New Geography

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  • Skepticism About High-Speed Rail Is Growing

    “Spend first, answer questions later.” So concludes a critical editorial in the January 12 edition of the Washington Post, commenting on California’s proposed $43 billion High-Speed Rail program. The Post editorial, along with a January 11 article in the New York Times (both of which we reprint below), are emblematic of the increasingly skeptical press and public opinion concerning the fiscal and economic soudness of the Obama Administration’s high-speed rail initiative. “It’s unclear that the public benefits attributed to high-speed rail…would outweigh the inevitable operating subsidies,” observes the Washington Post, confirming the conclusions already reached by the states of Wisconsin, Ohio and Iowa.

    Other states and their freight railroad partners seemingly are having similar second thoughts, judging from the parties’ lack of progress in reaching cooperative track-sharing agreements. Conspicuous among them is the state of Florida which has been promised a $2.4 billion federal grant to build an 84-mile “high-speed” line from Tampa to Orlando. That line, by all evidence, is too short to produce any meaningful time savings over car trips along a parallel interstate freeway. Moreover, as the New York Times article points out, the proposed line has scored among the lowest in terms of projected ridership in a study of the nation’s high-speed rail corridors recently published by America 2050, a national urban planning initiative (www.America2050.org). Its authors cited the low population and employment density of the cities at either end of the line (and a lack of internal transit distribution systems, we might add) as the reason for low ridership estimates and the line’s low score. The article notes that “the report represents another blow to the Florida high-speed rail network after a report from the Reason Foundation found the project could cost Florida taxpayers $3 billion.”

    As the Washington Post editorial observed, “The president has a vision of a national high-speed rail network almost as grand as the interstate highway system. We have our doubts about the ultimate feasibility of this vision, in part because in much of the country passenger rail can’t compete with car travel by interstate highways.” The editorial could also have noted one other fundamental difference. Pres. Eisenhower’s ambitious plan for the interstate highway system was placed on a sound fiscal basis by being backed by a user fee (aka the gas tax). Mr. Obama’s high-speed rail vision, on the other hand is funded by a one-time $8 billion federal stimulus grant with no visible source of continued support. Indeed, the high-speed rail initiative faces little prospect of sustained congressional funding, it has yet to show evidence of attracting private capital, and it exposes the taxpayers to continued operating subsidies,as Amtrak experience suggests.

    No wonder Pres. Obama’s vision is increasingly being questioned, even by the mainstream media.

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  • A Billion Dollar Federal Grant to Reduce Travel Time by 48 Minutes

    The Illinois Department of Transportation has reached a cooperative agreement with Union Pacific and Amtrak that will permit the release of a $1.1 billion federal high-speed rail grant to the state of Illinois to fund passenger rail improvements between Chicago and St. Louis. The agreement was proclaimed by state and federal officials as “historic” and hailed as “one giant step closer to achieving high-speed passenger service between Chicago and St. Louis.” But stripped of its rhetoric, the announcement only reveals how inadequate and cost-ineffective the Administration’s “high–speed” program is turning out to be.

    The billion dollar program of improvements to be completed under the Cooperative Agreement will enable “higher-speed” trains to travel between Chicago and St. Louis in 4 hours and 32 minutes, cutting present trip time by 48 minutes when the planned improvements are completed by 2014. As the Springfield Journal Register pointedly observed, that is 22 minutes longer than the trip time of 4 hours and 10 minutes promised in the original grant application. A four-hour trip time was also pledged in the White House press release announcing the project last January.

    Currently Amtrak operates passenger service between Chicago and St. Louis at an average speed of 53 mph. The announcement is silent about the expected improvement in the average speed when the project is completed but our calculations suggest that the planned improvements would increase average speeds only by 9mph, to 62 mph. Of the 284-mile Chicago-St. Louis route, a total of 210 miles of track will be ready for 110 mph operation under the present grant. Upgrading the remaining 74 miles of the line, between Dwight and Chicago, would have to await further federal aid. The State of Illinois originally requested $3 billion to complete the total project.

