NewGeography.com blogs

First, New Jersey Governor Chris Christie cancelled the proposed intercity and suburban rail tunnel between New Jersey and Manhattan because of the financial obligations its out-of-control costs could impose on the state's taxpayers. Then he delayed the final decision, under pressure from Secretary of Transportation Ray LaHood and other supporters of the tunnel. In the end, the proponents were unable to provide the financial guarantees necessary to keep New Jersey from having to pay more than it had committed and Christie cancelled the tunnel for good. Or so it appeared.

Now, the tunnel may be back. Mayor Michael Bloomberg of New York City has studies underway that could lead to extending subway Line 7 from a station at 34th Street and 11th Avenue to New Jersey instead.

Early press reports suggest the line can be built for $5.3 billion, which is approximately one-half the cost of the previous proposal. It is more likely that Governor Christie will buy the Brooklyn Bridge with tax money than this amount is in the "ball park." The subway tunnel would be only four blocks (15 percent) shorter than the cancelled tunnel.

The previous tunnel had the less than attractive name, "Access to the Regional Core." Given the back and forth history of this project, a more appropriate name might be "Rasputin's Tunnel," after the Russian mystic whose enemies failed in multiple attempts to murder (though in the end, they succeeded).

Local government consolidations are often proposed by a wide range of interests, often out of the belief that they will produce more efficient (less costly) governments. Much of the academic literature supports this view. However, the evidence indicates that material savings routinely fail to occur from such amalgamations. The claimed $300 million annual savings in Toronto's megacity quickly became higher costs and a larger bureaucracy.

As in the Canadian provinces of Ontario and Quebec the Australian state governments of New South Wales (Sydney is the capital), Victoria (Melbourne is the capital) and Queensland (Brisbane is the capital) have been aggressive in forcing municipalities to merge over the last two decades. Often these attempts have met with opposition from residents. A forced amalgamation in Montreal was so unpopular that a new provincial government established mechanisms to "demerge." Despite formidable barriers, 15 cities chose independence.

Sometimes amalgamations are proposed for much smaller jurisdictions than 2.5 million population Toronto or even the 1990s merger that created the 90,000 population city of Melbourne, which is the core city of the Melbourne metropolitan area.

In July, the New South Wales government announced intentions to amalgamate three jurisdictions ranging with a total population of 35,000. The city of Armidale-Dumaresque, Uralla Shire and Gyura Shire are located in the "New England" region of New South Wales, one-half way between Sydney and Brisbane. The amalgamation would have replaced the local governments with the New England Regional Council, a mega-jurisdiction of 5,000 square miles (13,000 square kilometers), a land area approximately equal in size to the area of the states of Delaware, Rhode Island and the province of Prince Edward Island (Canada) combined.

The proposal met with determined opposition, from citizens and from the local governments. For example, the Uralla Shire Council submittal to the state Local Government Boundaries Commission, cited pitfalls of local government consolidations, relying on both Australian and international research. The Armidale Express reported that two former Guyra Shire council members mobilized that community against the amalgamation. There were substantial concerns. One was an interest in preserving historic communities, and the nearly universal aversion to moving city hall farther away. Errors were claimed in state government analyses that led to the amalgamation proposal and fiscal concerns were raised.

In the end, the Local Government Boundaries Commission recommended against the proposed amalgamation. Minister for Local Government, Barbara Perry made the announcement on November 17. Uralla, Guyra and Armidale-Dumaresque will not be forced to amalgamate.

The decision brought immediate positive responses from local leaders. Uralla Shire Mayor Kevin Ward said that he couldn't be happier with the decision. Guyra Shire Mayor Hans Heitbrink said that the decision not to merge the three councils speaks volumes about the spirit of the communities who fought to save their separate local government areas. Armidale-Dumaresq Mayor, Peter Ducat, spoke of the stress that the decision will relieve for council staff and the community.

Nobel Laureate economist Paul Krugman caused a stir on ABC's This Week, expressing the following view to Christina Amanpour on the recommendations by the leadership of the US Debt Reduction Commission:

"Some years down the pike, we're going to get the real solution, which is going to be a combination of death panels and sales taxes. It's going to be that we're actually going to take Medicare under control, and we're going to have to get some additional revenue, probably from a VAT."

