Transportation Solutions: After the defeat of R-51

By Staff, Evergreen Freedom Foundation

Referendum 51 (R-51) was resoundingly defeated in November for several reasons. Among them: a lack of accountability measures, a well-founded distrust of government, and the fact that the $7.8 billion tax package only funded project start-ups, not completion.

So now what? Individuals and businesses are still losing too much time to traffic congestion.

If R-51 wasn't the solution, what is? The Seattle-area ranks fifth in the nation for worst traffic congestion. The typical Seattle peak-hour road traveler spent 82 hours stuck in traffic in 2000. That same traveler wasted 137 gallons of fuel.(1)

The transportation quagmire in Washington is igniting tempers, diminishing our quality of life, draining the economy, and driving businesses out of our state. Washington's gridlock costs the state an estimated $2 billion per year in wasted resources.(2)

First of all, throwing more money into the transportation system is like pouring gas into a leaky tank. It won't work. The problems in the Department of Transportation (DOT) run far deeper than funding: a flawed budget process, lack of clear goals, lack of measurable outcomes, inefficient planning, and poor agency structure, among others. These issues must be addressed and eliminated.

DOT needs to present a clear plan, with specific, concrete, market-based goals for reducing traffic congestion.

The following pages will present ways that DOT can save money and reduce congestion through restructuring the 468 agencies involved in transportation, implementing proven best practices, eliminating waste, funding efficiencies and seeking alternative funding sources for transportation.

These ideas have proven effective in other cities, states and countries dealing with transportation challenges. And they do not require additional taxes.

STRUCTURAL IDEAS

Create a binding, accountable budget
The current transportation budget does not prioritize projects or provide project start and completion dates. Transportation appropriations should be written in clear, binding language and should be part of the state general fund and capital budgets. The current transportation budget is written in loose, non-binding language, and appropriates money to transportation programs without project specification. The Secretary of Transportation has unlimited transfer authority to move money between transportation programs. This means there are no set standards against which to audit spending.

Create a clear mission statement
Once the budget process is fixed, DOT should write a clear mission statement based on its core responsibilities. DOT's current mission statement reads: "The Washington State Department of Transportation keeps people and business moving by operating and improving the state transportation systems vital to our taxpayers and communities." By law, however, all DOT must do is provide a means or method for a coordinated transportation system. It does not need to build, maintain, or operate any part of that system.

By including in its mission statement the need to operate and improve the state transportation system, DOT precludes meaningful outsourcing (contracting out); public-private partnerships; or privatizing parts of our transportation infrastructure e.g. airports, transit hubs, rest stops, the ferry system. DOT falsely assumes in its mission statement that it is exclusively responsible for building, maintaining and improving our transportation infrastructure.

Require specific, quantifiable goals and performance audits
Accountability can be ensured through meaningful goal setting and regular performance audits of DOT.

The best way to conduct a meaningful, comprehensive performance audit is through the State Auditor's office. Currently, the State Auditor only can conduct performance audits when the legislature specifically appropriates the money in the budget or when the Joint Legislative Audit and Review Committee (JLARC) authorizes it. Limited financial resources are granted to auditing purposes. Audits should be part of the standard operations of any government agency.

In 1996, after two meaningful performance audits of Michigan's DOT, full-time equivalent (FTE) positions went from 4,206 to 3,300 over a four-year period. Consider that Michigan has a population of 10 million people and Washington's population is only 6 million, yet Washington's DOT employees twice as many FTEs. In Washington, a reduction of the same percentage of employees would eliminate 1,600 positions, saving taxpayers $100 million annually in wages and benefits.

In the mid-1980s, New Zealand suffered economic catastrophe and overhauled the way its government operated. It slashed taxes, and privatized many government programs. The New Zealand Ministry of Transport was a bureaucracy with 5,500 employees. After introducing a clear mission, performance incentives and strong accountability the department was streamlined to a mere 56 employees within two years.(3) A similar reduction of our state's 6,800+ DOT employees would save taxpayers over $400 million annually in wages and benefits.

Washington's DOT, the governor and the legislature should study these examples and consider a taking similar action. While an effective Department of Transportation would oversee the work assigned, private companies can actually do the work.