    From what we can read between the lines, Union Pacific drove a hard bargain as a condition of signing the cooperative agreement. “Our priority in working out this agreement,” the company’s CEO, Jim Young said in a prepared statement, “was to protect Union Pacific’s ability to provide the exceptional freight service our customers need and expect. … This agreement allows us to deliver on those customer commitments.” The message is clear: UP’s freight operations will take precedence over passenger rail operations. The route, we are told, is expected to accommodate as many as 22 freight trains a day ultimately.

    Union Pacific also seems to have won out on another contentious issue. The cooperative agreement is silent about any penalties the railroad might face if on-time performance standards for passenger service are not met – a condition that the Federal Railroad Administration had insisted upon in its initial (and later withdrawn) guidelines concerning the terms of the cooperative agreements.

    The announcement, released on December 23, barely two weeks before a new Congress takes office, was meant to give a boost to a program that is barely limping along. The record speak for itself. Two major high-speed rail projects — in Wisconsin and Ohio — have been cancelled by the incoming governors because of the cost burden the operation of the new rail services would impose on the state taxpayers. The Florida Tampa-to-Orlando high-speed line is still in doubt as Gov.-elect Rick Scott ponders its cost and economics. The California high-speed rail program, with its starter line in the sparsely populated Central Valley, has been ridiculed as “the railroad to nowhere.” And several HSR cooperative agreements remain stalled in contentious negotiations. It’s not surprising that the Administration would be anxious to show progress and refute the widely held impression that the program is on its last legs. This is not how it was all supposed to end.

    Whether the program will, indeed, come to an untimely end will depend on the next Congress. To the incoming Republican lawmakers, eager to make good on their promise to cut federal spending, any unspent HSR funds will present a tempting target for rescission. In addition, future appropriations for the program will have to compete with other urgent transportation priorities amid pressures to trim discretionary spending and Congressman Mica’s announced intent to revisit the program and refocus it in ways that, in his words, “makes sense.”

    It is not a scenario that offers high-speed rail advocates much cheer in the New Year.

    Ken Orski is a former senior U.S. Transportation Department official and publisher of Innovation NewsBriefs, a transportation newsletter now in its 21st year of publication.

  • Washington Opens The Virtual Office Door

    On December 9, President Obama signed into law the Telework Enhancement Act, a bill designed to increase telework among federal employees. Sponsored by Representatives John Sarbanes (D-MD), Frank Wolf (R-VA) and Gerry Connolly (D-VA), the legislation gives federal agencies six months to establish a telework policy, determine which employees are eligible to telework, and notify employees of their eligibility. Agency managers and employees are required to enter written telework agreements detailing their work arrangements and to receive telework training. Under the Act, teleworkers and non-teleworkers must be treated equally when it comes to performance appraisals, work requirements, promotions and other management issues. Each agency must designate a Telework Managing Officer, and must incorporate telework into its continuity of operations plan.

    Supporters of the measure, including the National Treasury Employees Union and the Telecommunications Industry Association, rightly tout its potential to improve the productivity of federal employees, reduce the government’s overhead expenses, decrease energy consumption and cut carbon emissions. Indeed, the Telework Research Network estimates that if the eligible federal workers who wanted to telecommute did so once a week, agencies would increase productivity “by over $4.6 billion each year” and save “$850 million in annual real estate, electricity, and related costs.” The country would save nearly six million barrels of foreign oil and reduce greenhouse gas emissions by one million tons per year. The bill would enable agencies to continue functioning during emergencies (federal telecommuters saved the government an estimated $30 million per day when D.C.-area snow storms shut down offices last winter), and it would decrease traffic congestion.

    Increasing the number of federal telecommuters is a good first step towards empowering the nation to tap telework’s many benefits. However, a diverse group of advocates would like to see telework become widely available for all workers. The Obama Administration endorses this goal. Proponents of broad access to telework include champions for small businesses and for energy independence, transportation alternatives, work/life balance, homeowners, environmental protection, disabled Americans, and rural economic development. To maximize telework’s promise — including its potential to open employment opportunities for 17.5 million people — Congress must enact comprehensive legislation offering employers, workers and other stakeholders in both the public and private sectors a wide array of cogent reasons to expand the practice.

