Raising the sales tax is not the answer to GCRTA’s funding woes

joe calabrese town hall
joe calabrese town hall

GCRTA CEO Joe Calabrese prepares to speak at the Clevelands for Public Transit town hall meeting on June 23 at Antioch Baptist Church (courtesy of Clevelanders for Public Transit).

Pragmatists have long invoked the phrase “Don’t make the perfect the enemy of the good.” Generally speaking, that’s solid advice. And, as a card carrying incrementalist sellout™, it’s something I can get behind. Most of the time, that is.

Some issues are so substantial, so systemic in nature, that tinkering on the margins is unlikely to remedy the problem. And that’s one of our major pathologies here in Cleveland. We seem to try tackling these big, hairy problems with the same tired toolkit of solutions, despite the fact that they haven’t worked yet. There’s only so many times you can run headlong into a brick wall.

The problem isn’t that we make the perfect the enemy of the good. It’s that, in Cleveland, we tend to make the facile the enemy of the good.

In other words,  I mean that we almost always fall back on old ideas, regardless of whether or not they have worked or are the best tool for the job.

Our ongoing transit funding dilemma

Take public transportation. For years, transit boosters here have offered up exactly one solution for our system’s funding woes: make the State of Ohio pay its fair share. And, for the love of God, of course it should! But it’s not going to happen anytime soon.

Yet, even when we finally start talking about local funding options, we fall into familiar trap. At a town hall meeting last week, Newburgh Heights Mayor Trevor Elkins – the only member of the GCRTA Board of Trustees to vote against the new suite of fare hikes and service cuts – suggested that we raise the county sales tax to fund the agency.

Now, I’m not saying that there’s anything prima facie wrong with funding transit with sales tax revenues. Cuyahoga County voters approved a 1% sales tax to find GCRTA when it was established back in 1975, and this tax – still the most generous in Ohio – has been a resounding success. The fact that it continues to provide a majority of GCRTA’s revenue 41 years later, despite not being altered, is a testament to the fact that sales taxes can be useful policy tools.

The problem is that, while the transit tax itself hasn’t changed since 1975, the overarching conditions in the region have. Cuyahoga County’s ceaseless population loss has slashed the revenue generating potential of this tax by some $68 million.

Why is the answer always “raise the sales tax”?

Moreover, over the past two decades, Cuyahoga County leaders have turned consumption taxes into a veritable slush fund for bad ideas, many of which have degenerated into little more than thinly veiled corporate welfare. Want to build an oversized convention center and Medical Mart Global Center for Health Innovation? Let’s raise the sales tax! The Browns want a free, new scoreboard? Sin tax! The Republicans need hotel rooms? Bed tax!

Eventually, when you keep throwing tens of millions of good tax dollars after bad into these sorts of projects, people get wary. And, to be fair to Mayor Elkins, he said as much at the town hall meeting. But he still fell back on sales tax hike, perhaps because we lack the policymaking creativity to try something new. Cleveland’s leaders have no incentive to come up with good ideas when they can get away with the same old facile ones.

The problem is, just because something is easy to understand doesn’t make it an effective policy. Cuyahoga County already has the highest county sales tax rate (2.25%) and combined sales tax rate (8%) in the state. Franklin County is second at 7.5%. While we are no longer at the statutory sales tax cap (the state raised that to 8.75%), continually raising consumption taxes is not a long term recipe for success in a county that has been treading water, at best, for nearly 50 years.

Wait, you may say, didn’t you just say that sales taxes could be useful for funding transit? Yes, I did; but I don’t support this idea for a number of reasons, a few of which I will expound upon here.

The problem with raising the sales tax — again

First, as I already mentioned, Cuyahoga County residents already bear the single highest sales tax rate in the state. Raising it further will simply stress a shrinking tax base further.

Economists typically prefer consumption taxes to income taxes, because the latter tend to generate larger distortionary effects. But that’s not to say that consumption taxes don’t do this as well. By raising the relative costs of goods, sales taxes alter the equilibrium between supply and demand by decreasing the amount that people consume. This creates a market inefficiency, known as a “deadweight loss,” which reduces social welfare. It’s wonky as hell and seems weird, but it’s at the heart of economic theory.

Such deadweight losses have clear effects. According to a recent study by researchers at the Institute for the Study of Labor (IZA) in Germany, sales tax increases in the US harm localities. The study, which considers the effects of changes in combined sales tax rates on business activity from 2002-2011, found clear, negative effects.

Each 1% increase in the combined sales tax rate reduces total payrolls within a county, particularly among retail businesses and smaller firms. According to the authors, “These results show a clear negative and significant association between the combined state and county sales tax rate and total annual payroll.”

These deleterious effects are particularly apparent when a county’s sales tax rate is high in relation to neighboring counties. As the map below illustrates, the four counties bordering Cuyahoga have combined see taxes ranging from 6.5% to 7%.

ohio county sales tax rates

Combined sales tax rates in Ohio by county (courtesy of Ohio Department of Taxation).

Multiple studies have demonstrated that these types of cross-border differences can negatively affect the county with the higher rate. In a 2012 study (PDF), Jeffrey Thompson of the Federal Reserve and Shawn Rohlin of Kent State University examined how sales tax rate differences across state borders affected economic activity from 2004-2009. They found that when border counties raise their sales taxes by 1%, total employment falls by 3.8-5.8%. The bulk of this effect occurs in the retail industry, which sees a 7.6% decline in employment.

Second, it is a well-established fact that consumption taxes are regressive, as lower income residents end up paying a larger portion of their income than wealthier residents. This effect is concerning in Cuyahoga County, where we see extremely high rates of poverty and economic inequality in many areas. But this issue is even greater, in this case, as low-income residents are largely concentrated in impoverished neighborhoods within the City of Cleveland and inner-ring suburbs. Wealthier residents, in contrast, have moved out into the outer suburbs and exurbs.

Why does this matter? Because these suburbs are closer to the neighboring counties, making it easier for middle- and higher-income families to take advantage of lower sales tax rates. Consumers are far more likely to cross county borders to make purchases at lower sales tax rates if they live near those adjacent counties. According to Gary Cornia and colleagues (paywall), consumers are more likely to travel 5 kilometers (3.1 miles) a border to take advantage of lower sales tax rates, but that effect essentially disappears when you increase the distance to 30 kilometers (18.6 miles).

Moreover, the low-income residents residents living in Cleveland and the inner-ring suburbs are also far less likely to have ready access to a car. Compare Cleveland, where more than 10% of households lack a car, to Solon or Gates Mills, where that number is just 1.1% and 0.4%, respectively.

As Thompson and Rohlin demonstrate, “cross-border shopping is more prevalent when transportation costs are low.” This essentially guarantees that a sales tax hike will be uber regressive for low-income, transit-dependent Cuyahoga County residents, as they lack the means to avoid it readily. So they would bear an even more disproportionate burden of funding GCRTA, in addition to already shouldering the fare increases.

Third, raising the transit sales tax seems neither seems imprudent from a political perspective. Under Ohio law, county leaders can increase the sales tax by 0.25% to raise general fund revenues without triggering a vote. Our former County Commissioners took advantage of this back in 2007 for the convention center.

That option is not available for transit. Any effort to increase GCRTA’s sales tax rate would have to go before voters for approval. Now, it’s entirely possible that such a proposal would pass. Cuyahoga County voters have approved similar tax increases for far less beneficial purposes in the past. Yet, it’s not guaranteed. Summit County voters rejected this same sort of proposal in 2014 by a convincing 54-46 margin.

Are Cuyahoga County residents that much more inclined to support transit, particularly the type of voters who show up in off-year elections? Does it make sense for GCRTA and local officials to spend considerable political and financial capital trying to get approval for a proposal that does nothing to staunch the winds that have buffeted the transit system for decades?

Let’s choose good policy over simple policy

We know that GCRTA is a fighting a heroic, sisyphean battle against sprawl, population loss, and overbuilt vehicular infrastructure each day. So why don’t we pull policy levers that raise transit funds while simultaneously helping to remedy the underlying challenges?