Restructure DOT
The governor should appoint the Secretary of Transportation. The head of an agency as large and costly as DOT ought to be appointed by and answer to the governor. This would create direct accountability. Currently, the governor appoints a commission that selects the Secretary of Transportation. The commission has no independent staff and is just an additional, unnecessary layer of state government bureaucracy.

Consolidate agencies and streamline the permitting process
The Blue Ribbon Commission on Transportation has identified 468 different entities involved in transportation – that's 468 different entities with authority for transportation planning, funding, management, and construction. The fact that 468 separate entities exist would be a self-evident problem in any non-government organization.

With so many different hands trying to draw money out of the transportation pot, too much money is spent on bureaucracy and too little on transportation. Unnecessary agencies and jurisdictions should be eliminated. The remaining agencies should be consolidated to streamline the permitting process and increase efficiency.

Consolidating these entities also would improve the budget approval process for new roads—currently a costly, time consuming process in which DOT requests "design" funds; the Transportation Commission approves or modifies funding requests; then the request goes to the Legislature for final approval. And, this process only secures funding for the project design, not actual construction.

Many times conditions have changed by the time the Legislature appropriates the funding to build the road. Then the designs have to be redone. The Blue Ribbon Commission on Transportation said that, "The current system of governance and funding is fragmented which makes it difficult to identify, fund and implement the most cost-effective transportation solutions." That was more than three years ago, and nothing has changed!

Consolidate funding
Rather than sending money to 468 different transportation entities, the legislature should consider creative ways to reduce the number of hands reaching into the transportation pot.

All sales tax generated from automobile and other private transportation-related sales should be used to fund roads, instead of funding the general operating budget of the state. Why use transportation sales tax revenue for non-transportation purposes? It makes sense for state and local governments to take the sales tax generated from automobile sales or car repairs and dedicate it to roads. This action would transfer over $1 billion from the general operating budget to transportation. With a $2.5-$3 billion state deficit, it would not be possible to do this in 2003, but the legislature should phase this in over the next eight years.

The 2003 Legislature can move to create a binding, accountable budget. This budget should be contained in one document, and be easy to understand. All future funding measures should be tied to performance. This would create incentive for managers and workers to find and eliminate inefficiencies.

PROVEN "BEST PRACTICES"

Introduce competitive bidding
Competition in the marketplace improves performance and keeps costs down. Competitive bidding does not mean that public services automatically become privately operated. Rather, private organizations and public employees compete for the opportunity to perform a public service. Competitive bidding should be introduced immediately in the areas of road maintenance, road preservation, and landscaping.

When Indianapolis Mayor Stephen Goldsmith introduced private-sector competition, the unionized city crew of the Indianapolis Street Maintenance Department had 32 managers for 90 workers. The union quickly realized it was not competitive and worked with Mayor Goldsmith to reduce overhead. As a result, 50 percent of the managers were laid-off or transferred. The unionized city maintenance workers won many future maintenance contracts by decreasing costs 25 percent while increasing productivity 68 percent.(4)

British Columbia's Ministry of Transportation recently allowed competitive bidding between public transportation employees and the private sector, and listed the following benefits:(5)

• Reduced costs
• Lower public debt
• More infrastructure built sooner due to cost savings
• Innovation in design and construction
• Faster completion of projects

Massachusetts, Virginia and Texas are also saving taxpayer money by contracting out for maintenance. Bring competition into the equation, and the taxpayers will see more roads being constructed in less time, plus an improvement in government spending practices.

In 1998, Representative Maryann Mitchell (R-Federal Way) introduced House Bill 2892 that would have allowed DOT to contract with private companies for highway maintenance work. The bill would have allowed the private sector and DOT employees to compete for DOT projects. This bill was a move in the right direction, but it stalled in the legislature.

Repeal prevailing wages laws
Prevailing wage laws require employers to pay all employees in the county the highest union wage established in the county's largest city. Taxpayers foot the bill for these inflated wages. Prevailing wage laws should be replaced with free-market wages. Without wage competition, contract prices cannot be driven down, resulting in an increased final price. Most studies on prevailing wage laws have concluded that they substantially, and unnecessarily add to the cost of construction.