    Comprehensive legislation would need to offer either carrots or sticks to constituencies that may resist telework’s growth: organizations with telework-shy managers; commercial landlords worried about telework-induced vacancies; and cities and states afraid that reducing the number of commuters will decrease their revenue. A few key elements:

    Remove Regulatory Barriers
    Perhaps the single greatest regulatory barrier to telework is the threat interstate, part-time telecommuters face of being taxed twice at the state level on the wages they earn at home: once by their home state and then again by their employer’s state. New York has been especially aggressive in taxing nonresidents on the wages they earn at home even though their home states can tax those wages, too. The double tax risk makes telework unaffordable for many Americans.

    Proposed federal legislation called the Telecommuter Tax Fairness Act would eliminate this roadblock to telework, prohibiting states from taxing the income nonresidents earn in their home states. This bill, introduced in the 111th Congress by Representatives Jim Himes (D-CT) and Frank Wolf, enjoys bi-partisan support from lawmakers representing states across the country. It must be included in any package intended to accelerate telework’s adoption.

    Simplify the Home Office Deduction
    The complexity of the current home office deduction discourages home-based workers from taking advantage of it. Potent telework legislation would give both home-based business owners and telecommuting employees the option to take a standard home office deduction.

    Offer Incentives To Employers
    Employers should be allowed to treat as nontaxable income the dollar savings they realize as a result of telework. Alternatively, they should receive a tax credit based either on the cost they incur for equipping employees to telecommute or on the percentage of workers who telecommute. They should receive a payroll tax break when they hire new teleworkers

    Because managerial resistance is a significant obstacle to telework’s growth, and because managers who telecommute themselves may have a more positive view of telework than their office-based colleagues, businesses should receive added incentives to allow managers to telecommute.

    Offer Incentives To Workers
    Workers should be allowed a tax credit based on the amount of time they spend telecommuting or on the cost they incur to purchase equipment and services necessary for telecommuting. They should have the option to treat the value of all equipment and services the employer provides to facilitate telework as a fringe benefit excludable from their taxable income, even when personal use of the tools is also permitted.

    Officer Incentives To Insurers
    Insurers covering losses that telework can minimize should be recruited to promote telework with tax advantages. Because experienced teleworkers enable their companies to continue operating even when emergencies render the main office unusable, business continuity insurers can limit their exposure by increasing the number of their policyholders that maintain strong, well-designed telework programs. They should receive incentives to do so.

    Automobile insurers should also be enlisted. The less frequently people drive, the fewer accidents occur and the less liability car insurers face. To motivate these insurers, Congress should offer them tax advantages based on 1) the proportion of their corporate policyholders that have both significant telework programs and aggressive policies to replace work-related driving with Web-based or telephone conferencing; and 2) the proportion of their individual policyholders who telecommute regularly.

    Offer Incentives To Commercial Property Owners
    Because businesses with dispersed workers need less office space, commercial landlords may wince at decentralization. However, the landlords able to fill their buildings with a greater number of tenants requiring less space – rather than fewer tenants requiring more – can thrive. In addition to operating greener and more cost-efficient sites, these landlords can reduce their risk of loss: Because each tenant represents a smaller proportion of a landlord’s total revenues, a single tenant’s default or decision to relocate is less likely to deal the landlord an insurmountable blow.

    To entice commercial property owners to encourage their tenants to adopt telework, Congress should offer the owners tax incentives based on the proportion of their tenants that have either vigorous telework programs or well-enforced policies requiring employees to replace business travel with remote conferencing.

    Make State and Local Efforts To Promote Telework A Condition Of Federal Transportation Funding
    By reducing the demand for roads and mass transit, telecommuting minimizes the cost of repair, maintenance and expansion of such infrastructure. Before the federal government subsidizes state and local transportation investments, the funding recipients should be compelled to mitigate costs by promoting telework.