He later clarified his statement to be less provocative, noting that health care costs had to be better controlled and that there is a need for "several percent" more revenue, which might "most plausibly" come from a value added tax.

He went on to say that "And if we do those two things, we’re most of the way toward a sustainable budget." That is a very tall order. Any serious examination of government costs makes it clear that there is no such thing as a sustainable budget. The unit costs of government services routinely rise, frankly because in government competitive influences are largely absent. When government encounters financial difficulty, it looks for ways to cut services and raise taxes --- that is, ways to reduce customer service or to charge more for what it does. Regrettably, in government, the answer to every question seems to be "more money."

On the other hand, when companies in competitive markets run into fiscal difficulties, their survival requires that they find ways to attract customers and look for ways to lower their prices without cutting service.

Sustainability and government budgets are more often than not an oxymoron, except perhaps for the special interests who live off them (whether of the Right or the Left).

The National Association of Realtors has just published its quarterly median house prices and the trend continues downward in Miami. At the end of the third quarter, the median condominium price had dropped to $82,900 in Miami, about the same as the list price for a BMW-7 sedan. This places condominium prices at 77 percent below the 2007 second quarter median of $367,000.

While Miami has experienced perhaps the most substantial condominium bust in the nation, other metropolitan areas, such as Atlanta, Seattle, Los Angeles, San Diego, Chicago and Portland (Oregon) have seen huge decreases and a spate of spate of distress auctions and conversion of units to rentals.

A recent article in The Wall Street Journal noted that condominiums have experienced an even greater market decline than detached housing. The over-building of condominiums may have been spurred by rose predictions from urban planners about the demand for central city housing being far greater than the supply. For example, the developer of City Center Las Vegas indicated that they built too many condominium units, at least in part in response to information received an urban planning symposium.

Photograph: Condominium Conversion to Rentals in Portland (by author).

According to many economists, including the well-respected Robert J. Samuelson, the federal government's effort to fund high-speed rail lines is like trying to fit a round peg into a square hole. If one really breaks down the numbers, the Obama administration's goals of reducing green house gas emissions, traffic congestion, and oil consumption with these rail lines are idealistic to say the least, and this idealism may cost states more than their budgets can handle right now.

The administration wants to build rail lines in 13 urban corridors throughout the nation, 12 of which span distances of less than 500 miles. High-speed rail in these areas would compete with car and air travel, but statistics indicate that this would not save a significant amount on energy costs. Assuming daily air passengers, about 52,934 people in the 12 corridors in 2007, switched to high-speed rail, the result would amount to only a 2.5% drop in air passenger totals. Driving is even less likely to decrease seeing as 85% of the 140 million Americans drive to work each day. If you take the example of the Northeast corridor with 45 million commuters, only 28,500 of which take Amtrak, high-speed rail will not divert enough drivers to cut the amount of energy costs that the administration claims it will.

However, they use high-speed rail models from Europe and Asia to justify spending upwards of $10.5 billion on this infrastructure of the future. The problem with this is that the successful high-speed rail lines, the most successful of which are the Paris-Lyon and the Tokyo-Osaka lines, are located in densely populated urban areas. The United States became heavily suburban in the past half century and the percentage of the metropolitan population living in central cities dropped to 32% in 2000. As a result, jobs spread out to the suburbs and more Americans are even working from home. Rail service to big core cities will be even less useful as this trend continues.

Washington will end up footing most of the bill for these high-speed rail projects, especially in states like California that have massive budget woes and few interested private investors. In fact, California is asking for $19 billion for its now $42.6 billion project. That’s almost twice as much as the administration has paid for all the high-speed rail projects in the nation combined (currently $10.5 billion). If this starts happening in every state waiting to get high-speed rail, even if it is on a smaller scale, the federal government will have little money to address the country’s more pressing needs, such as education.

Some state governments are starting to wise up. Not wanting to waste money on unfruitful high-speed rail lines, they are simply rejecting federal money for these projects because they would not be able to spend the funds on things they really want, like better roads. Obviously, the federal government won't be able to force high speed rail on Americans for long.

There is no doubt the Obama administration has good intentions for high-speed rail, but good intentions don't always translate to success. Rather than try to wedge its idealistic vision of a new transportation infrastructure into the realities of recession-ridden America, it should evaluate what the country truly needs.