There are two good options available that serve this dual purpose: a parking tax, which I have already proposed, and scaling up GCRTA into a real regional transit agency by incorporating the collar counties.

Both of these are possible under current law. They will require legislative action and voter approval at the local level, yes. But if we have to launch a campaign to gin up support for local transit funding, we might as well do it right.

Asking some lingering questions about cutting service on the Waterfront Line

GCRTA's Waterfront line (courtesy of htabor).

GCRTA’s Waterfront Line (courtesy of htabor).

After months of an extended and often contentious debate, the GCRTA Board of Trustees finally voted on a series of measures to help the agency balance its budget for the next year. Surprising no one, Board members approved a series of stepwise fare increases that will take effect on August 16, which should increase annual operating revenues by $3.5 million. Single-ride fares will increase to $2.50 from $2.25 currently and, ultimately, rise again to $2.75 in August 2018. All day passes will increase from $5 to $5.50 and ultimately $6, while monthly passes will jump from $85 to $95 and then $105.

For the sake of comparison, WMATA, the Washington, DC area transit operator, charges $1.75 for bus fares and off-peak rail fares; the base fare for on-peak rail users is $2.25. MTA, the transit operator in New York, in turn, charges $2.75 for a single trip and $116.50 for a monthly pass. In other words, Cleveland’s fares are now on par with, or even higher than, some of the most extensive transit systems in the country.

But, as we know, the fare increases alone were not enough to cover the $7 million hole in GCRTA’s budget. Staff also proposed a series of service reductions that would have cut bus service hours and miles by approximately 4%. Courageously, the Board decided to punt on this issue and make GCRTA’s management responsible for approving the service cuts. These cuts, which have been scaled back since the initial proposal, will save the agency less month ($3 million vs. $4 million) but affect fewer customers (1% vs. 1.8%).

One of the more hotly debated portions of this list of service reductions involves GCRTA’s Waterfront rail line, which ferries customers from the Tower City transit hub along the Cuyahoga River and lakefront to the South Harbor. The Waterfront Line, which opened to much fanfare during Cleveland’s 1996 bicentennial celebration, cost GCRTA roughly $50 million to construct. But ridership soon fell off a cliff, as the city continued to shrink and the Flats entered a prolonged period of decline.

The agency reduced service on the Waterfront Line in 2010, but it subsequently restored it in 2013 to account for new investments on the East Bank of the Flats. While ridership may have increased somewhat since that point – we don’t really know – the line has rightfully earned its name as the “Ghost Train.” Fewer than 400 people ride the train on weekdays, and nearly all of those people take it during rush hours. During off-peak times, GCRTA says 2 people ride each train, on average.

Personally, I have long questioned the utility of the line. I think I have used it maybe 2 or 3 times in my life. If I am traveling to the Flats or the lakefront, I would much rather walk or hop on a trolley, but I freely acknowledge I’m abnormal.

That said, I do know people who ride the train and see its utility. I also recognize that there is no other transit serving the Flats, and it can be pretty daunting to try and walk up the hill from West 10th to West 9th, particularly if you are of limited mobility.

Moreover, I might be pissed off if I was one of the people investing in the redevelopment of the Flats. Investors and developers thought they had reached an agreement with GCRTA to ensure the Waterfront Line would serve this area. Adam Fishman, the Board Chair of Flats Forward, offered an eloquent articulation of this viewpoint in an op-ed over the weekend. As he wrote,

In 2015, RTA increased services to the Waterfront Line and saw an uptick in riders after the opening of Flats East Bank.

Now, RTA’s proposal is to reduce weekday service, to end at approximately 7 p.m. — but limiting service to these new entertainment venues during evening hours when downtown residents are looking to explore dining options is a misstep. Limiting transit service to this area will greatly hurt the potential for growth and will prevent the Flats East Bank from becoming part of the uninterrupted fabric of downtown in the minds of those who live, work and play here.

To an extent, he’s right! But we also need to recognize the fact that GCRTA has to balance its budget, and, in the process, it needs to guarantee that the pain is spread evenly. If the agency tried to dump all of the service cuts on low-income communities of color on the East Side, it may have run afoul of federal environmental justice and Title VI guidelines and would almost certainly have facee a lawsuit.

Yes, fixed rail investments can – and should – promote development. But sometimes when you build it, they don’t come. GCRTA dumped millions of dollars into the Waterfront Line for 20 years, with little to show for it. Flats developers can’t simply demand cuts for thee but not for me.

With all of that in mind, I still have some lingering questions that I wish had been asked during this debate. I think getting this information would have given all of us a clearer picture of the real value of the Waterfront Line, relative to the various bus routes that faced service reductions.

  1. We should recognize that, while the Flats is turning into something of a playground for wealthy white people, there are a lot of service sector employees who need to work in these establishments. What percentage of these service industry workers in the Flats and along North Coast Harbor rely on/use public transit? How does it compare to other lines that were cut or faced cuts?
  2. Will reducing service frequency on the Waterfront Line (and the Green line) have any effect on the lifespan of the aging Breda LRV cars? Could it reduce wear and tear on these trains to any noticeable extent?
  3. If the employers in the Flats are so concerned about protecting rail service, are they willing to pitch in? I’ve seen various estimates on how much GCRTA would save from cutting Waterfront Line service, varying from $200,000-500,000. The Flats East Bank development represents some $750 million in investments. Some of the entities involved, including Ernst & Young, are worth billions. Could they not come together to help defray or cover the costs of retaining service? Consider the fact that the Cleveland Foundation gave GCRTA $100,000 to provide free trips back in January 2014. And University Hospitals just signed on as the sponsor of Cleveland’s bikeshare system. There is a precedent here.
  4. What steps have Flats employers taken in the past to promote public transit usage among their patrons and employees? What about to promote public transit funding and support among the general public? Do they participate in RTA’s Commuter Advantage program? Do they subsidize transit passes? Seeing them actually stick their necks out for transit would mean a lot more, particularly in light of the sea of surface parking lots that they’ve constructed in the area.

Answering these lingering questions would not have mollified both sides, but it may have given us the information we needed to make a more informed opinion.

[Insert obligatory line blaming the State of Ohio for not funding transit.]

How America’s anti-urban bias distorts infrastructure spending

portsmouth bypass construction
portsmouth bypass construction

Crews prepare embankments for the Portsmouth Bypass project (courtesy of Midwest Energy News).

The relative struggle for power between urban and rural areas is a defining feature of the American political system, one that dates back to the founding of the country. In the immediate aftermath of the Revolution, the two dominant political theories were the urban republicanism of Alexander Hamilton and the agrarian democracy of Thomas Jefferson.

Hamilton’s ideas and biography are en vogue again, but the Jeffersonian push for agrarian power was enshrined in the Constitution. During the Constitutional Convention, small states successfully imposed the Connecticut Compromise, which created a bicameral legislature that included an upper house where every state would have equal standing. Thanks to this compromise, Wyoming – a state with 586,000 people – has the same power in the Senate as California – a state with five cities larger than 500,000 people.

Legislative proportionment and Baker v. Carr

Although rural areas unquestionably have disproportionate power on the federal level, it’s even starker at the state level. For a variety of reasons, rural voters tend to hold sway in state legislatures. One driver behind this outcome is gerrymandering, as typically Republican-dominated statehouses can draw districts in such a way as to enhance the relative power of rural and suburban residents.

The situation was actually worse prior to 1962. In that year, the Supreme Court issued its decision in Baker v. Carr, ruling that states need to continually update their legislative districts based on decadal Census data. This ruling effectively enshrined the principle of “one person, one vote,” which helped to somewhat level the playing field between rural and urban voters. But the situation has not been remedied. As I’ve said before, life is still difficult for blue cities located in red states.

Anti-urban bias in infrastructure spending

Recently I came across a great quote on this issue:

Ohio has practiced a rural and suburban philosophy that ignores big central city problems because those who run the state win their positions by soliciting the solid backing of farmers and small town residents.

