dioxide. The report shows that CO2 emissions per mile for all motor vehicles sold in 2017 were the lowest since the agency began collecting data in 1975.

For truck SUVs, the reduction since 1975 was 50%. For minivans it was 51%. For standard passenger cars it was 55%. Almost miraculously, automakers have produced the cleanest cars in history while also making them safer and more pleasant to drive than the 1975 models.

There is no crisis in Oregon regarding CO2 emissions. The trends are positive and long-term. This is a case where you should simply “do no harm” by staying out of the way.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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John Charles Carbon Rationing Testmony HB 4001 2-7-18

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For Green Activists, the Cleanest Cars in History Are Bad News

By John A. Charles, Jr.

The Oregon Legislature convened again this week. A top priority for some officials is SB 1507,

which would create an energy rationing program that likely would increase the cost of gasoline to more than $7 dollars per gallon by 2035. This is being promoted as a means of reducing carbon dioxide, which some people think is a pollutant.

Coincidentally, the Environmental Protection Agency just released its latest update of automobile emissions trends for carbon dioxide. The report shows that CO2 emissions per mile for all motor vehicles sold in 2017 were the lowest since the agency began collecting data in 1975.

For truck SUVs, the reduction since 1975 was 50%. For minivans it was 51%. For standard passenger cars it was 55%. Almost miraculously, automakers have produced the cleanest cars in history while also making them much safer and more pleasant to drive than the 1975 models.

One would think that environmental advocates would be pleased with this success story, but good news is actually bad news for activists. They can only pass onerous legislation when everyone thinks we have a crisis.

We don’t have a crisis, and we don’t need this bill.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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Road Policy Belongs to Those Who Show Up

By John A. Charles, Jr.

The Oregon Department of Transportation is hosting three Open Houses this month to discuss the possibility of changing how several local highways are managed.

Currently, we finance roads through gasoline taxes. However, a growing number of cars use little or no gasoline. Therefore, the legislature is requiring ODOT to study an alternative finance mechanism for I-205 and part of I-5 that would rely on user fees collected electronically.

In addition, those fees would vary in price depending on the time of day, direction of travel, and day of the week.

While this may sound punitive, the fact is that a single highway lane can move anywhere from 700 vehicles per lane, per hour, to more than 2,000 vehicles, depending on the density of traffic. At times of hyper-congestion, throughput drops dramatically as we sit in stop-and-go conditions.

An alternative would be to use variable toll rates to even out demand, thereby tripling the number of cars per lane while averaging about 45 miles per hour.

Is it a good idea to make our highways three times more productive through congestion pricing? That’s what the Open Houses will explore. Interested motorists should attend, because policy belongs to those who show up.

 

This is the schedule for ODOT’s community conversations, according to the department’s press release:

  • Tuesday, Jan. 23, 4:30 to 7:30 p.m., Clackamas Town Center Community Room (Level 1 near Buckle and across from Macy’s), 12000 S.E. 82nd Avenue, Happy Valley
  • Saturday, Jan. 27, 10 a.m. to 1 p.m., Lloyd Center (Level 1 between Ross and the ice rink), 2201 Lloyd Center, Portland
  • Tuesday, Jan. 30, 4:30 to 7:30 p.m., Vancouver Community Library, 901 C Street, Vancouver.
  • 17 to Feb. 5, the Online Open House will be active at odotvaluepricing.org. The public can see materials, view video recordings of the project Policy Advisory Committee meetings and leave comments for the project team.

 

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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Poll Shows Voters Are Smarter Than Politicians Think

By John A. Charles, Jr.

In November the regional government, Metro, released the results of a new public opinion poll of 800 registered voters living in the tri-county region.

One of the questions was, “In a few words of your own, what is the most important change that could be made to improve the quality of life in the Portland region?”

The top three responses were: dealing with the homeless/poverty (25%); affordable housing (17%); and traffic congestion (14%).

Environmental issues tied for last place (2%), and global warming did not even make the list.

This is roughly the opposite of what we frequently hear from many of the political talking heads. Listening to them, one would think that environmental Armageddon is upon us, especially because Donald Trump is President.

For instance, the top legislative priority for Senator Michael Dembrow (D-Portland), who chairs the Senate Environment Committee, is a bill he hopes to pass in early 2018 that would create a $700 million/year tax on carbon dioxide by establishing a convoluted industrial regulatory program. The ambient environment would not be improved one bit by this tax, but all of our basic necessities—food, clothing, shelter, and energy—would become more expensive.

