- Lesley Weidenbener, The Statehouse File
- Senate Appropriations Chair Luke Kenley, R-Noblesville, is not convinced the current plan to expand mass transit in Indy is the wisest use of tax dollars.
Editor's note: In calling for a fact-check to ensure that I had appropriately summarized Senate Appropriations Chair Luke Kenley's comment that highway infrastructure was entirely supported by user fees "through gas taxes and various vehicle-related sales taxes and licensing fees," an unexpected opportunity opened to discuss with the senator his take on the issues surrounding the effort to increase public transportation options in Indianapolis and surrounding communities. Edited excerpts from our conversation follow.
NUVO: Isn't it impossible to keep up with infrastructure demands? Isn't that why we had to do Major Moves and receive subsidies from the American Recovery and Re-investment Act?
Kenley: The Major Moves was a conversion of these toll road fees to a principal amount of money, so it all came from the highway users. So in that sense, it is a user fee reduced to a present net value capitalized amount so that we'd have plenty to spend today. So Mitch Daniels [who, as governor, spearheaded Major Moves] is spending the money today based on what we're supposed to get over the next 75 years. That's really not a subsidy from another source.
NUVO: I take your point about user fees, but that is not sustainable.
Kenley: Let me try to say it in a different way and maybe we'll kind of get connected here.
The gas tax itself is a little over $500 million. When you add in all these other fees that are related to highway usage, you get up to a total annually of about $1.1 billion. We also charge sales tax on gasoline, which yields another $500 million; that gets state revenues to be used for INDOT and highway funding up to $1.6 billion.
Then you add to that whatever we get from the federal gas tax and the federal allocation. Now in recent years . . . the revenues on the gas tax both for the sate and federal government has been falling a little bit because of fuel efficiency and so the feds have actually funded some of their highway fund distributions out of some reserves that have been established through prior usage on the highways, so it gets a little fuzzy . . . but even transfers from the general fund are actually from highway user fee-related reserves.
I think the point is, in the big picture, that virtually all the capital costs of the infrastructure improvements and the annual maintenance of the highways is paid for by user fees. In the case of mass transit, even under the plan presented by CIRTA, zero percent of the capital infrastructure costs will be paid by user fee. In other words, you'll never pay that off; you just have to take it from some other revenue source.
Across the nation, the direct fare box only generates 16 percent of the operating cost for the mass transit system. So you have a huge subsidy by percentile of any mass transit system, whereas even if you think you can find some subsidy for the highways, it's a very, very small percentage and it may not even exist.
NUVO: So we're not facing a shortfall on transportation funding as we look forward?
Kenley: No, because in this year's budget, we dedicated the sales tax on gasoline - which we had just put it in the general fund and allowed it go everywhere - we ended up giving the state highway department about $120 million a year going forward more money from that source. And we allocated to all the local units of government, the cities and the counties, about $100 million more going forward. So we have filled up the hole, but we filled it with revenues of users of that source.
NUVO: That includes finishing I-69?
- Source: "The Hidden Health Costs of Transportation," prepared by Urban Design 4 Health for the American Public Health Association.
- Mass transit proponents argue that, in addition to greater community connectivity and opportunity access, related benefits to well-planned transit infrastructure include a healthier, more active population, fewer traffic deaths and reduced air pollution. Sen. Kenley gives some of these arguments more weight than others.
NUVO: When we think about these things, is it easy to think holistically about some the challenges we have — with asthma rates, climate changes those kind of things — in terms of the wider maybe externalized consequences of the way we do things?
Kenley: Technologically, we have advanced so much in that area — and we're moving to things like electric cars and things of that nature — that we've actually been gaining ground on some of the environmental degradation issues that result from the use of motor vehicles. So, that question and justification for mass transit is not as viable a reason why we should do this as it has been in the past.
NUVO: Is climate change something that is important to you?
Kenley: Oh, it's a hugely important issue. I think there is a lot of disagreement over what happens and what the causes are and how you remedy it. ... But I think that if climate change is occurring É you could segregate that into two statements. One is: Is climate change in and of itself an actual provable act? The second part is: What do people, through their usage and their lives, contribute both to the environmental preservation or assets or to the degradation of our living situation. So, whether it is attributable to climate change, global warming or something else, it is an important issue. I think a lot of times that gets fuzzied up because some people want to say, "It is absolutely global warming." But that is not really the core issue. The core issue is: What are we doing environmentally to protect our resources and to not waste them and not create health hazards for people.
NUVO: So you are not entirely convinced that greenhouse gases need to be controlled?
Kenley: That's right. I don't know the answer to that. I accept that our activities have a bearing on our health and on the preservation of our resources, and whether or not we are wasting our resources for future generations. That makes the issue just as serious to me whether I accept greenhouse effects or global warming or not. I think that's where we get into trouble. We debate something nobody can quite prove, but the reality is we need to be very sensitive to what kind of resources we use and how they impact other people and how they affect our future availability of resources.
NUVO: Getting some kind of agreement on the greenhouse gas issue, it seems, will be important in terms of how we move forward.
Kenley: I think it's a good thing, factually, for us to try to determine if that is true or not true, but I don't think it matters in terms of whether or not we're interested in making sure we don't degrade our environment.
NUVO: It's not the same thing?
Kenley: Nope. Because it could be that we know that we degrade our environment through certain types of activities, but the truth could be that there is no actual global warming, that there is something else that is creating an environmental problem for us. You need to think a little bigger on this.
