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A Toll for the Slopes 17 October 2011

Posted by magicdufflepud in Colorado, Skiing, Travel.
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I just love when skiing intersects with policy, particularly since most of the time, nobody wants to hear wonkishness about Pigovian taxes and internalizing externalities. But when you’re stuck in a car on a Saturday morning waiting, praying for ski traffic to start moving, it’s high time to pull out the ole policy gun and fire off a round or two. At least you have a captive, and interested, audience. Pretty much everyone who skis in Colorado hopes for a solution to the traffic nightmare that is a weekend morning or evening. For those of you not familiar with Colorado’s unique predicament, here’s a primer from Slateon that stretch of highway between Denver and Vail:

The I-70 mountain corridor is a rather unusual piece of highway. As Ken Wissel, a transportation engineer with the Denver firm Stantec…describes it, I-70 has two of the highest peaks in the entire Interstate Highway system within 25 miles of each other. There are four major ascents, a two-mile-long tunnel that dips under the Continental Divide, a terrifying descent that features one of the country’s most-used emergency truck ramps, and a number of merge zones where traffic must jockey as the highway goes from three to two lanes before entering the tunnels. To complicate matters there’s snow, a lot of snow (“We had 600 inches last year,” Wissel says); and traffic, a lot of traffic.  “We end up with some real long queues,” Wissel says. Backups as long as 30 miles have been reported.

A good summary, but the problem isn’t all about the geography; it involves people too. The ski day begins and ends at particular times, meaning that traffic all arrives from Denver at around the same hour and departs on a similarly scheduled basis: roughly 8 a.m. and 4 p.m. All those cars at once, intermingled with the inexperienced throngs of Midwestern vacationers and their white-knuckle driving creates a mess of volume and accident-related slowdowns or stops. Dealing with traffic is a necessary part of skiing in Colorado. A rite of passage almost.

But it doesn’t have to be that way.

The Slate article above describes the problem to tell a larger story about CDOT’s attempts to “harmonize” traffic at certain speeds. Once volume hits a certain point, a cop pulls onto the highway, lights flashing, and leads the mass of cars at 55 mph. Think pace car in an Indy or NASCAR race. That keeps drivers from engaging the the sort of speed up/slow down behavior that results accidents that cause even more delays. Two tests so far this year seem to indicate that it will be an effective strategy, but it only addresses a symptom, not the underlying problem of volume.

The real issue of course is volume: too many cars on a road only designed to handle so much. And look, before you say it, I know that semi trucks are a curse too, but they only become relevant once traffic reaches a certain point anyway. If there aren’t already 10 bajillion cars on the road, whatever dumb behavior you attribute to 18-wheelers doesn’t matter. At any rate, when the problem is volume, you can have only two solutions: increase capacity or decrease the number of cars.

No one’s going to widen I-70 anytime soon, nor are they going to build that monorail, so you can nix solution one right out of the gates. So the second option is the only realistic one, and since you can’t arbitrarily ban, say, cars with license plates ending in odd numbers from heading up to the mountains, the leaves the sensible solution of making the whole thing a toll road—at least part of the time. Congestion pricing is nothing new—London does it—but it will definitely piss people off. It will also keep them off the road because traveling around peak times will get annoyingly expensive.

Under the system, traveling at peak hours would incur higher tolls, while off peak travel could be essentially free, encouraging drivers to travel at off times or to pile more people into their cars to diffuse the cost of the toll. In turn the money could go toward expanded capacity. Or a monorail. I mean, why not? I’m not as interested in the particulars as I am in forcing drivers to confront the real costs they’re incurring when they all show up at the same hour because the interstate is free, creating slowdowns that waste everyone’s time. Time really is money, and we shouldn’t be wasting either when it comes to skiing. If it takes toll roads to get us to and from the slopes faster, then toll roads we shall have.

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At the Ballot Box: Considering Trade-offs on 101, 60 and 61 10 October 2010

Posted by magicdufflepud in Economics, Policy.
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Unless you’ve been living under a rock–which, in Colorado, is entirely possible–you’ve heard about Proposition 101 and all those two amendments in the 60s. If any of them passes in November, the nation’s gaze will settle on our state. Someone Massachusetts will spit out his latte and ask “Dude, Colorado. WTF?” Around here, folks are calling the proposed changes the Armageddon amendments, but if you prefer “Ragnarok amendments” or the “amendments of the eschaton,” I doubt anyone would stop you. The evangelicals out the might even support the idea. I guess it’s cool if Colorado brings about the rapture. Anyway, point is that if you live in Colorado, you face a set of proposals that will, if enacted, turn Colorado on its head. I’ll leave you to decide whether that’s a good thing, but I’m hoping to give you a hand in assessing the impacts of each.

