When the Goal of Spending Money is to Spend Money

Transit should instead be about getting people places

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After a previous regional transit tax was rejected by voters, Wayne County Executive Warren Evans developed a new one that he’d like to submit for approval. Unfortunately, his pitch contains little about how the tax will get people to where they want to go.

Getting people where they want to go is what transit should be about, right? But to judge by this proposal, it’s about keeping up with the Joneses, regardless of what the Joneses get out of it. It points at average spending amounts in other regions to show that southeast Michigan is behind the curve. That’s only the case, however, if those other regions are better at getting people where they want to go.

When it comes to showing that the proposed spending will be valuable, the pitch from county officials such as Evans is weak. They say that if they spend money on transit, they will get more money from state and federal taxpayers. Plus, they add, spending on buses and bus drivers means that bus drivers and bus manufacturers will have more money to spend, which in turn will generate four times as much economic output.

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This attempt to focus attention on alleged spinoff benefits is a regular tactic among spending interests. People care less about the costs of a proposal if you can persuade them it will pay for itself or generate further economic outputs. Indeed, I’ve collected a number of examples that have been used in policy debates.

Spending item Multiplier
Tourism advertising in Arkansas 144 spending multiplier
Rapid Transit in Cleveland 114 spending multiplier
Arts grants 51 spending multiplier
Pure Michigan 44 spending multiplier
State Venture Capital Funding 21 spending multiplier
University Corridor spending 17 spending multiplier
Early childhood education 16 spending multiplier
Michigan Business Development Program 8.72 spending multiplier
Arts spending 7 spending multiplier
Film Credits 6 spending multiplier
Transit spending 4 spending multiplier
Soo Locks 2 – 4 spending multiplier
Great Lakes Restoration Initiative spending 2 spending multiplier
Earned Income Tax Credit 1.67 spending multiplier

A variation of two orders of magnitude for some trivial programs shows that these figures are not to be trusted. Some advocates do a careful job in mapping out their estimates, while others seem to make crazy assumptions about the effects of spending.

Even if these findings were all legitimate, the point of a multiplier analysis is to show that spending on one thing, all things being equal, has a bigger economic effect than spending on another. So if the economic effects were what mattered — as their pitch implies — officials in southeast Michigan ought to be making the case for county arts spending rather than transit. Or giving more money to Wayne State University and the University of Michigan, which are also in their region and have higher reported multipliers. Or anything else higher on the list.

Instead of being used to compare which kind of spending has a bigger bang for the buck, the analyses are merely used to justify taking money from residents. And that’s an inappropriate application.

Officials who wish to sell a transit plan to voters would be better off showing them what transit can do for them. That’s why the actual transportation outcomes matter here. The benefits of such a plan should be improved commuting times, increased access for people who can’t drive or some other way in which people would be better off.

What residents get is a list of more routes and services. What they could use instead are some figures on how those routes may help make their lives better. Having buses go every 15 minutes doesn’t help anyone if the buses are empty. Express commuter buses are only a good use of money if they improve the commutes of the people in the region, and if buying them means shutting down lanes of congested roads, people may end up being worse off.

So while the benefits of the latest Wayne County transit plan are uncertain, its costs are real. It calls for a 1.5-mill tax that would be expected to raise $5.4 billion. Residents should be skeptical not only of dubious claims that the spending is worth it, but also of a plan that lacks even a discussion of how transportation is will be improved.

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