Sen. Dembrow’s biggest supporter on this issue is Governor Kate Brown, who recently flew to Bonn, Germany to hobnob with celebrities at a United Nations conference on global warming. The two of them are convinced that if they can make energy more expensive, we’ll all use less of it and the world will be saved from “global warming.”

Most voters intuitively know that this is a scam. The term “global warming” doesn’t even have a useful definition. Voters know that the pain-versus-gain equation of global warming taxes is heavily one-sided: the “benefits” of reducing fossil fuel use are highly speculative (and may not exist at all); long-term (potentially thousands of years away); and global in nature. Yet the costs will be known, immediate, and local.

As the Metro poll shows, there is very little grassroots support for this kind of punishment.

It’s not surprising that homelessness, housing, and traffic congestion rank as the top three issues in the Metro poll because these are problems most of us confront daily. They are also things we can take action on.

Unfortunately, government itself has caused much of the mess, so voters will need to think carefully before signing on to more tax-and-spend programs. Almost every time regulators intervene in real estate markets, the result is some combination of less housing production and higher housing prices.

Take the most obvious intervention: urban growth boundaries. Since 1980, the population of the Portland metro region has increased by about 78%, but the available land supply for housing has only gone up by 10%. Making buildable land artificially scarce and thus more expensive is not a winning strategy if you’re trying to provide more housing.

But lack of land is just the start. After you add in ubiquitous farm and forestland zoning, extortionist system development charges, tree protection ordinances, inclusionary zoning requirements, prevailing wage rules on public housing projects, and numerous other interventions, the result is that we have a serious shortage of housing.

Even the government is trapped in government regulation. Last spring the Portland City Council approved spending $3.7 million to purchase a strip club on SE Powell Boulevard near Cleveland High School. The City plans to tear down the building and build 200 to 300 units of low-income public housing on the 50,000-square-foot property. City officials have admitted that it will take two years just to obtain the necessary permits for the redevelopment.

If it takes this long to get the permits for one of Mayor Ted Wheeler’s top priorities, imagine the delays facing a private sector developer.

The housing woes in such cities as Portland, San Francisco, New York, and Seattle are mostly self-inflicted. Housing supply is lagging demand because we’ve created so many barriers to housing construction. Removing those barriers should be a top priority for the state legislature when it convenes in February.

Global warming legislation does not even deserve a hearing.

John A. Charles, Jr. is President and CEO of the Portland-based Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article was published by the Pamplin Media Group and appeared in The Portland Tribune.

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Tolling People on to Portland’s Highways

Tolling People on to Portland’s Highways

By John A. Charles, Jr.

Earlier this year the state legislature passed a bill requiring the Oregon Transportation Commission (OTC) to apply for federal authorization to implement “value pricing” on two regional highways: I-205, and I-5 from the Washington border to the intersection with I-205. The OTC must apply by December 31, 2018.

Although value pricing may sound vague or somewhat ominous, motorists should be happy with this new policy. It has the potential to eliminate traffic congestion and create a revenue stream that will allow us to build the new highways and bridges that we need.

First, some background. “Value pricing” is a bureaucratic term for electronic tolling of highways where the toll rates vary based on the density of traffic. Usually, the rates change based on time of day, direction of travel, and day of the week. The rates are set to ensure 45 MPH driving conditions at all times of the day, hence the “value” offered to motorists.

There are many possible variations on this theme. In most cases, value pricing is used on new highway lanes, allowing drivers the option of staying in the unpriced, general purpose lanes. That probably will not be feasible in the Portland region because there is no room for an entire new network of priced lanes on I-5.

In some ways this is a blessing, because variable tolling will make our current lanes more productive. If priced properly, it’s possible that new lanes will not even be needed, saving us the expense of construction.

Value pricing is necessary because our current system cannot address congestion. Our highway network is an open access system, where each trip appears to be “free.” Of course, it’s not free—it’s being paid for by various back-door mechanisms such as motor fuel taxes, vehicle registration fees, and random federal grants. But we think it’s free, so during peak hours we see a “stampede” effect.

When too many people try to get on at the same time, per-lane throughput drops substantially. The carrying capacity for most highways is roughly 1,800 vehicles per-hour in each lane. At times of hyper-congestion, this can drop to 900 vehicles or fewer.

By using variable pricing, we can clear up the stampede and get per-lane travel back to 1,600 or 1,800 vehicles per-hour. In essence, value pricing allows us to “toll on” more people than we “toll off.”