I think this sentence encapsulates the current relationship between Cleveland and the State of Ohio quite well. Except it’s not a contemporary quote. This is actually from a speech (start at 17:00 mark) that former Mayor Carl Stokes delivered at the City Club of Cleveland on July 24, 1970.

Stokes spoke at a time when the State of Ohio showed no inclination to support the City of Cleveland. One year before the Cuyahoga River infamously caught on fire (for the 13th time) in June 1969, Cleveland residents passed a $100 million bond issue to upgrade the city’s water and wastewater infrastructure. The bond issue was necessary, because – six years after Baker – the State of Ohio refused to finance the improvements.

This imbalance remains today. Ohio actually spends more state money on its rural transit program than its urban program, despite the fact that 78% of Ohioans live in urban areas.

ohio transit funding 2000-2014

Transit funding, by program, from the Ohio Department of Transportation from 2000-2014 (courtesy of ODOT).

The bias towards rural areas also remains when examining spending on social issues at the state level. How many red states refused to expand Medicaid under the Affordable Care Act, for instance? Here in Ohio, while Governor John Kasich loved to brag on the campaign trail how he did expand Medicaid, he never seemed to mention how he only expanded food stamp allocations for rural areas, not cities.

But it’s possible to alter these types of social spending decisions in the short term. Governors and legislatures can pull the policy levers to increase welfare or education financing much more readily than they can build a new transit line in cities.

So what is it about infrastructure that makes it harder to influence, over the short-term, than social spending? What accounts for this inertia?

The ‘persistence of highways’

In a recent working paper (PDF), Stanford political science professor Clayton Nall and PhD candidates Simon Ejdemyr and Zachary O’Keeffe examine this issue. The study examines how the anti-urban bias in legislative apportionment affected the distribution of public goods before Baker. It also questions to what extent the case remedied this issue. As a proxy for public goods, the study considers the provision of federal-aid highway funding.

The authors identify two key mechanisms that explain the “persistence of highways” and that make highway spending less responsive to political change than social spending.

First, infrastructure clearly carries a sense of permanence. While the food that SNAP benefits help families buy may be gone a day later, a new bridge or highway will be fixed in steel and concrete for decades. Politicians are suckers for groundbreakings and ribbon cutting ceremonies.

Once these structures are built, there is typically tremendous pressure to maintain them. This is true even if the road or bridge outlives its useful life or if the cost of maintaining it outweighs the benefits. Like everyone else, lawmakers are subject to the sunk cost fallacy, which leads us to falsely believe that we need to keep investing time and money into projects or tasks, simply so that we don’t lose the time and money we have already spent.

Secondly, building infrastrastructure creates policy feedback. In other words, the development of the federal highway system gave rise to new interest groups that benefited from their construction. Construction and engineering firms directly benefited by winning state and federal contracts.

New infrastructure also creates what the authors call spatial policy feedback. New highways alter development patterns, facilitating the growth of suburban and exurban areas. In turn, these new suburban populations form powerful interest groups. Their support for and dependence on these highways becomes a self-perpetuating political force.

The unique persistence of highways is an important issue, as the framework for the federal-aid highway system was laid before Baker and was, thus, inherently anti-urban. In the Federal Highway Act of 1944, Congress explicitly barred the use of federal funds to build roads in communities with more than 2,500 residents.

While Congress altered its funding formula in 1956, it allowed rural-dominated state legislatures to influence the allocation of highway funding for decades. According to the authors, “state legislative malapportionment would have compounded already biased federal policies that limited states’ freedom of action to develop their urban areas, while promoting the biases within state legislatures.”

So, did the Baker ruling make a difference?

To examine how anti-urban bias within the political system may have affected the allocation of highway spending, the authors developed two models.

First, they compare each county’s portion of total highway mileage to its share of the state’s population. They then account for each county’s representation within the state legislature using the Relative Representation Index (RRI); a county with more political representation than its population should justify will have a score above 1, and vice versa.

To study the impact of the Baker ruling, they compare results from 1934-1960 to those from 1970-present. Per their results,

We find that legislative representation had approximately the same effect on a county’s share of state highway construction, regardless of region and urbanism. Second, and more importantly, we find that pre-Baker malapportionment had a persistently significant effect on highway-mileage bias in the decades after Baker. We find that representation mattered, but that it was the timing of the representation—prior to the construction of most of the American highway network—that dictated the distribution of highway infrastructure for decades to come.

According to this model, from 1934-1960, a one standard deviation increase in a county’s RRI score increased its share of highway-mileage spending by 0.3 standard deviations. While this number has been halved since the Baker ruling, the effect remains.

Second, the researchers compared the relative impact of Baker on both highway and social spending from 1972-20002; to measure the latter, they used state spending on public welfare and education. In this model, counties with higher RRI scores continued to see higher levels of state highway funding after Baker, even as they received less funding for welfare and education.

The implications of this study are significant. We live in an era of budget cuts and austerity. But, in a lot of ways, this crisis is political. The Ohio legislature could not be bothered to allocate even $1 million more for public transit, even as the largest transit system in state, GCRTA, muddles through a $7 million budget deficit.

Yet, while Cleveland residents brace themselves for fare increases and service cuts, Ohio has no qualms about spending $1.2 billion on the Portsmouth Bypass, which serves no purpose other than to let drivers avoid a few traffic lights.

As Ejdemyr, Nall & O’Keeffe conclude,

The current plight of American infrastructure – widely described as a “national infrastructure deficit” – is not a universal phenomenon but represents a long-term legacy of legislative malapportionment and decisions about infrastructure made before cities had equal representation in state legislatures. The poor state of American infrastructure is not merely a result of overall underinvestment, but stems from a historical legacy of unequal treatment that left some areas (notably cities) with a host of social and economic problems, including underfunded road infrastructure.

In an era in which people seem to be rediscovering the value of our center cities, we cannot afford to keep recreating the mistakes of our predecessors. Remedying the anti-urban bias in infrastructure spending will not happen overnight, but it’s well past time that we start.

Don’t believe the lies – Ohio can’t afford to extend the freeze on clean energy

students protesting against sb 310
students protesting against sb 310

Students protesting against SB 310 in front of the Ohio Statehouse on May 14, 2014 (courtesy of Ohio Beyond Coal).

I wrote my first post on SB 310, the legislation that froze for two years Ohio’s renewable energy and energy efficiency portfolio standards, all the way back on March 31, 2014. That was the day that Senator Troy Balderson (R-Zainesville) introduced the bill to the Senate Public Utilities Committee.

Since that point, I have written at least 14 other posts that touch on this abysmal legislation in one way or another. Given that we’re now well into 2016, the final year of the freeze, I’d like nothing more than to see out this reprieve and forget this whole shameful episode ever happened.

But, this isn’t to be, perhaps because God hates Cleveland and all of us who live here.

One of the elements of SB 310 was the creation of the Energy Mandates Study Committee, a 12-member panel composed of lawmakers from both houses of the legislature. It’s specified task should give you a pretty good idea of its intended outcome (emphasis mine):

Section 3. It is the intent of the General Assembly to ensure that customers in Ohio have access to affordable energy. It is the intent of the General Assembly to incorporate as many forms of inexpensive, reliable energy sources in the state of Ohio as possible. It is also the intent of the General Assembly to get a better understanding of how energy mandates impact jobs and the economy in Ohio and to minimize government mandates. Because the energy mandates in current law may be unrealistic and unattainable, it is the intent of the General Assembly to review all energy resources as part of its efforts to address energy pricing issues.

Therefore, it is the intent of the General Assembly to enact legislation in the future, after taking into account the recommendations of the Energy Mandates Study Committee, that will reduce the mandates in sections 4928.64 and 4928.66 of the Revised Code and provide greater transparency to electric customers on the costs of future energy mandates, if there are to be any.

