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Phil-osophically Speaking - October 29, 2010

The Twilight Zone of Public Financing

At a recent luncheon a friend of mine, whose opinions I respect, leaned over the table and told me, sotto voce, that the opposition I helped mobilize against the Third Track was really overdone. This unexpected sally was like being struck by lightning on a cloudless, blue day.

I recoiled from the friendly fire and resorted to the kind of trench warfare that characterized the blistering debate that was fought in the pages of newspapers, a phalanx of media outlets and standing room only public hearings. I painstakingly catalogued for my culinary companion an oeuvre   filled with statistics relaying how ridership on the LIRR peaked in 1949, that the so-called reverse commute was as crowded as a ghost ship and the $1.6 billion the MTA was about to sink into building another track was better spent on modernizing its moldering infrastructure.

This is not to say that good arguments could not be marshaled for the Third Track, only that the reasons given were enfeebled and unconvincing: First the need for a reverse commute and second to create a passing lane around broken down trains. Neither justified convulsing communities or expending enormous sums of taxpayer cash. Just recently, New Jersey’s Gov. Chris Christie has threatened to cancel the largest infrastructure project in the nation, a new rail tunnel that would alleviate the Hudson River bottleneck and dramatically increase rail capacity into New York City from the Garden State.

Unlike the Third Track, the reasons given for the tunnel project has some merit. But Christie is concerned about the cost of such an obligation in tough economic times. He should be. The price tag for these infrastructure projects are frequently stratospheric with costs initially grossly underestimated and its benefits greatly inflated. The estimated costs for the tunnel project have soared from $5 billion to $9 billion and some analysts say the final cost could be as high as $14 billion, a nearly three-fold increase from its initial projections. Unfortunately, this is the norm rather than the exception when it comes to financing these megaprojects. “Boston’s Big Dig” was one of those grandiose projects that make the infrastructure crowd salivate like Pavlov’s dogs in expectation of a tasty treat. The final bill, however, a staggering $15 billion, had taxpayers retching their insides out as if they had been suddenly stricken by some kind of motion sickness.

This kind of profligate spending is nothing new in Jersey. Refurbishing urban schools a decade earlier proved to be another financial bloodbath with cost overruns once again strapping taxpayers. Nor is it a novelty elsewhere in the country. As mayor, I vowed that during my tenure no public building or edifice would be constructed. The last thing the public needed was another building with the names of elected officials memorialized on it. When it came to the public purse, I wanted my legacy to be less rather than more. The cost of some of these projects can be enormous and unless the economic and cultural benefits are really substantial you are much better off creating a financial surplus to offset future taxes rather than creating new taxes to finance them. A little short-term discipline goes a long way in producing long-term savings.

Of course proponents are forever telling you about the economic benefits of these enterprises. The Third Track, they assured us, would have ushered in an economic renaissance in Eastern Long Island, increasing, among other things, property values. What is easily overlooked is that property values on the Island are already so high that fewer and fewer potential buyers are willing to purchase homes and open businesses which will, of course, depress property values.

Then there is the ever-reliable environmental argument you can throw in when your plans are being stymied by the dollar and cents apologia. Tunnels and rails, they will plead with misty eyes, are bound to take thousands of cars off the roads and reduce pollutants. Yet, commuters preferred driving on the Long Island Expressway than riding on the LIRR. Moreover, the environmental benefits to be accrued ignore the significant gains that have been made in improving air quality over the last 40 years. By virtually every quantifiable measure, despite the increase of millions of cars on our roads, air quality has significantly improved. This is not because of mass transit but because of unleaded gasoline and more stringent emission standards.

Big transportation projects have an undeniable sex appeal attracting huge sums of public monies to finance it. With the wrong suitor however, it’s a marriage made in hell. Under the auspices of the MTA, capital improvement programs rarely resulted in a fair return of the investment made by taxpayers and commuters. Their deep pockets have only given them a greater ability to support money-losing operations. This was the case with their so-called improved railcars in the late 1960s and their failed efforts to modernize railcar maintenance and repair operations in the 1980s. The recent spate of mishaps that have seriously disrupted service and stranded tens of thousands of commuters make a better argument than I can here that money could be better spent on modernizing an archaic switching system and other infrastructure improvements.

When we finished lunch I picked up the bill, surfeited and happy by a sumptuous meal and that taxpayers and commuters did not have to foot another bill on another unwanted and unnecessary venture into the Twilight Zone of public financing.