It is a pleasure to speak to you today on behalf of the Texas Public Policy Foundation (TPPF). I am a Senior Fellow with TPPF and an independent consultant headquartered in the St. Louis area. I was also appointed to three terms on the Los Angeles County Transportation Commission by the late Mayor Tom Bradley. The Commission oversaw highway and transit policy in Los Angeles County until it was merged with another organization a few years ago. I have been appointed by the Speaker of the U.S. House of Representatives to the Amtrak Reform Council and serve as chairman of the Financial Analysis Committee.

My testimony will to some degree complement that of Roger Snoble of DART and Mike Morris of the North Central Texas Council of Governments. Senator Shapiro is right to doubt the ability of public transit to play much of a role in reducing air pollution. This was echoed in the testimony of Roger Snoble and Mike Morris, though I would suggest that even their sober assessments somewhat overstated the case, as I will explain later. The basic problem is that transit carries only one to two percent of travel in the Texas metropolitan areas. As Mr. Snoble indicated, there is comparatively little that can be done with such a small base.

As we look at the issue of air quality, it is useful to recall that great progress has already been made. Over the past 30 years, volatile organic compound emissions from mobile sources have dropped 60 percent, carbon monoxide 43 percent and nitrogen oxides five percent. This is despite a national increase in vehicle miles traveled of 130 percent. And technological improvements on the horizon promise further progress. The gains, however, have been much less obvious in Texas, which has so many of the nation's fastest growing metropolitan areas.

Today I will discuss the following:

• Transit spending

• Light rail and traffic congestion

• Light rail and development

• Smart growth

• Long term transportation planning

• Opportunities

Public Transit Spending: Since establishing metropolitan transit authorities, unit costs of transit operation have escalated significantly in Texas. This increase, more than twice as fast as justified by the market, has generally been most severe during the same time frame as transit taxes have been raised. As a result, the people of Texas are receiving considerably less in service than they should from the money being spent. Based upon an analysis of market costs, we calculate that the four largest transit agencies in Texas (Metro in Houston, DART in Dallas, Capital Metro in Austin and VIA in San Antonio) are spending at least $180 million annually more than necessary to produce their present levels of service. For example, out of the 86 transit agencies in the nation with more than 100 buses, DART has the 82nd highest costs per vehicle hour. As a result of the very high costs, the subsidy per passenger mile in Texas is the highest among the 10 largest transit states.

The problem is that competitive incentives have not been significantly and systematically integrated into transit service provision in Texas. The same is largely true of the rest of the nation. However, a number of public transit agencies are using competitive contracting to reduce the costs of transit service, making more service available. Average cost savings are more than 30 percent. Virtually the entire developed world is converting to competitive transit provision alternatives, with the exception of the United States and Canada. And conversions are being overseen by governments of both the "right" and the "left."

Light Rail and Traffic Congestion: You have probably heard that light rail can move the equivalent of six to twelve lanes of freeway passenger volume. Just a few minutes ago, Mr. Snoble indicated that DART would be able to move three freeway lanes of volume on the new Richardson-Plano light rail line. This is, however, misleading. In fact, none of the nation's new light rail lines carries more than 40 percent of a single freeway lane's volume, and usually fewer than 25 percent of the riders are people who would otherwise be driving.

Moreover, light rail and transit are downtown-only solutions. There are no corridors in the United States in which transit carries a significant share of travel that are not downtown corridors. This experience includes Dallas-Fort Worth, New York and most other metropolitan centers. This occurs because it is only to downtown destinations that transit is able to provide the quick, no-transfer express service that can compete with automobile trips. People are not going to switch to transit if it means transferring and thus much longer travel times. Therefore, there is no point in anticipating that any form of transit is capable of relieving the congestion along a non-downtown oriented corridor such as the LBJ Freeway (I-635). Moreover, it is important to understand that downtowns contain only a small portion of metropolitan employment --- downtown Dallas represents less than six percent of employment in the Metroplex, and all of the projections indicate that downtowns will contain an even smaller share of employment in the future.

The point is that light rail has been demonstrated to be incapable of materially reducing traffic volumes in downtown oriented corridors. Light rail has even less potential in non- downtown oriented corridors. Because it does not reduce traffic congestion, it also has little, if any impact on air pollution.