For example, the prevailing wage for construction site flaggers in King and Lewis Counties is $26.18 per hour, or $54,454 annually. In Walla Walla County flaggers receive $23.11 per hour, or $48,068 annually.(6) These wages are well above the market rate for similar private sector jobs in Lewis and Walla Walla Counties meaning overall project construction costs are higher than necessary.

In 1989, the Washington State Senate proposed legislation to repeal prevailing wage requirements on projects estimated to cost less than $100,000. At that time DOT prepared a fiscal note for the bill (SB 5822), which concluded that if the bill passed, DOT projects under $100,000 would save 67 percent on labor costs and 20 percent of total project costs. For projects costing more that $100,000, the DOT estimated a 33 percent savings on labor and 16.5 percent savings on total project costs if prevailing wage laws were repealed.

Washington should repeal the prevailing wage law to assure maximum efficiency of taxpayer dollars while protecting workers and their wages in the local area. At a minimum, the law should be revised so the prevailing wage represents the average wage in the local area, not the highest wage in the area's largest city. In small towns, away from the high-wage urban centers, local governments cannot afford to pay the mandated prevailing wages.

Implement the design-build process
All transportation projects should use the design-build process. Canada and England use this system to consolidate management and reduce costs.(7) Washington's current "design-bid-build" practice of using different firms for each stage of construction is expensive. Design firms often add "unnecessary frills" to a project, costing construction or operating firms added expenses.

DOT calls the interchange project at SR 500 and Thurston Way in Vancouver the state's first transportation design-build project. Construction began in April 2001 and was completed in October 2001 – a timeline that is nearly one year shorter than the conventional design-bid-build approach. The project was also completed on budget.

This was a successful pilot design-build project, but the state has yet to implement this cost saving process for all projects.

Build roads in the right places
DOT needs to prioritize projects by the congestion relief they offer. Known congestion "choke points" are often caused by poor engineering:

• The two left lanes in downtown Seattle on I-5 N that disappear
• The collector distributor on I-5 N in Seattle
• The disappearing left lane as you approach downtown Everett on I-5 N
• Obsolete cloverleafs that slow down traffic and cause accidents (e.g. Federal Way; Renton)
• The exit problem at the Mercer Street exit on I-5 S after crossing the Lake Washington floating bridge

In the Puget Sound, 65 percent of traffic is carried on 12 percent of the region's freeways. Adding new lane capacity along these freeways would increase total capacity on freeways, expressways and principal arterials by more than 33 percent.(8)

ALTERNATIVE FUNDING SOURCES

End Sound Transit light rail.
The project is a boondoggle. The money can be better spent on Bus Rapid Transit.

Sell state assets
The privatization of state assets was started by Great Britain in 1987 when it sold seven airports. Since then, the private operator of these airports has invested over $5 billion and in 1998 paid $340 million in taxes to the British government.(10)

The state should consider selling the SeaTac Airport (Port of Seattle), the state ferry system, the state interest in the Seahawks and Safeco Stadiums, the Convention & Trade Center and other government-owned assets.

During 1998 and 1999, more than 60 airports were sold or leased to private owners worldwide. Our own SeaTac Airport alone could bring in almost $2 billion. Washington desperately needs this cash infusion to finance transportation projects. Once privatized, future revenue would be realized through property, sales, and business and occupation taxes paid by the private company operating the airport.

The ferry system is in desperate financial trouble. Rather than looking for ways to increase efficiency and drive down ferry operating costs, DOT wants to raise ferry fares. The state's 50-year-monopoly on ferry transportation is costly. It's time for legislators to reintroduce competition in the ferry system by allowing private companies to operate ferries. This is not a new idea; prior to 1951 the state ferry system was privately operated. The state took over the ferry system after a union labor dispute stopped ferry service in the Puget Sound.

Lease state assets
The state should lease highway rest areas and public transit hubs. The leasing companies could open restaurants, operate convenience stores, provide ATM services, etc. These businesses would have to pay taxes, and in exchange for receiving prime business locations, the businesses would take on the responsibility of restroom maintenance, trash collection, and general keeping of the grounds. Most rest areas on the east coast operate this way.