    One step that states receiving federal aid should be required to take is to eliminate tax barriers to interstate telework. For example, they should be prohibited from subjecting a nonresident company to business activity taxes when the company’s sole connection to the state is its employment of a few in-state telecommuters. States could also allow car insurers to offer pay-as-you-drive policies.

    States and municipalities could require their agencies to develop telework programs for their own workers and to engage only those contractors that make the maximum possible use of telework. They could require agencies seeking funds to increase their car fleets or facilities to submit an assessment of whether telework could eliminate or reduce the need. They could compel their employees who seek approval for business travel to demonstrate that remote conferencing would not be an adequate substitute. They could authorize agencies to retain the funds the agencies save as a result of telework.

    States could create offices that promote telework and provide technical/legal support for both public and private employers developing telework programs; designate high traffic and pollution days as telework days and publicize them; and conduct public awareness campaigns to encourage telework, including campaigns specifically targeting businesses. Municipalities could eliminate telework-hostile zoning rules.

    All of these proposals would go a long way towards minimizing needless travel. Some would cost the federal government nothing or save it money. Others require a federal investment, but the investment would be made via business and individual tax breaks — welcome incentives for many members of the incoming Congress. Together, these suggestions would create jobs and strengthen the nation’s energy security. They would reduce traffic, carbon emissions and transportation costs; enable workers to meet conflicting job and family responsibilities; help businesses lower expenses, and drive profits. These are fundamentally important goals with bi-partisan support. Congress should act quickly and forcefully to unleash telework’s potential to meet them.

    Photo by By Rae Allen, “My portable home office on the back deck”

    Nicole Belson Goluboff is a lawyer in New York who writes extensively on the legal consequences of telework. She is the author of The Law of Telecommuting (ALI-ABA 2001 with 2004 Supplement), Telecommuting for Lawyers (ABA 1998) and numerous articles on telework. She is also an Advisory Board member of the Telework Coalition.

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  • Chicago Magazine Asks Why Illinois is So Corrupt

    Chicago Magazine has an interesting article on the sore subject of Illinois corruption. The article was written by Shane Tritsch who interviews several experts on Illinois political history. There’s no “good old days” of clean government in the Land of Lincoln. Tritsch explains a major reason for Illinois’ historical graft:

    Owing to historical factors, Illinois developed a labyrinthine governmental structure that offered fertile ground in which corruption could sprout. The Illinois constitution of 1870, in effect until 1970, limited the amount of debt counties and municipalities could carry and taxes they could levy. When cities needed to fund improvements, they got around those constraints by creating new units of government with the capacity to borrow—a library district, for example, would be created to build and administer a new library. “The 1870 constitution almost forced you into multiple units of government if you were going to deliver services beyond your municipality or modernize your municipality,” says Redfield. Today the state contains almost 7,000 separate governmental fiefs—far more than any other state—ranging from counties, towns, and school and fire districts to water reclamation and mosquito abatement districts. Most have budgets to protect and authority to wield. “It’s very hard to stay on top of it all, and it creates many more opportunities for patronage,” says Cindi Canary. “It creates ways for small islands of graft and corruption to stay hidden.”

    It appears that Illinois’ luck is running out. According to Forbes, Illinois is number two on the list of states Americans are fleeing behind New York:

    at No. 2. Illinois is expected to lose 27,000 people this year, consistent with its average annual loss over the last five years. The losses are likely linked to the state’s economy and tax structure. Job losses in manufacturing and industrial machinery are likely pushing people out of the state

    The bond market has taken notice of Illinois’ debt problem. While Illinois can’t go legally bankrupt, creditors can refuse to extend credit. Illinois faces massive public pension crisis in the coming years. Unfunded liabilities will make Illinois a less desirable place to invest.

    The Illinois economic situation was born in Illinois’ history of corruption. Shane Tritsch’s article is a decent history on Barack Obama’s home state. The Chicago segment of Illinois corruption is certainly unique. Below is an excellent segment from a National Geographic TV special on how Chicago was taken over by the Mob.