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WebMemo #1163 on Federal Budget

July 17, 2006

H.R. 3496: The Biggest Pork Barrel Earmark in History?

By

Representative Tom Davis (R-VA) is requesting the House of Representatives to consider an amendment (H.R. 3496, as revised) to the Deep Water Energy Resources Act (H.R. 4761) that would divert $1.5 billion of federal revenues earned through offshore drilling to subsidize the deeply troubled Metro transit system serving the nation's capital and his congressional district. If enacted, this earmark would be one of the largest ever passed-seven times larger than Alaska's "Bridge to Nowhere" and twice as large as Mississippi's "Train to Nowhere." This earmark would reward Metro's poor performance with an astounding sum of money while enabling the system to put off essential reforms.

Mr. Davis justifies taxpayer funding for this local project on the grounds that "Metro, the public transit system of the Washington metropolitan area, is essential for the continued and effective performance of the functions of the Federal Government, and for the orderly movement of people during major events and times of regional and national emergency."

But Metro provides no such service. Unreliable and poorly run, the system is subject to frequent shutdowns and service interruptions due to equipment failure, bad weather, suicides, driver error, and passenger medical emergencies. In mid-June, heavy rain and winds caused a shutdown of two of its five routes, significant delays on the other three, and the complete shutdown of the two commuter rail lines serving suburban Virginia. While some roads in the area were damaged as well, none suffered the kind debilitating closures and interruptions that Metro did. And as for the need to get the federal workforce to the office, a Metro spokeswoman noted that "Because nearly half of Metro's daily commuters are federal government employees…delays could be less severe if large numbers of them take advantage of the unscheduled leave option and stay home." In other words, Metro's service can be improved if federal workers don't go to work-so much for being an essential service.

Beyond such posturing lies a legislative effort whose origins sprang from an act of constituent service, and chief among the constituents served is the Congressman himself. As originally introduced in July 2005, H.R. 3496 was written to force a resolution of a dispute between Mr. Davis and Metro over its plan to sell 3.75 acres of land it owns beside a rail station to a developer who wanted to incorporate the land into a large, mixed-use development near Mr. Davis's home. Concerned about traffic congestion and the displacement of suburban charm by urban density, Mr. Davis threatened to do something about it. While most Americans can only complain about encroaching development, Mr. Davis can use his congressional powers to prohibit it, and H.R. 3496 was written to do exactly that. Specifically, Section 4(a) of the bill prohibits Metro from selling the 3.75 acres in question until it has submitted a detailed study of the proposed land sale and planned development to Congress. But as Metro has since sold the land to the developer, this legislative prohibition is pointless, and all that remains of the bill is a massive federal and local bailout of the faltering system.

In fairness, Metro confronts serious problems, chief among them a legacy of mismanagement and high-cost operations, which was described in great detail in a four-part series published in The Washington Post in June 2005. As a consequence of its many operating inefficiencies and the deep subsidies to its riders, Metro is broke and has no funds to add to capacity, replace unreliable rolling stock, or make other necessary repairs and improvements. Although it has raised fares twice in the last two years, the increases were modest and well below the cost increases incurred by local motorists due to soaring gasoline prices.

Metro has also avoided opportunities to save money and improve service through competitive contracting, due in part to its timid management's unwillingness to confront opposition from its unionized workforce. Although Metro fears contracting, the communities it serves do not, and virtually all of the newer public transit services in the Washington, DC, area are operated by private contractors because the alternative is too expensive.

Another troubling aspect of this costly earmark is the regressive nature of the spending policies the bill promotes. Notwithstanding H.R. 3496's contention that subsidizing the daily commute of civil servants is an essential national need, Washington area workers are among the best paid in the nation. Whereas the median household income for the entire nation was $44,684 in 2004, it was $88,133 for Fairfax County, VA, the most populous part of Mr. Davis' congressional district. As such, Mr. Davis is proposing a costly exercise in trickle up economics to compel Americans across the country to subsidize the transportation needs of a small slice of one of the nation's most prosperous communities. As the U.S. Census Bureau reports, only 9.6 percent of Fairfax County residents and 4.2 percent of those in Prince William County, VA, use Metro or another form of transit to get to work.

As troubling as these inequitable transfers are, Mr. Davis's H.R. 3496 also requires that, as a condition of receiving the $1.5 billion federal bailout, the communities in Metro's service area raise their taxes (euphemistically referred to as a "dedicated funding source" in H.R. 3496) to match the federal subsidy. In the communities supportive of the plan, discussions have centered on an increase in the sales tax to provide their share of the $1.5 billion, thereby compounding the regressive nature of the limited benefits it would provide to a small segment of the area's population.

While Representative Davis is justified in his concern about Metro's poor performance as it struggles to serve a small fraction of his constituents, H.R. 3496 would reward that poor performance with a costly taxpayer bailout. Instead, Congress should force fundamental market-based reforms on Metro by linking the continuation of the system's existing federal subsidies to reductions in operating costs, improvements in service, and an aggressive program of competitive contracting similar to the successful reforms implemented elsewhere. In recent years, Denver, the Washington, DC, suburbs, and London, to name just a few, have given up on the socialist transit model by implementing aggressive contracting programs. Metro should join them.

Ronald D. Utt, Ph.D., is Herbert and Joyce Morgan Senior Research Fellow in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

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