Thursday, October 09, 2008

Measure "R" and the Whiners


Los Angeles is crazy. Gee, that's a shocking and unexpected proclamation eh? No this time it is a "jump the shark" moment in public transportation. LA is pushing Measure "R" a half cent sales tax increase to fund transit. That's another half cent BTW. Props A&C already have combined a half cent. This pushes LAs sales tax to 8.75%. Buy comparison neighboring Ventura sports a 7.25% rate. I said "buy" not "by" because that's what's happening. How would you like to be a car dealership near that border? 1.5% is more than dealers are making these days. But forget the elementary economics. Look at the lame politics being employed. Hit up the taxpayers for an amount 4x the total farebox revenue? Dumb. Look, it's a mess but public transit needs pubic subsidy. We can talk about "needs" versus "deserves" another time for now unpaid and un-payable bills are accumulating. It has taken all of two weeks for the lie that is the California State budget to be revealed for what it was. As warned here last month actual revenues have fallen off a cliff. Worse is the exploding gap twixt projections. "But Dawg, this is a transit post." Fine but remember that 4/5ths of transit expenditures are public funds.

Measure "R" is about mostly maintaining service. I know, I know theproponents are all about making things better wrt congestion but these same proponents are claiming without "R" massive service cuts will occur immediately. I guess both sides can play at the spite game.

As long as reasonable and justified user fees are not part of the solution it should come as no surprise that voters will likewise consider Meas R to be unreasonable and unjustified. Measure "R" will lose by a majority 58% to 42% but 66% is needed to pass. Here's why the beleagured taxpay will balk:

2007 fares accounted for 23% of operating revenue. 17% of total budget. $293,878,777 per year and the amount requested in “R” is 30 years $40b or approximately 4 times as much. Call the current farebox 25%, use that as a baseline and raise 25% from fare and 75% from taxes. Problem? Well I have a problem. Maintaining that ratio would mean a doubling of fares. Besides doubling fares is likely to only increase revenue 60-70%. Things should have never been allowed to get this disconnected service/cost. Now that we are here there is a very real threat of a voter revolt that will cut of their noses to spite themselves. To keep the taxpayer paying it is necessary to raise fares as much as possible until ridership and elasticity are stretched and then go to the taxpayer.

33 comments:

Salt Lake Mortgage Guy said...

First to notice nobody comes here anymore...

Rob Dawg said...

Nigel,
You are projecting.

First, I managed to transition my blog to a sustainable pace.

Second, The people that come here and the fairly large number that track without participating are top notch.

Third, it doesn't affect my ad revenue now does it?

Of course you come here so the nobody comment is not entirely without merit.

Casey Serin said...

Nigel is just angry that I dumped him for another guy. ;-)

Jean ValJean said...

@Nigel: isn't that a self-invalidating paradox? Like "I am lying" or somesuch?
Oh, and I would look at the number of comments in the last few posts as fairly quick proof that lots of people DO come here.

But, back to the topic at hand... here's the REALLY bad news: California's just leading the rest of the country off the cliff:

First Into Recession, California Shows Possible Future for U.S.

Here's the latest trend that started in California and is spreading to the rest of the country: recession.

It's all but certain the U.S. economy is in a recession, as falling home prices and Wall Street turmoil have put the brakes on consumer spending and stoked unemployment. But California got there first. Now, the state provides a template of how a broad U.S. downturn could look.

Rob Dawg said...

Ewwww. "Casey," "Nigel" and "dumped" in the same sentence. I won't go there.

Nigel, seriously, you do know that it was obvious that Casey would use your kindness and hospitality to try and stir up the haterz? Pretty much everyone who matters knows you two didn't do the double double with cheese and animal fries. The commentary is surrounding that you didn't appear to know Casey would use your honest outreach to incite haterz speculation.

Rob Dawg said...

Teh bastards just booed the Dow breaking 9000.

Aaron said...

'Teh bastards just booed the Dow breaking 9000.'

sweetness.

Chuck said...

Loved this typo:

"public transit needs pubic subsidy"

Not really sure it's a typo, though. It's very fitting - taxpayers get screwed again.

Rob Dawg said...

Chuck,
It was a typo but ended up as a comment. Think the current orgasm over the impending liquidity injection.

Jean ValJean said...

Ok, this was just too funny to pass up. From Nigel's "last blog post" (yeah, I've never heard THAT ONE before):

[Nigel spends 17 paragraphs dissecting Casey's personality. Then...]

At the heart of my attraction is the fact I've been in similar circumstances. I've had several major failures in my life so far and deep down I wanted to use my experience to help Casey.

[Two paragraphs later:]

Some people have felt it necessary to impose their values and experiences upon him and it's clear Casey won't change his mind. He wants to fail forward on his own. I suggest we let him.

[...]

