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Of Rail, Lying And Lemons

Opinion Editorial
August 8, 2002

By Wendell Cox

It’s the same story over and over. Transit districts ask the voters to approve taxes to build expensive rail systems. The voters consent, and get half of what they bargained for — the tax. As for the promised rail system, it almost always turns out that there just isn’t enough money to deliver on the promises.

Or, transit board members will be told by consultants that a rail line can be built for a certain amount of money. But invariably, after the local political establishment has committed itself to the project, the cost increases start arriving.

Three Danish researchers have just concluded a comprehensive study of hundreds of transport projects and conclude that all of this is not happenstance. The technical term they assign to their findings is . “lying.” In an American Planning Association (APA Journal) article, they put it this way.

The use of deception and lying as tactics in power struggles aimed at getting projects started and at making a profit appear to best explain why costs are highly and systematically underestimated in transportation infrastructure projects.

And so it was that St. Louis voters approved a tax for four rail lines in 1994, only to find within three years that there was barely enough money for one. Or there were the voters in Seattle, who have seen world class cost escalation, at the same time that the promised system has been significantly scaled back, even before the first shovel has been turned.

Perhaps the most pitiful case is Charlotte, where, two years after our report predicting it, local officials have announced steep cost escalation, much of it due to “things left out” of the original plan. As if that were not enough, Mayor Patrick McCrory told the Charlotte Observer that there was no problem, because the voters had approved a tax, not a plan in 1998. Mayor McCrory has a short memory and his comment insults the intelligence of the constituency that elected him. There was a plan, detailed and widely publicized. The voters of Charlotte did not simply grant authority to spend money, they were induced to support the tax by the promise of the plan. Another prediction — within the next year or two, there will be a call for additional taxes or announcements of system cutbacks or stretching project delivery dates out beyond the retirement dates of most transit middle-management.

My personal experience mirrors the international findings on two counts. First; in 1980 the Los Angeles County Transportation Commission, of which I was a member, told the voters that in exchange for a one-half cent sales tax we would build eleven rail lines. Twenty two years and another tax increase later, three lines have been built and a fourth project is struggling toward completion. There are no serious plans to fulfill the 1980 promises.

Then, in 1981, we members of the Los Angeles Transportation Commission were told that a light rail line could be built from Los Angeles to Long Beach for less than $150 million. Soon after we approved the line, the costs started rising. By the time the line opened in 1990, the cost had more than quadrupled, after accounting for inflation. A private company that spent $600 million for a $150 million project would be mercifully forced into bankruptcy. But things are different in government. No public official, especially no elected official, can imagine suffering the embarrassment of “pulling the plug” on a major project, no matter how obscene the cost escalation becomes. It is not surprising that light rail builders have an incentive to claim projects will cost less, while planning to push the prices up after virtually irrevocable approvals have been given.

The same thing occurred with respect to the Denver Southeast light rail line. Between 1998 and 2000 the cost of the project rose from under $600 million to nearly $900 million. Prospects are that future rail extensions will have similarly rising costs, and that, as in other urban areas, the reality will fall far short of the promise.

But there is a more important issue here. The legal equivalent of lying is fraud. Consumer protection laws forbid fraud in commercial transactions and violation can result in civil or even criminal penalties. The citizenry should at least be able to depend upon being treated as well by their government as by the otherwise unscrupulous used-car salesman who values his freedom more than a fraudulently earned commission. Perhaps it is time to apply “lemon” laws to government.

Copyright 2002, Independence Institute

INDEPENDENCE INSTITUTE is a non-profit, non-partisan Colorado think tank. It is governed by a statewide board of trustees and holds a 501(c)(3) tax exemption from the IRS. Its public policy research focuses on economic growth, education reform, local government effectiveness, and Constitutional rights.

JON CALDARA is President of the Institute.

WENDELL COX is Senior Fellow for Urban Policy of the Independence Institute. He was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley and was appointed by Speaker Newt Gingrich to complete the unexpired term of New Jersey Governor Christine Todd Whitman on the Amtrak Reform Council.

ADDITIONAL RESOURCES on this subject can be found at: www.i2i.org

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