SHORT-TERM CONGESTION RELIEF IDEAS

Stop taxi deadheading
Local government removed competition from SeaTac airport taxi service by granting the current airport taxi company a monopoly on taxi service from the airport. Currently, only official airport taxis may take people from the airport to the city. All other taxi companies may take people to the airport, but not pick anyone up at the airport. This clogs our freeways with over 650,000 empty taxi trips per year. That's the equivalent of a cab driving 10 million miles or making 20 round trips to the moon—empty.(11)

Open High Occupancy Vehicle (HOV) lanes during off-peak hours
Opening up HOV lanes during weekends, middays, and late evenings would ease some congestion. In the past, DOT said this is not possible since the lanes were built with a high percentage of federal dollars. Now they appear to realize that was incorrect.

In 1998, then-Governor Christie Whitman of New Jersey requested and received a waiver of federal penalties for the removal of federal restrictions on HOV lanes. Also, HOV lanes in Virginia, Maryland and Pennsylvania along with Washington's own Clark County are open to all traffic in non-peak hours. DOT, with the governor's assistance, should pursue this option in the Puget Sound region.

Consider High Occupancy Toll (HOT) lanes
HOT lanes allow single occupancy vehicles to pay a user fee to use HOV lanes. This increases revenue and maximizes HOV lane capacity.

Open wide shoulders
Many parts of the U.S. and Europe use wide shoulders as an additional lane during peak transit hours. All this should require is some new signs stating the times when the shoulders were open to traffic.

Add lanes in key locations
DOT should use common sense and start funding lane construction where it will relieve congestion. Congestion relief has a trickle down effect. If the freeways have more capacity, and traffic is moving, people driving on side roads to avoid the freeway congestion will return to the freeway.

Quit trying to force transit
DOT should focus on congestion relief instead of trying to force mass transit use. Only three percent of commuter trips use public transit systems. Successful mass transit options will require a cultural change. Despite large taxpayer dollar investments in advertising campaigns, targeted incentives, and tax breaks for transit users, transit use is not increasing. In fact, it is decreasing, even as our population increases. Washington residents maintain a strong preference for auto travel. A reduction in congestion will require increased lane capacity, not more transit.

Incident response
Each minute a lane remains blocked due to an accident results in four to ten minutes of traffic congestion.(12) Removing accidents quickly is the most effective way to relieve congestion. DOT says failure to clear incidents quickly causes 60 percent of Puget Sound traffic congestion. DOT's response has been to use $3 million of state funds to buy nice new large tow trucks.

The State Patrol, not DOT, needs to be put in charge of incident response. State Patrol, which is normally the first one on the scene, should call the nearest DOT or private sector tow truck to remove the vehicle. Private-sector tow trucks can clear accidents just a quickly and certainly more cost efficiently than DOT.

LONG-TERM CONGESTION RELIEF IDEAS

Minimize federal role in transportation
Currently, Washington citizens send 18.4 cents tax per gallon of gas to the federal government. The Federal Highway Administration and the General Accounting Office have concluded that core federal highway programs (such as interstate maintenance and federal lands programs) could be funded with a gas tax of less than 3 cents per gallon.

The process of sending tax money to the federal government, for it to turn around and send the money back, causes bureaucratic overlap and diminishes the purchasing power of our gas tax money. In 2000, the federal government collected over $30 billion between the 50 states and then spent $350 million on administrative issues while redistributing our money.(13) Along the way, the federal government added rules and regulations on how our money can be spent.

The governor and our state legislative leaders need to work with our federal representatives to change this money transferring process. Why not just keep this money in the state? Do they really know how to spend our money better than we do? Keeping the money in the state eliminates costly federal requirements and increases Washington's transportation fund without placing a greater tax burden on citizens.

Earn the voters' respect
The gridlock we're experiencing can be laid at the doorstep of state government. In his 2001 State-of-the-State Address, Governor Locke promised he would "make our Department of Transportation as lean and efficient as it can possibly be." While the governor has failed to deliver on his promise, his own prediction is coming true: "If we don't fix our transportation problems now, our businesses won't grow . . . they'll leave our state. If we don't have businesses, we won't have jobs. It's that simple."