That didn't prevent me from flying him out to Salt Lake to speak to him in person and try and influence him in real life.

[Then Nigel proceeds to cleanse the blog from all his previous criticism of Casey.]

Aaron said...

dawg,
she just blew through 8800. I guess we need to revisit. ;)

Peripheral Visionary said...

So this is what capitulation looks like.

And am I mistaken, or does TIME have the economy as the cover story? Looks like I can start thinking about going long.

Dolph said...

I'm a lurker here. I come here for the opinions. I actually like reading here since it's pretty much minimally Casey free.

Nigel, many come here to read. The posters here (and on HP) tend to allow me to read opinions without any need to participate. It's good for me as I am into seeing people's opinions.

Aaron said...

PV,
we have plenty of time to think about going long. the market won't recover any time soon. I figure we have a good year to bottom feed.

Jean ValJean said...

We just hit 8595 at about 3:45 PM Eastern before a bounceback.

This is nasty.

serinitis said...

Dow is at 8600. Rob you are an optimist.

Rob Dawg said...

At 12:41 PM, Aaron said...
dawg,
she just blew through 8800. I guess we need to revisit.


She ain't closed yet.

peripheral visionary said...
So this is what capitulation looks like.

And am I mistaken, or does TIME have the economy as the cover story? Looks like I can start thinking about going long.


Nope. This is not capitulation. The largest long covering in history maybe.

Property Flopper said...

Hell, I had 8500 as the low, we'll blow through that soon enough. Looks like I'm an optimist too. Any new predictions?

Also - Nigel, you're a tool. Why don't you contribute something USEFUL to the discussion or just go away. Either works.

tk said...

Anyone else tax loss harvesting today? I just swapped Vanguard's Total Stock Market Index for a combination of the S&P 500 Index and the Extended Market Index. It was sad that I didn't have to sell too many shares to realize a $3,000 capital loss.

Tomorrow, I'll think about rolling that traditional IRA into a Roth IRA. I mean, it can't go much lower, right?? :)

Oh, and Nigel, you add nothing to the conversation here. Get lost.

tk said...

Hey PF, I almost used "tool" to describe Nigel, too. Uncanny.

Rob Dawg said...

LoL. How long has it been? I don't drive away some posters despite the sour taste. Ever wonder why? Calling Nigel a tool is very close to that truth.

Anybody else laughing at the CNBC wonderment at the "speed" of this decline?

Akubi said...

If predict a low of 2759 before this crisis is over.

Peripheral Visionary said...

I will have to confess that my eyes are actually on overseas markets, which have crashed and burned over the last month. How many times have the Russian authorities shut down their markets? Sounds like an opportunity to me.

But Aaron is right, there's time to pick a good entry point. Now that the markets have crashed, they'll likely drift down before slowly forming a bottom. Those of us who rode this storm out in cash and gold will have plenty of time to pick up pieces.

I almost feel bad for the Federal Reserve. Almost. If this were a horror movie, the Fed would be in a farmhouse surrounded by zombies, out of ammunition, with several hours to go until morning . . . isn't that the part of the movie where somebody snaps, starts screaming "we're all going to die", and has to be put down by the other survivors?

Aaron said...

8579. wow. I must admit I am a little surprised today dawg. I too may have been optimistic with my 83xx. I need to check what I guessed for the bottom.

w said...

Just another -1646 to go.

Lou Minatti said...

I thought it has something to do with the shorts being allowed back in.

There are a lot of good companies that have been whacked pretty hard. Companies that produces goods that we actually need.

Bill in NC said...

Mass transit - you can have it, but you can't afford it.

Unless you force everyone at gunpoint to move into 30-story buildings.

And only a few of the industrial stocks (e.g. CAT) have reached their historical P/E of 7.

Most stocks have a long way to go to hit a P/E of 7.

Rob Dawg said...

Were we to just charge users half the operating costs of transit they'd abandon the mode en masse.

An historical P/E of 7 includes periods of high inflation. With 3% inflation we might need a 4 or 5 ratio especially as credit tightens and earnings are retained by necessity.

Jeremy said...

im glad you reside in ventura county and have no say in the matter...

Gary said...

"Were we to just charge users half the operating costs of transit they'd abandon the mode en masse."

I'd imagine if you charged road and highway users just half the operating cost of those roads and highways you'd have people abandoning driving en masse too.

I frequently hear the criticism that public transit requires subsidy, but private transit requires it as well, and is eating far more of it. The gas tax is a drop in the bucket compared to total costs of construction and repair of public roads highways and parking spaces.

If transit should be forced to raise fares to account for more of it's funding contribution, than I would argue that automobiles should be taxed according to vehicle miles traveled in addition to the gas tax.

Gary said...

... chirp chirp..

Any rebuttal to this. I can never seem to get a straight answer from any libertarian types on this issue.

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