Because so much money is at stake here we need to understand taxing and spending and cuts thereto. We need a framework for making decisions.

Spending any time arguing with someone about tax cuts, and you’ll eventually hear the line “Proposal X takes away Y dollars from program Z” followed shortly thereafter with a statement, always said with an air of finality, “And we simply can’t afford to cut that much from program Z.” And on the other side of the argument, you’ll get, “Proposal X returns Y dollars to taxpayers’ pockets.” Both sounds reasonable, hence the finality, but rarely do you hear them addressed together. Let’s take a moment to examine what’s going on.

If we accept the argument that taxes exist in part to pay for government services (and set aside the arguments that they serve redistributive and behavioral purposes as well), then tax money looks largely the same as money spent purchasing anything else. We’re buying roads, education, social services and so forth because we see value in the products. It’s that kind of thinking that passed Amendment 23, mandating higher levels of funding for Colorado schools. Our tax dollars pay for things we believe we need to live in a civil society.

So when considering tax cuts, we can begin drawing analogies to the purchases we might make on our own. If we choose not to spend money on a new car, for instance, we might keep $350 a month to spend on other things we need or enjoy. Same with tax dollars. If we cut taxes, we’ll now have Y dollars left in our pockets to purchase things other than roads, education, etc. That’s the argument the tax cutters make. “More money in our pockets.”

Taking both sides into account, we must decide whether the trade-off makes sense. Maybe our current car is a clunker with no hope for repair. It guzzles gas and threatens to fall apart at every other turn. $350 a month for a new car solves those problems. The same goes for state services. We might all be able put more toward repairs to our houses, for example, but is it worth it to take that money from higher ed? When we take tax revenue from the government we’ll lose certain certain services, as well.

Cutting taxing and spending is a trade-off, not the one-sided disaster (or success) story so often offered against (or in support of) it.

With all that in mind, we ought to consider two factors when making our decisions: 1) the relationship between tax revenue collected and the quality of services provided and 2) the minimum level of services we’re willing to accept.

To illustrate the importance, take a look a these two graphs:

 

 

Low impact on service quality

 

 

High impact on service quality

 

In both these graphs, we’re willing to to accept nothing below the same non-zero threshold of service quality. This is the level of service we expect from the government, irrespective of the money we pocket through tax breaks*. In the first graph, however, you’ll see that our return on investment is much lower. More money to government improves government services only slightly. In the second graph, small increases in revenue result in large increases in service quality. To think about this more concretely, try replacing the x-axis with “spending per-pupil” and the y-axis with “test scores.” In the first case, we get relatively little improvement when we spend more money. Maybe it would be better to spend it elsewhere. In the second case, we see enormous gains. Spending more money here gets us a lot.

Bringing this back to the original discussion, we need to consider exactly what we lose when we cut taxes and curtail spending. We need to know how effectively Colorado spends taxpayers’  money. And then, we need to know, based on that relationship between revenue and service quality, whether the cuts proposed via Prop. 101 and Amendments 60 and 61 will take us below the minimums we expect from government. If we think those cuts will take us below our minimum expectations, then we need to oppose them, and if we think they’ll remain above the minimum, then we need to weigh the service lost against our own gains. Not an easy task, but when so much money hangs in the balance, we need to base our decisions on something stronger than whimsy. This provides a framework.

But if all that sounds too time consuming and wonkish, then yes, all the ballot proposal mentioned will cut funding below those minimum expectations eventually and in some cases immediately, depending upon the program. But take the time. Make your own assessment.

* Despite the discussion of trade-offs, sometimes we require a minimum when making decisions. In your own life, you might be choose to live in cheaper and cheaper places so that you can afford to spend money on other things, but at some point you reach a lower bound. You have to live somewhere, so your trade-off becomes one between money and homelessness–not a realistic decision. Same with government: you expect police and fire protection, roads, some form of public education, etc. A minimum exists.