Light-rail transit is a bad deal for Nevadans

No light-rail line anywhere has ever boosted the overall growth of any region

By Robert Fellner
  • Wednesday, June 20, 2018

Nevadans should trust neither the cost estimates nor claims of future benefits made by the promoters of public transit projects, according to the researchers behind the largest and most robust study of public transportation infrastructure projects ever conducted.

The study — Underestimating Costs in Public Works Projects: Error or Lie? found that the actual cost for public transportation projects was, on average, 41 percent higher than what was originally forecasted.

The researchers determined that the “cost estimates used to decide whether such projects should be built are highly and systematically misleading,” something which “cannot be explained by error and is best explained by strategic misrepresentation, that is, lying.”

Of course, and as their incentives dictate, this fact has done little to dissuade government agencies tasked with providing transit from advocating for such schemes.

As reported recently in the Las Vegas Review-Journal, the Regional Transportation Commission of Southern Nevada (RTC) is now considering the creation of an 8.7 mile light-rail system, with a starting estimated cost of $750 million that would be mostly funded via an increase in the county sales tax rate.

The near-certainty that costs will end up ballooning past this initial forecast is just one of many reasons why taxpayers should be skeptical.

For starters, there is good reason to believe the demand and actual number of users of a light-rail system will be far less than projected, much like what happened with the Las Vegas Monorail.

Take the case of Phoenix, for example, which is frequency cited as an example of a successful light-rail system.

Nearly seven years after its creation, local transit authorities reported that only 0.3 percent of Phoenix commuters used the light-rail system in 2015, according to an azcentral.com news report.

And when you look at the numbers for all forms of public transit, things get even worse. In 2008, the year before the Phoenix light-rail line opened, 3.3 percent of commuters took public transit to work. By 2015, it was down to 2.5 percent. In other words, the number of light-rail commuters is not even enough to offset the number of those who have stopped using public transit altogether.

Unable to defend such numbers, proponents instead have claimed that the transit system was responsible for economic growth in the region. But this is simply not true, according to the Cato Institute’s Randal O’Toole:

Light-rail advocates also claim the Phoenix rail line has stimulated economic development. In fact, many of the developments they count were projects planned before the rail line opened but were never built. Today they are vacant lots, and the companies that planned them are out of business, while most of the money spent on developments that were actually built were on government or government-subsidized projects.

While rail transit in some cities may have influenced the location of developments, no light-rail line anywhere has ever boosted the overall growth of any region. Why should taxpayers spend billions of dollars to shift development from one set of property owners to another?

Then there are the “recurrent theme of mispricing, misallocated funds, suboptimal service and investment and inflated production costs,” that have come to define public transit systems generally, according to Brookings Institution transportation expert Clifford Winston.

In Nevada, labor costs for the construction of a light-rail system will be artificially inflated by the state’s so-called prevailing wage law — which sets wage rates for public work projects approximately 46 percent above market levels.

The law is one of the state’s clearest examples of how the democratic process bestows concentrated benefits on the politically powerful at the expense of the dispersed masses.

While a clear rip-off for taxpayers, the law makes sense from a political perspective. Labor unions assigned to the project receive wages 46 percent above market rates. In exchange, compliant politicians receive union support come election time, as well as the positive press that comes with the unveiling of a shiny new train station.

Public transit systems are also notorious for selling tickets well below the amount needed to cover costs, while forcing taxpayers who may never use the system to pay for the difference.

This reliance on taxpayer funding can lead to a particularly vicious cycle. Because most public transit systems do not receive sufficient funding from users, when an economic recession hits and tax revenue falls below what is necessary to keep the system running, transit authorities have historically responded by increasing taxes and raising fares — precisely when taxpayers can least afford another tax hike.

Finally, the push for light-rail reflects a failing endemic to government generally: an inability to innovate and overreliance on outdated models.

The impending widespread adoption of autonomous vehicles is expected to revolutionize transit as we know it, by reducing congestion and travel time, lowering insurance costs and virtually eliminating automobile accidents completely according to a recent study published in the international, peer-reviewed journal Transportation Research: Part A.

Rather than doubling-down on a system defined by an “overwhelming evidence of government failure,” Nevada should instead look towards the future.

Lawmakers should be proactive in exploring and solving all the regulatory and legal issues surrounding autonomous cars now, so that we can take advantage of this ground-breaking technology as soon as possible.

Despite claims to the contrary, the creation of a light-rail system and similar projects will only serve to enrich politically-connected unions and compliant lawmakers who benefit from the short-term spotlight that such projects bring, while bearing none of the long-term costs.

Robert Fellner is the Nevada Policy Research Institute’s policy director


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