Naturally, when the group released its biased cost analysis (PDF) of the energy standards last fall (and I say cost analysis, because it’s kind of hard to do a cost-benefit analysis when you refuse to consider benefits), the GOP-dominated panel called for extending the freeze indefinitely:

Until the US EPA provides greater clarity on the operation of the [Clean Power Plan], and until litigation is resolved, the Study Committee feels compelled to extend Ohio’s freeze of the Mandates.

Interestingly, Governor John Kasich, who changes his tune on clean energy everytime he opens his mouth, took a brief time out from his quixotic presidential campaign to state that he opposed this idea. And so that’s where things sat for seven months. Nobody showed their hand, at least publicly, and we plodded along towards the end of the freeze.

Then, on Wednesday, I was greeted with this headline in the Columbus Dispatch: “Bill continuing ‘freeze’ on clean energy expected soon.”

It seems our old friend Sen. Bill Seitz (R-Cincinnati) is acting on Study Committee’s recommendations and proposing a three-year extension of the freeze. Senate President Keith Faber (R-Celina) informed the Dispatch that he supports the idea.

Here is my official reaction to this proposal:

computer rage

To be honest, I don’t even want to write about this any more. People have already raised just about every argument as to why SB 310 (and any continuation of it) is terrible public policy. We’ve already explained how energy efficiency is the cheapest source of electricity in Ohio; how renewables are driving down energy bills and increasing grid resilience; how clean energy is creating thousands of good paying jobs for Ohioans; how the energy standards have saved ratepayers $2-4 for every $1 invested. None of it has mattered.

So let’s just take a look at the real impact of this bill on the people of Ohio. Maintaining the status quo on electricity generation in this state will have real, tangible impacts on public health and quality of life, even if fossil fuel boosters would prefer to ignore this.

Shortly after the Study Committee released its cost analysis, a coalition of environmental groups released the heretofore nonexistent benefits analysis. Their study examines the impacts of restoring the state’s clean energy standards in 2017 and allowing them to continue through 2029. Though the Study Committee recommended an indefinite suspension of the standards, this outcome seems unlikely in light of Gov. Kasich’s professed opposition. This is particularly the case, given that Sen. Seitz, the most vocal and insufferable opponent of the standards, is only calling for a three-year extension of this moratorium.

Accordingly, I will only outline the foregone public health benefits of this proposal, which would stretch from 2017-2019. (I will just ignore, for a moment, the fact that the deadline for states to submit their CPP compliance plans to the EPA falls on September 6, 2018, smack dab in the middle of this extended freeze.) This benefits analysis assumes that each megawatt hour (MWh) of renewable energy generation/energy efficiency installed in Ohio will displace either 0.4 or 0.6 MWh of coal-fired power, with natural gas generation making up the difference.

While the benefits of swapping fossil fuels for renewables and efficiency compound over time, they are still significant in the short-term. Restoring the clean energy standards would reduce carbon dioxide (CO2) emissions in the state by roughly 12.5 million tons per year from 2017 to 2019. Moreover, cutting Ohio’s reliance on coal-fired power will also slash harmful air pollutants, including fine particulate matter (PM2.5).

co2 emissions with & without sb 221

CO2 emissions in Ohio from 2017-2029, with and without the state’s clean energy standards (courtesy of NRDC).

In 2017 alone, this reduction in PM2.5 levels would prevent 16,900 lost work days, 2,230 asthma attacks, 100 hospital admissions, and 230 nonfatal heart attacks. It would also prevent anywhere from 140 to 370 premature deaths. Adding in 2018 and 2019, these numbers increase to a total of 480 to 1,240 premature deaths, 350 hospital admissions, 7,540 asthma attacks, 760 nonfatal heart attacks, and 57,110 lost work days avoided.

These benefits are truly staggering.  Let’s calculate the economic benefits of the premature deaths prevented. Using the EPA’s statistical value of a human life, which is $9.1 million, we get a total social benefit of anywhere from $4.37 billion to $11.28 billion by 2019. And, again, I’m only talking about the next three years. Extending this out to 2029, as this study does, increases the number of avoided deaths to 2,820, which has a total value of $25.66 billion.

The Ohio GOP may want you to believe that the state’s clean energy standards are raising energy costs, crippling businesses, and killing jobs, but they’re doing precisely the opposite. They can try to obfuscate this by leaving the benefits out of cost-benefit analyses and by including line items on your electric bill showing the supposed costs of complying with these standards.

But when you account for the true costs of fossil fuels in this state, in both blood and treasure, you quickly come to the conclusion that we cannot afford not to implement these standards. So end the damn freeze already.

On LGBT issues, Cleveland needs to get its house in order first

gay games cleveland
gay games cleveland

Downtown Cleveland decked out in rainbow lights after the Opening Ceremonies of the 2014 Gay Games.

Last week, PayPal announced it was scrapping plans to expand its operations in North Carolina. The company’s decision to call off its $3.6 million expansion in Charlotte, which would have created 400 jobs, came in reaction to a despicable (and almost certainly unconstitutional) law that Republican Governor Pat McCrory signed into law on March 23.

The bill, which bars municipalities from extending non-discrimination protections to LGBT individuals, particularly targets transgender residents by requiring that they use the bathroom that corresponds to the sex listed on their birth certificates.

While Gov. McCrory sought to tamp down some of the controversy this week by issuing an Executive Order “clarifying” the bill, it amounts to little more than putting lipstick on this proverbial pig. As David Graham of The Atlantic notes, all public buildings will still enforce the draconian bathroom restrictions on transgender individuals, and the state still precludes any effort to prohibit anti-LGBT discrimination by private entities.

PayPal was just the latest in a series of groups that decided to pull out of North Carolina in the aftermath to this law. Deutsche Bank froze plans to hire 250 people in the state, and entertainers including Bruce Springsteen cancelled their performances.

All of this gets to a larger debate about the impacts of these types of boycotts. There is no doubt that applying economic and political pressure on states in response to such acts of blatant discrimination is an important tool – one that has worked on a number of occasions.

These sorts of boycotts can also have unintended consequences. For one, they may drive supporters of these bills to simply dig in their heels against outside pressure. More importantly, they may harm innocent people living within these states (including LGBT individuals) who oppose such laws. Blue cities, like Charlotte and Raleigh, already chafe under the control of GOP-dominated state legislatures. Economic boycotts of this sort might punish them further for policies they ardently oppose.

This should be readily apparent to those of us in Cleveland, a deep blue city stuck in an (artificially) bright red state.

But the tone deaf political and business leaders of Northeast Ohio completely missed this point. Following PayPal’s announcement, a group of leaders, including Cuyahoga County Executive Armond Budish, sent a self-congratulatory letter to CEO Daniel Schulman. In the letter, Budish et al. commend Schulman and his company for their progressive values, noting that “the City of Cleveland shares those same values.”

The letter highlights the fact that Cleveland is, in many ways, quite progressive on LGBT equality. Both the City and Cuyahoga County governments extended benefits to same-sex couples prior to the Supreme Court’s decision in Obergefell v. Hodges. The administration flies the pride flag above City Hall each year during Pride Week. And, of course, we hosted the 2014 Gay Games, which I helped plan and execute.

pride flag cleveland

The pride flag flies above Cleveland City Hall in June 2014.

But, in their haste to sell the Cleveland Renaissance narrative, Budish et al. end up coming off as too cute by half.

The authors completely ignore a number of important details. First, Republicans rammed this legislation through the North Carolina legislature as a direct response to a law passed by Charlotte’s City Council. That bill extended nondiscrimination protection to LGBT residents and required that all public and private entities allow transgender people to use the bathroom that matches their gender identities. PayPal is not leaving Charlotte because the city does not “share its values,” but because state leaders went off the deep end to legislate against those values.

Second, Budish et al. conveniently ignore that Cleveland City Council failed to pass exactly this same type of legislation last year. While Charlotte leaders stood up for their constituents, transgender Clevelanders had to listen as members of Council and the local media evoked the bullshit specter of transgender predators invading bathrooms around the city. As a bill opponent said, with a straight face, that “the most discriminated against group of people in this country…is not transgender people or gay people, it is people of faith.” As Plain Dealer editorial board members claimed allowing them to use the bathroom could “create a fertile environment for predators to strike.”