The voters of Washington do not believe current tax dollars are spent wisely. News stories such as the $7-$10 million proposal to elevate portions of a new highway in Pierce County for squirrel crossing,(14) the $30 million cost overrun on the I-90 Issaquah interchange,(15) and the $1 million grant for architectural work on a private car museum in Tacoma perpetuate this belief.(16)

After the defeat of Referendum 51, DOT presented Straight Talk About Transportation: Building a New Plan for Moving Forward. The new DOT plan proposed several different tax increases. Most notably, the report lacked any mention of a more competitive market-based system, an increase in public-private partnerships, eliminating prevailing wages, or any other innovative cost reduction idea. It only suggested new ways to "raise revenue." Also, all the "alleged" new efficiencies that the Legislature approved this year past year are now "null and void" because R-51 did not pass.

The governor, legislature and DOT need to look at both sides of the equation. They know how to raise taxes and spend money. Now they need to become best practice experts to create efficiencies and cost reductions. DOT needs to implement some common sense changes and spend our tax dollars wisely. Until DOT earns the public's trust through smart management, the budget should not be increased. Voter's want an accountable, lean and transparent government that provides congestion relief. Let's give it to them

Notes:

1) Texas Transportation Institute, "Urban Mobility Report," Texas A&M University, http://mobility.tamu.edu/ums/study/mobility_data/
tables/seattle.pdf, (Accessed 3 December 2002)

2) Jeff Kemp et al. "Traffic vs Kids: How Puget Sound Gridlock Hurst Families," Washington Policy Center, October 2000, p. 2.

3) Maurice McTigue, Personal Correspondance e-mail, Mr. McTigue is a former New Zealand Legislator, Cabinet Minister, and Ambassador, 14 October 2001

4) Dennis Lisk, "Highway Maintenance: Putting the Market to Work," Washington Policy Center, July 1998, p. 2

5) British Columbia Ministry of Transportation, Creating Opportunities for Expanding Transportation Infrastructure, June 2002, p. 9.

6) Department of Labor & Industries, Prevailing Wage, http://www.lni.wa.gov/prevailingwage/,
(Accessed 11 December 2002)

7) Bruce Chapman and Bruce Agnew, "Looking down the road at transportation solutions," The Seattle Times,
1 November 2002

8) Eric Montague, "Roads in the Right Places: A New Plan to Ease Congestion," Washington Policy Center, March 2002, p. 6.

9) The Newspaper's View, " Buses, not light rail, for tomorrow's traffic," The Seattle Times, 28 June 2002

10) Ronald D. Utt, "FAA Reauthorization: Time to Chart a Course for Privatizing Airports," Heritage Foundation, 1999, p. 10

11) Peter Lewis, "Cabs to, from airport go 10 million miles – empty," The Seattle Times, 8 July 2001 http://archives.seattletimes.nwsource.com/cgibin/
texis.cgi/web/vortex/display?slug=taxi08m0&date=20010708&query=
cabs+10+million+cabs+peter+lewis, (Accessed 25 November 2002)

12) Washington State Department of Transportation, Incident Response Team (IRT), http://www.wsdot.wa.gov/traffic/incidentresponse/, (Accessed 6 September 2002)

13) U.S. Department of Transportation: Federal Highway Administration, Comparison of Federal Highway Trust Fund Highway Account Receipts Attributable to the States and Federal-Aid Apportionments and Allocations from the Highway Account, http://www.fhwa.dot.gov/////ohim/hs00/fe221.htm, (Accessed 25 November 2002)

14) Susan Gordon, "Protecting Squirrels may Raise Road Costs," The News Tribune, 13 November 2002

15) Sara Jean Green, "Boulder, erosion problems drive I-90 work over budget," The Seattle Times, 14 October 2002

16) Martha Modeen, "State Transportation Agency Grants $1 million for Car Museum Design," The News Tribune, 30 January 2002

The Evergreen Freedom Foundation is a non-profit public policy research organization dedicated to preserving and advancing individual liberty, free enterprise and limited and accountable government.

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org