John Locke Update / Research Brief

State Lawmakers Should Keep the Cap on Light Rail Spending

posted on in City & County Government, Local Government, Transportation
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The North Carolina House of Representatives has released its budget and, as I expected, there are few policy changes that affect local government operations.  But there is, on page 300, something that could be significant.

Last year, the General Assembly capped the percentage of state funding for light rail projects.  According to that provision, state funding couldn’t exceed 10 percent of the total cost of any light rail project.  The rest had to come from other sources, such as local government budgets.  That was an increase over the previous year’s budget that had placed a cap of $500,000.  This year, the House’s proposed budget would lift that cap entirely.  And that has me concerned.

Light rail is regional.  We’re not talking about Amtrak that moves people from Charlotte to Raleigh or across state lines.  No, light rail is about moving people around the Triangle or around Charlotte.  It’s about local systems that move people relatively short distances and only in bigger cities and their immediate surroundings.

Even in the largest, most densely populated cities, there are real questions about whether light rail makes sense.  In Charlotte, the light rail system has been extremely expensive while residents often opt for Uber.  In the Triangle, Durham and Orange counties approved light rail plans, only to have Wake County opt out, stating that they didn’t think light rail was the right fit for Wake County’s needs.

The fact that light rail is expensive isn’t debated. This isn’t a few extra buses for additional public transit but a serious investment in extensive infrastructure.

And even if the absolute best case scenario occurs, the benefits will be local.  Commuters who move into and around major metropolitan areas may use the light rail.  People may ride the train to get downtown for entertainment.  But the potential beneficiaries are overwhelmingly concentrated in the areas where the line is built.  This has led people on both the right and the left to question whether it’s a good use of taxpayer dollars.

Taken all together – expensive, risky, and concentrated (if any) benefits – the General Assembly has been right to limit the amount of state taxpayer money that could be used to support these systems.  Better that local governments weigh up the risk and put in the majority of the funding if they’re convinced that light rail is a winning proposition for their areas.  If it needs heavy state subsidies to make a project viable, then it’s probably not a good deal for state taxpayers.

Softening that cap last year wasn’t a great move, and lifting it this year is even worse.  I don’t know that the General Assembly will rush out and immediately start spending lots of money on light rail.  I certainly hope not.  But a cap makes sense.  It is appropriate to make sure that checks are in place to protect taxpayers from having millions and millions of their dollars spent on projects that are likely to continue to lose money forever and only benefit a very small number of people.

Removing the cap this year forces me to ask why.  Are they looking to pour more public money into projects so shaky that they need lots of extended state support?  Are they going to direct limited taxpayer dollars to vanity projects that look modern and shiny and impressive, but that very few people ever actually use?

It is usually not good for taxpayers when legislators write into law provisions that allow them to spend more money.  Taxpayers should be wary of this change.  Legislators should think twice about it.  A budget with this particular paragraph removed would better serve the people of North Carolina.

Julie Tisdale is City and County Policy Analyst at the John Locke Foundation. She studies the effectiveness of local spending and tax policy. Before coming to the Locke Foundation, she worked at the Centre for Civil Society in New Delhi,… ...

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