But the reality that transgender Americans are nearly twice as likely to be the victims of a sexual violence as cisgender Americans did not win the day. The fact that three transgender women were murdered in this city in less than a year did was not enough. No, the hatemongers peddling their lies on the pages of the PD made sure the bill never even got a vote.

Third, unlike North Carolina, the State of Ohio has no protections in place for LGBT residents. A gay person can still be legally fired for being gay; a lesbian can still legally be evicted for being a lesbian. In the wake of Gov. McCrory’s Executive Order, North Carolina is now more progressive than Ohio on this front, for government employees at least.

Moreover, the only way for a transgender person to guarantee access to services and accommodations that match their gender identity in states like Ohio and North Carolina is for them to go through the absurdly arduous process of getting a new birth certificate issued. Except, you cannot actually do that in Ohio at all, because this is one of just three states that refuses to issue updated birth certificates to transgender residents.

There is no question that Cleveland is a fairly welcoming place, regardless of one’s gender identity or sexual orientation. The week of the Gay Games was an incredible experience specifically because of the way that Clevelanders graciously welcomed LGBT people from around the world with open arms. I will never forget seeing a Cleveland police cruiser with a rainbow flag bumper sticker parked outside of the Convention Center.

But none of this does away with the truth that we still have an awful lot to do in order to ensure that LGBT Clevelanders are guaranteed their equal rights. I just wish that our leaders would spend more time working on this and less time patting themselves on the back.

Ohio won’t save GCRTA, so let’s tax parking to fund transit instead

rta healthline buses
rta healthline buses

RTA HealthLine buses in downtown Cleveland (courtesy of Cleveland.com).

One of the biggest stories in Northeast Ohio right now is the Greater Cleveland RTA’s budget shortfall. It’s probably because of the company I keep, but my Facebook and Twitter feeds have been inundated with posts, comments, and tweets about every new update and public meeting for the past several weeks.

It’s a big story. GCRTA has reported that, in order to balance its books, it needs to cut expenses by $7 million this year. CEO Joe Calabrese and his staff have proposed a suite of route cuts and fare increases to plug this hole. Options include raising the base fare from to $2.50 per ride from $2.25 currently, increasing paratransit fares to $3.50 from $2.25, and curtailing or eliminating bus service along 18 routes. Alternatively, the agency could maintain existing service and increase the normal fare to $2.75 per trip.

Rather than just approving some combination of these options, the GCRTA Board of Directors tabled this discussion at its December 2015 meeting, opting to hold a series of 15 public meetings around the county. The last of these hearings occurred on Wednesday, and the ball is now back in the Board’s hands.

If I had to wager, I would guess they’ll raise fares by $0.50 to minimize the service cuts. Keep in mind that Cleveland has already cut annual bus revenue miles by nearly 40% since 2006, the single largest decrease in the country, according to Jake Anbinder of the Transit Center. Given the nearly overwhelming opposition to some of these service cuts, making it that much harder to get around town seems pretty untenable.

In addition to hosting this litany of hearings, Mr. Calabrese testified before the Cleveland City Council Transportation on Wednesday. He came to distill the agency’s challenges, justify its plans, and hear feedback from the Committee members. For the most part, the tenor from the Council members was pretty standard – they all agreed GCRTA is in a tight spot, they opposed service cuts in their wards, and they pilloried the State of Ohio for not doing its part.

Enough ink has been spilled – including by me – on the sad state of public transit funding in this state, so I won’t belabor the issue. Suffice it to say, as I once did, that I’m not sure it would be possible for Ohio’s elected officials to care less about public transit if they tried. Hell, even if Ohio devoted every one of the $7.3 million it kicks in for public transit to GCRTA, that would barely be enough to paper over its budget hole. The state needs to fund transit, full stop.

We can’t depend on Ohio to fund transit

But, while I don’t like cutting service on the 81 to the Lakeview Terraces or raising paratransit fares, I found myself agreeing most with Councilman Zach Reed. It was strange. I rarely see eye-to-eye with Councilman Reed on transportation issues, but his comments were dead on. He called on local officials to disabuse themselves of the notion that Ohio is suddenly going to find religion on transit funding.

Instead, Councilman Reed broached a subject that most local officials have sidestepped – we need to increase local funding for transit. Currently, GCRTA gets around 60% of its funding from a 1% county sales tax assessed in 1970. But this tax generates far less revenue today than it did in 1970; population loss costs the agency nearly $68 million in funding each year. That could close this budget hole nearly 10 times over.

gcrta sales tax revenue

Sales tax revenue by year (courtesy of GCRTA).

Additionally, Councilman Reed was the only person to note another key detail – federal and state transit dollars come with strings attached, including the local match requirement. Local governments need to cough up 20% of the cost of a project in order to spend federal transit dollars. This issue has increasingly become a hurdle. According to ODOT’s transit needs study (see page 46 of PDF), the state is sitting on more than $21 million in transit funding that it cannot disperse due to a lack of local matching funds. We need more transit spending for Cuyahoga County from Cuyahoga County; there’s no way around it.

Granted, continually increasing taxes on a shrinking population to fill budget gaps is a recipe for disaster. But not all taxes are created equal. There are certain levers that officials can pull to help rectify social harms and raise funds at the same time. And since sprawl is among Cleveland’s most pressing issues, taxing land uses that promote it can be beneficial. So let’s tax parking to fund transit.

Cleveland already has a parking tax, but…

First, I’ll note that Cleveland already taxes parking.* In 1995, City Council approved an 8% sales tax on parking transactions in the central business district. This tax raises roughly $10-11 million per year for the City’s coffers. Or it, would if Council hadn’t passed this tax as part of its plan to finance a new Browns stadium. Cleveland doesn’t actually see a dime of this money, as it just goes to pay off debt from bonds issued for FirstEnergy Stadium. Argle bargle.

The easy way to raise funds for transit would be to simply raise this existing tax. Compared to other cities with this sort of tax, Cleveland’s is relatively low. New York City, Miami, and Los Angeles impose taxes of 18.5%, 20%, and 25%, respectively. Pittsburgh, which has impressively progressive transportation policies, imposes a 50% tax. Cleveland could, say, double its tax to 16% – raising $10 million per year for transit – and remain on par with other cities.

Unfortunately, despite its ubiquity, this tax is flawed. Because it’s assessed on reported transactions, parking lot operators have an incentive to underreport their sales, something that has occurred in Cleveland. Additionally, it can have the unintended consequence of reducing the supply of paid parking and increasing the supply of free parking in city centers.

According to a study (PDF) from the Victoria Transport Policy Institute (VTPI), “it makes urban centers relatively less competitive compared with suburban locations where parking is unpriced. In this way, commercial parking taxes can increase total parking subsidies and sprawl.” Not only are we wasting the revenues from our parking tax to subsidize a football stadium, the tax itself may be contributing to urban sprawl. Argle bargle.

Taxing parking lots by surface area instead

What other options exist? A number of cities outside of the US – chiefly in Australia and Canada – take a different approach. They levy a tax on the total area of surface parking lots or on the total number of parking spaces. In this way, the tax generates a double dividend; it produces tax revenue while also driving down the demand for parking and reducing congestion.

Following the advice of a study from Eran Feitelson and Orit Rotem, I propose that we implement a tax on the surface area of private parking lots. But this tax would be imposed based on the square footage of each lot at ground level; this would ensure that a surface parking lot like those blighting the Warehouse District would have the same tax burden as a 4-level parking deck with a comparable surface area on each level. Not only would this create revenue and cut into parking demand, it would also push developers towards parking decks, as the effective tax per parking spot falls with each additional level added.

Moreover, the supply of free parking in the region would decrease, as developers would now have a greater motivation to recoup tax expenditures by charging. There is a legitimate risk that hiking up parking taxes could push people away from downtown or other districts within Cleveland. Accordingly, this policy should be implemented at the county level. Doing so would increase the cost of developing in suburban and exurban areas, relative to the city center, because the latter has an existing supply of parking decks and underground lots.