The effect of this was seen recently when tolls on the Port Mann Bridge in Canada were removed on September 1. The Port Mann is a 10-lane bridge over the Fraser River near Vancouver. After tolls were removed, the result was a huge increase in congestion. One driver saw her daily commute increase by 25 minutes each way. She told a news reporter, “Absolutely, it’s terrible. It’s selfish but I want those tolls back on.”

In addition to the benefits of free-flow driving conditions, variable tolling will also create the dedicated revenue stream we need for future highway expansion. There is no doubt that we need several new bridges over the Columbia River, plus additional highway lanes elsewhere. Value pricing will tell us where to build, when to build, and who is willing to pay.

Fortunately, the Oregon Constitution does not allow toll revenues to be siphoned off for non-highway uses such as light rail construction. Therefore, money paid by motorists will benefit them directly.

The new law mandates value pricing on two specific highways but also authorizes the OTC to implement pricing anywhere else. Since the Portland highway network is an integrated system including I-84, I-5, I-405, HW 26, HW 217, and I-205, it would be better to implement value pricing region-wide to ensure that motorists get what they want: free-flow driving conditions, at all times of the day.

Most new highways being built around the world are using electronic tolling with variable rates. The new Oregon law is an opportunity for us to learn from that experience and to implement a Portland highway pricing system that truly delivers “value” for motorists.

John A. Charles, Jr. is President and CEO of the Portland-based Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article was originally published by the Pamplin Media Group and appeared in the Wilsonville Spokesman and The Portland Tribune.

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Transportation Finance Isn’t as Complicated as Legislators Make It

By John A. Charles, Jr.

Some members of the Oregon Legislature think you don’t pay enough to travel. Therefore, they are considering a 298-page bill that would create multiple new transportation taxes.

The draft legislation, HB 2017, includes dramatic increases to vehicle registration fees, higher gas tax rates, a new sales tax on the purchase of motor vehicles and bicycles, and a statewide tax on all employees to subsidize transit.

In addition, a percentage of money currently paid by customers of investor-owned electric and gas utilities would be diverted to subsidize electric vehicle owners.

Billions of dollars would flow to various bureaucratic entities, with little accountability. Those of us paying the taxes would hardly know we’re paying them, and we would have no idea how the money was being spent.

The legislative strategy of simply “throwing money” at transportation is not going to work, because it’s already been tried. For example, TriMet riders only account for about 10% of all revenue in the FY 18 budget; the rest of TriMet’s income is derived from various backdoor taxes.

The agency’s most lucrative income source is the regional payroll tax, authorized by the legislature decades ago. TriMet has been raising its payroll tax rate almost every year since 2005 and will continue to do so through 2024. As a result, the agency now collects over $366 million annually from employers to subsidize transit operations. Yet, in the first decade after tax rates began rising, TriMet service actually declined.

Much of the new money went to pay for generous union contracts rather than the promised service improvements. The result: In 2016, employee benefits equaled 123% of wages. In other years the ratio has been as high as 149%. This is not a finance model that we should emulate.

The best way to improve any kind of service is to have a tight fit between what we pay as consumers and what we get in return. If we don’t know the real price, we can’t evaluate the purchase. And if taxpayers are being forced to subsidize unrelated services, there can be no fiscal discipline.

A better option would be to euthanize this 298-page monstrosity and work to implement highly-targeted user fees. The social costs of travel such as congestion, road wear, and noise pollution vary considerably by time of day, direction of travel, weight of the vehicle, and other factors. The user fees that we pay should account for these differences.

Gasoline taxes and vehicle registration fees are poor user fees because they are fixed, mostly invisible, and not time-sensitive. But new technologies now allow us to collect the full cost of each trip in real time by all modes of travel.

Some auto insurance companies already collect detailed driving data because they sell mileage-based policies. Millions of American drivers also own toll tags for use in modern tollways. And many transit operators use digital technology to collect variable fees based on distance traveled, type of service, and time of day.

User fees should be precisely calculated, and revenues should be dedicated to maintaining and improving the services paid for by consumers, with no cross-subsidization of other modes.

Transportation finance doesn’t have to be complicated. Legislators only make it that way when they don’t want you to know where the money is going.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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John A. Charles, Jr. featured in KATU 2 story on the “cash for clunkers” program

The federal government’s ‘Cash for clunkers’ program aims to boost cars sales and cut fuel use by letting car shoppers trade-in their older, gas guzzling vehicles for a rebate from $3,500 to $4,500 toward the purchase of a newer, more fuel-efficient vehicle. Cascade President John Charles points out why the program won’t work as intended, and how it will create a shortage of used cars, thus driving up their prices and making it even more difficult for low-income people to purchase affordable transportation.

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