Government’s default position: Fleecing

Government’s default position: Fleecing

What is it about government mass-transit projects?

New York City is moving forward on a controversial streetcar line to run through Brooklyn and Queens. And it appears to be another farce in the making, a la Pittsburgh’s North Shore Connector.

The original New York proposal for the Brooklyn-Queens Connector, or BQX, was to run 16 miles at a cost of $2.5 billion. But now, five miles have been axed from the project. And guess what? The cost has jumped to $2.7 billion.

File that one under “Stupid Government Tricks.”

Which brings to mind the Port Authority of Allegheny County’s North Shore Connector. Its “spine line” to the David L. Lawrence Convention Center was lopped off but the half-billion-dollar price tag remained. Then, some officials even snapped their braces about the project being brought in on budget. Really. Talk about chutzpah.

New York Mayor Bill de Blasio’s plan for that shiny new streetcar, supposedly guaranteed to spark economic development in the boroughs, took a big step forward Wednesday last.

The NYC Economic Development Corporation, which also runs NYC Ferry service, announced it approved a contract with a consultant to oversee the environmental review process for BQX.

The New York Daily News reports concerns remain about whether the trolley line will lead to gentrification and rising housing prices. Of course, the greater concern should be if ridership will end up being anything close to the projections always used to justify such projects.

Long answer short – it seldom is.

Oh, and there’s another kicker to the New York trolley project – “it still hasn’t (been) determined how it will be (fully) funded,” the newspaper reports.

An estimated $1.4 billion of the project’s cost will be covered through a scheme called “value capture,” or VC, the current darling of “creative financing” in Europe.

Value capture is not unlike that dubious methodology so favored in Greater Pittsburgh known as tax-increment financing (or TIF). That said, it appears VC is more market-perverting than TIF.

“It’s not yet clear where the remaining $1.3 billion will come from,” the Daily News reminds.

Oh, one can only imagine someone will cook up yet another “creative” financing scheme.

One needs to look no farther than the Pittsburgh Water and Sewer Authority to understand how dysfunctional “government water” can be.

The PWSA, you’ll recall, long was treated as a piggybank by the City of Pittsburgh and prone to the worst of political machinations. These days, it’s under state Public Utility Commission (PUC) oversight and faces a long slog to recover from that abuse.

On Thursday, the PUC approved across the board double-digit percent rate hikes to pay for long overdue upgrades. Future rate hikes are virtually assured.

In addition to mechanical upgrades, another of the many areas to be reformed is a 24-year-old agreement between the city and authority that, among other things, gave city government entities 600 million gallons of free water annually, saw the city cover authority pensions to the tune of $2 million each year and transferred millions more dollars in agency payments to the city.

PWSA board chairman Paul Leger tells the Tribune-Review:

“The old agreement is now invalid. What we are trying to do is come up with a new agreement that reflects itemized costs that we will pay for and/or that the city will pay for or perform that reflects current standards of operation both for us and for the city.”

You know, run things like a business — a private business. Ahem.

The better idea, obviously, is to get government and shadow governments (i.e. authorities) out of the water business. Which is about as popular with government bureaucrats as garlic is with vampires.

It’s certainly not as if there aren’t multiple scores of examples of private companies providing excellent services at competitive prices to multiple millions of customers, all still overseen by state utility regulators.

Right?

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).