Because this would be applied countywide, it would be essentially a commuter tax imposed on both county residents and those people who live outside but enter the county to work, go to school, shop, see a sporting event, etc. This would help to address the types of equity concerns we face when dealing with similar taxes, like the Sin Tax.

Coincidentally, ODOT actually explored the idea of levying an annual tax on parking spaces to fund transit all the way back in 1993. The agency estimated (see page 20 of PDF) that this sort of tax could generate $187.3 million per year. If we adjust for inflation, that would be equal to $307 million in 2016 dollars. If we conservatively assume that a tax in Cuyahoga County could generate 10% of this revenue, that would still equal roughly $30 million per year.

Excess parking is a scourge for urban areas. It consumes valuable land, encourages driving and sprawl, contributes to air pollution and climate change, increases surface runoff, and harms water quality. On a good day, GCRTA struggles to compete and keep its budget balanced. Parking makes this challenge that much harder. So let’s try to remedy our incentives and tax parking to fund transit.

 

*Credit to Cleveland real estate lawyer and part-time blogger Christian Carson, whose 2014 post helped put me onto this idea.

There’s no congestion in Cleveland, so why are we adding capacity?

480-271 junction
480-271 junction

The junction of Interstates 480 and 271 near Warrensville Heights (courtesy of Google Maps).

Most people probably recognize TomTom as a company that manufactures and sells GPS units and fitness trackers. But developing these tools has allowed the company to develop considerable information regarding road networks and traffic conditions worldwide. TomTom uses these data to produce its annual Traffic Index, and the firm released its much awaited 2015 edition of the report earlier this week.

The report includes a wide array of information on congestion across the globe, from the amount of time that drivers spend in traffic to the individual day in 2015 when congestion was worst in each city. Many of the cities notorious for their soul crushing congestion topped the rankings, with Mexico City taking over first place from Istanbul, which fell to third behind new entrant Bangkok. Surprising no one, Los Angeles has the worst traffic in the United States, coming in 10th. Brazil, which has some of the worst gridlock in the world, had more cities in the top 10 than any other country. Rio, Salvador, and Recife ranked fourth, seventh, and eighth respectively.

The pros and cons of congestion for cities

TomTom ranks cities using a metric it terms “congestion level.” It defines this variable as the “increase in overall travel times when compared to a Free Flow situation.” In other words, it indicates how much longer a given trip will take in a city, due to congestion, compared to a situation in which the flow of traffic was completely unobstructed. In Mexico City, for example, traffic ensures that the average trip takes 59% longer than it would otherwise. Capitalinos spend 219 hours – more than 9 full days – per year waiting in traffic.

Sitting in traffic sucks. There’s no question about that. It consumes time people could spend doing something more productive or fulfilling, it wastes substantial amounts of fuel,  exacerbates air pollution, interrupts economic output, and discourages people from entering congested areas. As Yogi Berra famously quipped, “Nobody goes there anymore. It’s too crowded.”

But, congestion also hints that a city is succeeding. If a lot of people are trying to get into and around your city, that probably indicates that the city is doing well – at least up to a certain threshold. It’s when your roads are totally empty and you can get around town without tapping the brake that you should be worried.

cleveland congestion level history

Cleveland’s congestion level history from 2008 to 2016 (courtesy of TomTom).

Congestion? What congestion?

If you ask the average commuter in Greater Cleveland, s/he is likely to complain that we have issues with traffic. After all, many of our major interstates, particularly the Innerbelt, have been under construction for years now. This constant construction, combined with the ballyhooed revival of downtown must be making the streets more crowded, right?

LOL. The TomTom index ranked 174 cities based upon their respective levels of congestion. Cleveland came in 168th with a congestion level of just 11%. In other words, of the 174 cities for which TomTom had traffic data, just 7 of them have less traffic than Cleveland. What’s more, traffic actually eased somewhat from 2014 to 2015, falling from 12%. In the eight years that TomTom has been publishing its index, Cleveland has had congestion levels of 11% six times and 12% twice. That’s it.

According to the report, travel times for the average Cleveland commuter increase by just 20% and 25% during our morning and evening “rush hours,” respectively. The single worst hour of the week for travelers is 5:00-6:00pm Wednesdays, when the congestion index tops out at 27%. For the sake of comparison, there are 78 cities that have an average congestion level of 27% or more.

Expanding capacity to solve a nonexistent congestion problem

Given the fact that Cleveland has little, if any, traffic problems, one would expect our local and state transportation planners to avoid adding capacity. We clearly have enough roads as it is.

And this is exactly NOACA has done. The NOACA Board of Directors officially adopted a “fix it first” policy last September, indicating that it would prioritize funding to repairing our existing road network, rather than adding to it. Every lane mile that we add simply increases our financial liabilities, because it’s extra pavement to lay, repair, clear from snow and ice, etc.

There have been some rumors floating around the interwebs that ODOT would adopt a similar policy. This would be a huge deal, albeit one reportedly driven solely by financial realities, as opposed to enlightened self-interest. And yet, when the agency announced $2.1 billion in road and bridge projects it plans to complete this year, the list included plans to widen three separate freeways in Greater Cleveland:  I-271, I-77, and I-76/77. Granted, these projects have been in the works for a long time, and it was highly unlikely they’d be scrapped, regardless of whether or not we really need them. It is what it is.

Yet, we know that widening urban highways has directly contributed to the sprawl and population loss that has plagued Cleveland for 50 years. In a 2007 study, Brown University economist Nathaniel Baum-Snow concluded that every new highway that passes through a center city cut its population by 18%. According to Baum-Snow, “had the interstate highway system not been built, instead of declining by 17 percent, aggregate central city population would have grown by 8 percent” from 1950-1990.

We have entirely too much pavement in this region. NOACA (PDF) has indicated that there are 670,795,906 square feet of federal aid roadways in Northeast Ohio. That’s equal to just over 24 square miles of pavement, roughly the size of the City of Strongsville. But here we are again, adding capacity, even as this pavement falls into disrepair. NOACA estimates that 46% of the region’s pavement falls short of being in a state of good repair. The cost of just bringing that roughly 308 million square feet of pavement into good repair is somewhere on the order of $1 billion.

But hey, that’s for another day! Why fix what we already have when we can widen highways so that “motorists [who] are putting on make-up or even shaving” don’t have to worry about keeping their eyes on the road. That’s just good public policy.

New images show how freeways tore apart Cleveland’s neighborhoods

Carnegie-Ontario 1951

Earlier this week, Chris Olsen of ESRI uploaded some amazing aerial maps of Cleveland into ArcGIS, which document the land use changes in the region over the past 65 years. As we all know, since 1950, while Cuyahoga County’s population declined from 1950 to the present, the remaining population has spread out throughout it and neighboring counties. As a result, whereas just 26% of the county’s land was developed in 1948, this number exploded to 98% by 2002.

One of the major factors contributing to this trend was the development of the interstate highway system, which began after the passage of the Federal Aid Highway Act of 1956. Accordingly, the aerial maps from 1951 provide us with a snapshot in time just after the City of Cleveland’s population reached its peak of 914,000 and just before the highway system helped usher in decades of population loss and decline.

But, beyond just aiding the movement of people out of the City of Cleveland and into the suburbs and – eventually – exurbs, these images demonstrate the extent to which the Interstate Highway System devastated wide swathes of the city. Whole neighborhoods were torn apart as homes and businesses were demolished to make way for freeways. It would take decades for many of the neighborhoods carved up by these freeways, such as Tremont, to stem the associated decline. Other neighborhoods, such as Slavic Village and Clark-Fulton, have yet to rebound. The images below display what some of these areas looked like in 1951 and how these same areas look today, six decades later.

Gateway District (Downtown)

This image displays the southern reaches of downtown Cleveland, including the eastern end of the Lorain-Carnegie (Hope Memorial) Bridge and what is now known as the Gateway District. While this portion of downtown was densely developed through 1951, the construction of the Interbelt beginning in 1954 radically altered the area. The replacement of the Interbelt Bridge, which has since become functionally obsolete, is still ongoing.

