With Washington facing mounting costs for roads, transit, and bridges, might the answer lie in tapping union pension funds? It certainly doesn't look like taxpayers are going to do much more. The Legislature is getting more tax averse and Eyman-minded. Bucking the costs down to a regional level, as in the defeated Proposition 1, doesn't seem to work either, as the local politicians load up any proposals with Christmas tree goodies.
So if self-discipline won't tame the problem of too many claimants on too little money, maybe an infusion of money will do the trick? Enter America's second-biggest union federation, the Service Employees International Union (SEIU), as well as an idea from super-dense Hong Kong.
The federation urges state pension funds to invest some of their $2 trillion in assets in domestic infrastructure, joining SEIU funds. The idea is floated by SEIU president Andy Stern as a way to keep these projects out of the hands of private equity groups and overseas investors, who are attracted to this fast-growing sector. Stern presented the plan to the Democratic Governors Association two months ago, according to a story in The Financial Times.
To make these projects work for such investors, there has to be a sure revenue stream, either in the form of tolls or in developable land alongside the highways or transit corridors. (Vancouver is thinking about extending its light rail out to the University of British Columbia by using the latter device, discussed below.)
That enrichment of big private companies has been the rub for populist politicians, but the shift to union and state pension funds may make the ploy seem more "public." Speaker Frank Chopp has been the main foe, arguing that the long payout means higher costs than floating state or municipal bonds. But a key first step may have been taken by the Legislature in this session, partly authorizing tolls on 520 and starting to look at other possible toll roads.
A new appeal for tolls is to sugar-coat the pill with the goal of reducing climate change, by getting more cars off the roads. One hopes the whole idea is debated in the governor's race this year, as Dino Rossi, no fan of tolls or any wars on the automobile, nonetheless looks for some positive, low-tax solutions for the roads-and-transit mess.
While the appeal to politicians of solving big problems with other people's money (or future generations' wallets) is palpable, tolls are still an unpopular form of raising money, especially when you get down to cases. A good example is this essay by Jim Horn, former chair of the Senate Highways and Transportation Committee, noting that there's "no way Mercer Islanders would accept tolling" on I-90 and adding that truckers from Eastern Washington would also balk at having to pay for a section of I-90.
Maybe the solution lies in Hong Kong, generally regarded as having the world's best transit system. The Hong Kong ploy, currently being advocated for Vancouver, B.C., is to get transit money from real estate developers. It's an elegant formula. You lay out a new transit route, and select the key stations for high-density, urban-residential development hubs. That major spike in land values is retained by local government to build transit, or you auction off the new density to private developers, who absorb part or all the cost of building and running the new transit line as part of the deal.
In Vancouver, politicians are exploring the Hong Kong formula as a way to build North America's best transit system, with a goal of raising the transit share from 12 percent today to 22 percent by 2020. In Seattle, combining developer interests with the eco-density advocates has proven powerful politics, even if it means further "manhattanizing" the city.