Light Rail and Development: I know that there has been much publicity about the perceived development impacts of DART light rail. It is claimed that more than $800 million in investment has been generated by light rail. But development is a complex issue, and the DART reports greatly oversimplify the situation. Dallas-Fort Worth is the fastest growing of the nation's top ten metropolitan areas. That means that development is occurring at a rapid pace. Much of the claimed light rail oriented development is occurring along the northern leg of the system, which also happens to be the same corridor that has seen a much more significant transportation improvement, the rebuilding and expanding of the North Central Expressway (US-75). The DART studies do not factor out the impact of the new expressway. One study purporting to indicate a positive light rail land value impact includes property beyond walking distance from any light rail station and includes comparison of light rail and non- light rail study areas that do not appear to be at all comparable.

At the same time, the one part of the city that should have gained from light rail remains in virtual recession. According to CB Richard Ellis, Dallas has the second highest downtown vacancy rate in the nation, just below that of Oklahoma City. Vacancy rates in downtown Dallas hover above 30 percent, essentially unchanged relative to the period prior to the introduction of light rail in Dallas. Conversely, vacancy rates have dropped in other non-light rail cities, including Houston. Houston's downtown vacancy rate has fallen from 22.4 percent to 9.9 percent, while the national downtown vacancy rate has fallen from 15.3 percent to 9.0 percent. If one were interested in oversimplification, it might be asserted that light rail is the reason downtown Dallas continues to have such a high vacancy rate. I do not, of course, suggest that, but I do suggest that development impacts are complex and considerably more rigor needs to be applied to development studies.

But there is another dimension to development and light rail. To the extent that light rail induces development, it will increase air pollution and traffic congestion. This occurs because the overwhelming majority of trips to new developments will be by automobile. As a result, there will be more traffic in smaller areas, and slower average speeds. Since air pollution rises exponentially with slower speeds and stop and go traffic, air pollution will worsen. Therefore, light rail related development is not necessarily a good thing.

Smart Growth: Related to this issue is the in vogue planning philosophy of "smart growth,' which would increase urban densities. Proponents claim that such higher densities and other strategies (such as urban growth boundaries) will improve traffic congestion and air pollution. Nothing could be further from the truth. The Texas Transportation Institute traffic data clearly indicates that greater traffic congestion is associated with higher densities and that more severe air pollution is also associated with higher densities. The problem is that as densities increase, more traffic is concentrated in a smaller area, which worsens traffic congestion and air pollution. For example, in Ballston, a transit oriented development outside Washington, DC, densities are five times that of the surrounding community, while vehicle miles traveled are four times as great --- this means that four times as much traffic is generated in a small area with considerably more air pollution.

In fact, the best way to reduce air pollution is to get traffic moving faster in our urban areas. That, of course, would also reduce traffic congestion.

Long Term Transportation Planning: Texas transportation planning warrants additional legislative oversight. Far too much of future resources are planned for expenditure on strategies that will have little positive impact. For example, in both the Dallas-Fort Worth and Austin areas, 70 times as much will be expended per transit passenger mile than per highway passenger mile. This, by the way, counts high- occupancy vehicle lane (HOV) spending as highway expenditures. This imbalance in funding means that residents of Texas metropolitan areas will face more significant air pollution and traffic congestion than would otherwise occur.

Opportunities: All of these factors, overly costly operations, ineffective light rail systems and imbalanced long term planning might not be so much of a problem if there were significant annual surpluses of transportation funding, or if traffic and air pollution were at acceptable levels. But, of course, the opposite is true. Public funding can only be spent once, and it must be spent effectively to maximize public benefits.

More than 25 years after authorizing metropolitan transit authorities, Texans are paying much more for transit, while a considerably smaller share of metropolitan travel is moved by transit. Sufficient value has not been obtained for the expenditure. This is not a negative reflection on the transit agencies or on their boards or managers. It is rather a reflection on a system of incentives that needs to be reformed, much as it is being reformed now in western Europe, Australia and New Zealand.

Three measures would transform the system and improve the return to the people of Texas:

• A legislative mandate to convert transit systems to competitive contracting. This could be accomplished using the natural attrition rate of transit employees, so that no employees are laid off.

• Imposition of CPI-X (consumer price index) regulation, under which transit agencies would be required to reduce their overall operating cost by a percentage factor under inflation per vehicle hour to a competitive benchmark. This would have the effect of reducing the cost of internal operations not yet converted to competitive contracting.

• Reasonable and objective planning, under which factors such as cost per passenger mile would drive long term transportation investment strategies. This would eliminate the imbalance of the present programs, which are skewed so heavily in favor of transit solutions that are incapable of making any difference in traffic congestion or air pollution.

Measures such as these would go a long way toward providing better transportation for the people of Texas at a cost that is no higher than necessary.