Campus District (Downtown)

These images document the changes in the Campus District around Cleveland State University. CSU, which did not exist until 1964, has taken over a significant portion of the eastern section of downtown in recent decades. But this area was also divided in two with the construction of Interstate 90.

Slavic Village/East 55th Street (Near East Side)

Further east, we find the area around Cleveland’s Industrial Flats and East 55th Street. This neighborhood has seen its fair share of ups and downs over the years. The railroad depot in the upper right-hand quadrant was formerly known as Kingsbury Run; this was the location of the infamous Cleveland Torso Murders of the 1930s that eventually ended Eliot Ness’ career in law enforcement.  This same railyard is now the primary rail hub for the Greater Cleveland Regional Transit Authority. Ultimately, the images display the extent to which the construction of I-90 and, later, I-490, drove a massive wedge into this area. While the continuation of I-490 further east fortunately never materialized, the controversial Opportunity Corridor is essentially the reboot of this project.

Tremont/Industrial Flats (Near West Side)

Heading southwest across the Cuyahoga River, we find ourselves on the southern fringes of Tremont. Much like the areas around East 55th, Tremont has been broken into four sections by the junction of I-90/Interbelt and I-490. This newly trendy, gentrified neighborhood had historically been home to low-income, blue collar workers of various ethnic groups. When I-90 broke off the neighborhood off from Ohio City, located just to its northwest, Tremont entered into a decades-long decline.

Clark-Fulton/Stockyards (Near West Side)

Further southwest of Tremont is the Clark-Fulton neighborhood. This area, too, has historically been home to blue collar workers, hence its other moniker – the Stockyards neighborhood. The construction of I-71 and Ohio Route 176, which break apart in the upper right of the modern image (near the Alcoa plant) brought about the bulldozing of much of this neighborhood.

West Boulevard/Cudell (West Side)

Lastly, this image shows the change in area around West Boulevard/Cudell. This neighborhood has become notorious as the location where Cleveland police officer Timothy Loehmann killed 12-year old Tamir Rice. But if you drive down West Boulevard or West 98th Street, you can see that, decades ago, this area was home to upper middle class Clevelanders. Today, I-90 leaves a massive scar through the middle of the area, making large portions of the surrounding surface streets, like Lorain Avenue, extremely difficult and unpleasant to bike or walk across.

Ultimately, these aerial images provide a striking juxtaposition of two Clevelands: one at its economic zenith, the other struggling to emerge from its nadir. While the Interstate Highway System provided a lot of benefits to the United States that aided its post-war economic growth, these images really help us understand just how devastating that change was for cities like Cleveland.

That ‘Cleveland rail shutdown’ looks more likely by the day

red line winter
red line winter

The aging infrastructure and rail cars on GCRTA’s Red Line have struggled to cope with the past two brutal winters in Cleveland (courtesy of YouTube).

WCPN has a story today from Nick Castele on the untenable fiscal position in which the Greater Cleveland Regional Transit Authority (GCRTA) finds itself. All Aboard Ohio, the rail advocacy organization, recently ran a post arguing that GCRTA’s rail cars are rapidly approaching the end of their useful life, and the system faces an “unavoidable” rail shutdown sometime after 2020 without a substantial infusion of capital.

Castele interviewed GCRTA’s General Manager Joe Calabrese, who confirmed much of All Abroad Ohio’s account, though the agency has sought to downplay the hysteria around the issue. According to Calabrese, GCRTA needs to raise $280 million in capital funds by 2025 to replace 65-70 of its aging rail cars. He emphasized that GCRTA “can’t get there alone. It’s going to take a more major investment.”

What Calabrese failed to discuss is what happens if that influx of funding doesn’t materialize. As I have discussed on a number of occasions, I’m not sure it would be possible for the State of Ohio to care less about public transit if it tried. The state provided just $7.3 million in general funds for transit in its latest budget, down 83.5% from 2000. So, at that rate, Ohio won’t scrape together $280 million for all transit funding throughout the entire state for another 38.4 years.

But that obviously doesn’t accurately reflect the state funding actually coming GCRTA’s way. In recent years, the state has broken transit funding into four main tranches: the Urban Transit Program, the Rural Transit Program, the Elderly and Disabled Transit Fare Assistance Program (E&D), and coordination grants (which it eliminated in 2009). Because Northeast Ohio is an urbanized area with a population well over 50,000, GCRTA receives funding from the Urban Transit Program. Given that it is the largest transit agency in the state, it receives the biggest chunk of urban transit funding (18%) each year. The agency used to receive E&D funding ($2.8 million per year in 2008-2009), but the state eliminated that funding for urban areas in 2009, reallocating it to rural agencies.

ohio transit funding 2000-2014

Transit funding, by program, from the Ohio Department of Transportation from 2000-2014 (courtesy of ODOT).

The only problem is that urban transit funding has evaporated in Ohio. For fiscal year 2016, GCRTA will receive $1,360,080 in funding through this program. If the agency devoted every penny of this allocation to procuring new rail cars, it would only take 206 years for it to save up $280 million. But, once again, this actually exaggerates Ohio’s support, as it includes federal funds. Urban transit funding from the state has, quite literally, fallen off a cliff since 2001. Whereas the 2000-2001 budget provided nearly $30 million in total funding for urban transit operators, that funding was halved in 2002 and has continued to dwindle to just $1.4 million by 2014. Given that GCRTA gets 18% of this funding, the state is really providing roughly $252,000 of its budget to fund transit in Northeast Ohio. Accordingly, if we wanted Ohio to foot the bill for this, GCRTA could expect to get its new rail cars running sometime in the year 3126.

It still seems a bit hyperbolic to claim that GCRTA’s light and heavy rail lines will inevitably shut down next decade. But, unless something changes dramatically at the Statehouse, the odds of that outcome increase each day.

SB 310 makes it far harder for Ohio to comply with the Clean Power Plan

obama clean power plan
obama clean power plan

President Obama delivers his speech announcing the final Clean Power Plan on Monday, August 3 (courtesy of Susan Walsh/Associated Press).

Last Monday, President Obama stood at the podium in the East Room of the White House to announce “the single most important step America has ever taken in the fight against global climate change” – the final Clean Power Plan (CPP). As the President noted in his remarks, this final rule amounts to “the first-ever nationwide standards to end the limitless dumping of carbon pollution from power plants” into our atmosphere. The EPA projects that, if fully implemented, carbon emissions from US power plants should be 32% lower in 2030 than in 2005.

Here in Ohio, the rule was met by a mixture of excitement from those of us who want the country to take action on climate change and outrage from those who oppose such steps. Attorney General Mike DeWine joined 11 other attorneys general in a lawsuit to derail the rule, while notorious Ohio coal firm and serial litigant Murray Energy intends to file no fewer than 5 separate suits.

Changes to the final Clean Power Plan that affect Ohio

Given all of this controversy over the CPP, it may be wise to take a step back and consider just how the rule would affect Ohio. Last year, I explored how Ohio fared in the proposed CPP and how the state’s clean energy standards put it on a solid path towards meeting its carbon reduction targets. While that analysis was relevant at the time, we need to revisit it, as the final CPP is different from the proposed version in a lot of ways. For the sake of this post, here are a few of the key changes that will affect Ohio:

  1. State compliance plan date: Under the proposed CPP, states needed to submit their compliance plans to the EPA by June 30, 2016. The final rule pushes this date back to September 6, 2018, but with a caveat. States still need to submit either a final plan or an interim plan in 2016, but they can request a 2-year extension of the deadline if they meet certain criteria. This matters, as Ohio EPA Director Craig Butler has already stated that he will wait until to submit a plan until he sees how the rule fares in the federal court system, which may take years.
  2. Emissions cuts to begin later: Whereas the proposed CPP required states to begin cutting carbon emissions in 2020 and continue through 2030, the final rule delays that effective date until 2022. This 2-year delay is important for Ohio as a result of SB 310, as I will explore later.
  3. Changing the way that emissions reductions are measured: Originally, the EPA planned to measure emissions reductions as the change in how many pounds of carbon emissions a state produces per megawatt hour (MWh) of energy it produced (“rate-based”). But the Agency has now added a “mass-based” approach, which shows reductions in the actual tons of carbon states emit. Additionally, EPA has changed the state-by-state targets to account for the fact that the utility sector operates within 3 broader regions. As a result, Ohio’s rate-based target was strengthened from 1,338 lbs/MWh to 1,190, up to 37.4% from a 27.7%. The mass-based reduction remains at a comparable 27.85%.
  4. Eliminating the energy efficiency benchmark: The proposed CPP created federal guidelines for state compliance plans that included 4 main building blocks: improved coal plant efficiency, more use of natural gas, increasing renewable energy generation, and improving demand-side energy efficiency. EPA has removed the energy efficiency building block, which has significantly reduced the CPP’s legal vulnerability. Fortunately, EPA did not scrap demand-side energy efficiency entirely. Instead, it will allow states to include it as part of their state compliance plan.

How Ohio can meet its Clean Power Plan requirements

Fortunately, Ohio is well-positioned to meet its emissions reduction targets under the CPP, as multiple analyses have shown.

In a 2013 analysis, the World Resources Institute found that, if Ohio fully implemented its renewable portfolio standard (RPS) and energy efficiency resource standard (EERS) that the state passed nearly unanimously back under SB 221, it could cut its carbon emissions by 17% through 2020.

WRI’s analysis also calculated the emissions savings from the other 2 building blocks in the CPP. It estimated that Ohio could cut its emissions by 7% by 2020 if it increased the operating capacity of its existing natural gas fleet (building block 2). The state could further cut emissions by 2% if it improved its coal plant efficiency by 2.5% (building block 1). Combined, these four actions would get Ohio to a 26% cut by 2020, before the CPP’s requirements even kick in. And if Ohio continued to implement its EERS and RPS beyond their current end date, the state would be able to meet and exceed its required carbon targets.

wri ohio emissions clean power plan

Ohio can cut its carbon emissions by up to 24% through 2020, depending on the policies it implements under the Clean Power Plan (courtesy of World Resources Institute).

SB 310 will make increase the costs of compliance

While Ohio is currently in decent shape, SB 310 will unquestionably make it more difficult and more expensive for the state to comply with the CPP.

The two-year freeze on the RPS and EERS will deprive the state of renewable energy and energy efficiency gains that it could count towards future benchmarks. Though it pushed back the date when states have to demonstrate emissions cuts by 2 years, EPA wants to encourage states to reduce their carbon emissions before that point. Accordingly, the final CPP creates a Clean Energy Incentive Program (CEIP), which allows states to get credits for renewable energy generation and energy efficiency measures taken in 2020 and 2021 and apply these to reduction targets in subsequent years. For every 1 MWh of wind or solar that a utility brings on line, it will get a 1 MWh credit towards future emissions reductions. And for every 1 MWh saved through energy efficiency projects in low-income communities, utilities will get a 2 MWh credit.

Because SB 310 freezes Ohio’s RPS and EERS for 2015 and 2016, the RPS and EERS benchmarks will be lower during 2020 and 2021. RPS benchmarks will decline to 6.5% and 7.5% from 8.5% and 9.5%, respectively, while the efficiency requirement for 2020 will be halved to 1%. According to projections from the Public Utilities Commission of Ohio (PUCO), the state’s major electric utilities would have generated almost 25.9 million MWh of renewables in 2020 and 2021; however, thanks to SB 310, this number will fall by nearly 25% to 19.4 million MWh.

The freeze will also cut into the amount of low-income energy efficiency projects carried out in the state. From 2009-2012, Ohio’s major electric utilities realized  55,084 MWh in energy savings from low-income projects. This accounted for just under 1% of total savings. Based on estimates from the American Council for an Energy-Efficient Economy (ACEEE), Ohio was on course to save 56,410 MWh from energy efficiency in 2020 and 2021 before SB 310. Using revised energy savings from the Natural Resources Defense Council (NRDC), which account for SB 310’s effects, this number would fall to 46,866 MWh. Because these savings get double credit in the CEIP, Ohio will lose out on 19,048 MWh of emissions reduction credits (ERCs).

All told, the 2-year freeze on Ohio’s clean energy standards enacted under SB 310 will cause the state to miss out 6,476,386 MWh of ERCs. If we assume that each of those MWh would have offset a unit from a fossil fuel plant, we can estimate how many tons of carbon emission reductions the state will lose. EPA has calculated that Ohio’s power plants release 1,900 pounds of CO2 per MWh; as such, Ohio will lose ERCs worth roughly 6,152,567 short tons of CO2. Applying a social cost of carbon at $40 per ton means that this one effect of SB 310 will cost the state more than $246 million.

But that doesn’t account for any potential reductions in the RPS and EERS benchmarks. The bill’s language makes it perfectly clear that the Ohio legislature intends to “enact legislation in the future… that will reduce the mandates.” Any future reductions to these clean energy standards will make it that much harder for Ohio to comply with the Clean Power Plan.

What should Ohio’s elected officials do?

Clearly, SB 310 carries a big price tag for Ohio. The state’s elected officials should take action on three fronts to address this issue.

First, the legislature needs to pass a bill restoring Ohio’s clean energy standards as enacted under SB 221. It should not wait until the freeze comes to an end on December 31, 2016. Instead, legislators should use the final report from the Energy Mandates Study Committee, which is expected to be released this fall, as a reason to restore the standards effective January 1. Interestingly, OEPA Director Butler told Gongwer (subscription required) that, despite his reservations, he realizes restoring the standards from SB 221 would help Ohio meet its emission reductions targets. Beyond this step, however, the legislature should look to pass a follow-up bill by the end of the next session that will extend and, preferably, strengthen these standards through at least 2030.

Second, Ohio should begin exploring how it can partner with other states to form a regional carbon trading system. The final CPP explicitly allows and even encourages states to pursue this route. Several Midwestern states have been meeting under the auspices of the Great Plans Institute to discuss this option, but Ohio has conspicuously been absent. It would be in the state’s best interest to work with its neighbors in order to lower the cost of compliance.

Third, Ohio needs to double down on low-income energy efficiency. According to Policy Matters Ohio, the state currently weatherizes roughly 7,000 homes per year. This number accounts for just 1.5% of the households in the state who seek emergency assistance for their utility bills each year. Not only will ramping up low-income weatherization allow the state to get additional credits through the CEIP, it will generate tangible benefits. Every $1 million invested in weatherization leads to the creation of 75 jobs.

Ultimately, SB 310 has cost Ohio considerably, but it’s not too late to mitigate those effects. Every day that Ohio continues to languish under this bill will continue to add to those costs. It’s time to act.

Update (8/13/2015, 3:45pm): Since I posted this, the Union of Concerned Scientists has updated its state-by-state projections on the Clean Power Plan. In June, they concluded that Ohio was on track to meet and actually exceed its 2020 interim reduction benchmark under the proposed CPP. The new analysis finds that Ohio is now on track to achieve 84% compliance with its rate-based goal and 130% compliance with its mass-based goal for the 2022 benchmark. Without implementing additional policies, however, the state would only 44% and 56% of its rate- and mass-based targets, respectively.

Additionally, I noted that, based on the EPA’s social cost of carbon ($40 per ton), the emissions reductions that Ohio will miss in 2020 and 2021 as a result of SB 310 would carry a cost of more than $246 million. This number does not account for the costs of other air pollutants that power plants release in addition to CO2. Based on a 2010 study, which reviewed the literature on the air quality co-benefits of carbon reductions, the average air quality benefit for developed countries per ton of CO2 is $44. Based on this number, Ohio would not only incur climate change-related costs of $246 million, it would also forego air quality improvements worth more than $270 million. Combined, SB 310 will cost the state nearly $517 million in 2020 and 2021 alone.