NUVO: Well, it seems to be there are a whole bunch of issues intertwined, but the preponderance of the science, the EPA and the wide majority of scientists accept the greenhouse gas theory.
Kenley: I'm saying that I don't know. And, secondly, it's really not that important, if you think that it's important for you to, environmentally, find ways to be more preservationist oriented or not to be degrading things in terms of our healthy environment.
NUVO: With global warming, I don't think it means that it gets hotter everywhere all at once, but the floods and extreme weather ... the extreme weather patterns are increasing.
Kenley: That clearly hasn't been proved. You're getting off into the distance here now.
NUVO: Well, it's definitely not my thing to debate with you. I value your expertise on the budget and I appreciate you taking the time to walk me through some of it.
Kenley: The big difference and the point I made in the meeting was that highway usage is pretty much and maybe 100 percent paid for by user fees both at the capital expenditures and as to the annual operating costs. Transit: the reverse situation is the fact, so we need to deal with that in terms of deciding whether it's an important enough priority for us to take resources from other things and apply it to help solve this problem.
- Lesley Weidenbener, The Statehouse File
- For Senator Kenley, Central Indiana's transit issues should not be decided by the people without appropriate guidance from elected officials.
NUVO: The people decide that the amenity is important enough to them, just as an amenity to their community, that they want to pay for it . . . what's the problem?
Kenley: Well, that's a little bit overly simplistic view of how government works. For example, if you were to take a referendum on whether people want a transit system or not, I think you'd want the public officials to assume the responsibility of providing the most efficient and effective system that they could. And if you'd taken the decision out of their hands through the referendum, then you've also given them the excuse of saying, "Hey, they just said do it, so we have to do it and it's not up to us if it's good or bad, or efficient or not."
So I think that it is very important that the leaders in every community that they are committed to doing it the right way and they can be held accountable for their performance on that point. If you just say, "They people think this" without having the elected officials be held accountable, you're kind of putting us in the position where we might not give our best efforts to doing this correctly. So you need to have consensus that extends to your elected leadership. And when you elect your leaders, that's also a referendum on them, OK?
NUVO: Isn't that just another layer of bureaucracy? Doesn't that make things less efficient?
Kenley: There's another more practical thing that needs to be considered: How much do you think the average citizen knows, for example, in Marion County about where we are on our budgets with respect to police and fire or other competing needs? We trust our elected officials to be experts in these areas. If you don't give them a chance to have input on the decision, then the people without knowing what the balance is, or what the other liability issues may be, could be led into making a choice, that had they known otherwise, they wouldn't have made.
NUVO: Isn't it like Mayor Greg Ballard said? It's a dedicated fund. It's not like it's taking money away from our fire department or something else. It's an additional fee.
Kenley: If you put this extra dedicated fee on and then you get this reaction that people are moving out of Marion County because your income tax is higher than everyone else's, then you face the problem of assessing your priorities.
NUVO: We're already in that position. All the other donut counties already sort of take advantage of what we do in the metro area. It does seem that we support all these central services.
Kenley: It's also true that Hamilton County and all the cities in Hamilton County contribute free gratis to the food and beverage tax for the payment of the convention center retirement bond. And on infrastructure, Hamilton County is a donor county on the monies that are being re-distributed to the counties on the highway tax. So be careful when you say that Marion County is somehow paying the freight of everyone else.NUVO: It feels like it sometimes.
Kenley: Well, the facts and what it feels are two different things.
NUVO: Fair enough. But we do have this vitality issue. We've got to get the urban core jumpstarted.
Kenley: I agree with you. One of the interesting things . . . the actual urban core has improved significantly, the problem is the ring between the urban core and the county line in some cases . . . .In evaluating this: Is it more important to give people a transit system or is it more important to provide better schools and better public safety? That's part of the question we're discussing here.
NUVO: Giving people options to be mobile, a lot of people are stuck in what look like wastelands in some cases.
Kenley: Is it more important to give them mass transit than it is to have better schools and safer streets?
NUVO: When you consider vouchers and the mobility of students to get around to make their school choices, mass transit will become more important because the viability of getting a school bus system to accommodate that is kind of impossible.
Kenley: The real question is how do we provide transportation for people who are stuck? Is the best way to do that to give them, for example, a vehicle subsidy, which gives them more flexibility? I'm wondering: There's not such a cumbersome infrastructure in that solution. In 20 years, is that something we'll be sorry we invested in heavy duty. Now there's more heavy infrastructure in a train set-up than a bus set up. That's part of the discussion going on here too.
NUVO: Is that something that is getting you extra nervous from an elected official side? If they took the rail off the table, do you think local lawmakers would be more comfortable with what they are trying to do?
- Lesley Weidenbener, The Statehouse File
- "I think it's perfectly reasonable for the General Assembly to try to break these things down as to 'Who needs the service, why do they need the service?'" Kenley said. "Let's make sure we've examined all of our alternatives. That's all we're trying to do here."
Kenley: Not for me personally. For me personally, I think we have limit to how much public tax dollars we can generate and use for resources without becoming negatively impacted — not just from Marion to Hamilton County, but from Indiana to Florida. You have to be careful about the costs of your cultural lifestyle choices.
NUVO: I agree with you; that is super important to long-term sustainability. But one of the speakers said if we added this fee that we would still be an extremely competitive tax environment.
Kenley: That may be true . . . I know that we do have people moving from Indiana to Florida . . . changing their residence because of tax differentiation. And that's kind of big problem because those people are often big income earners, so it has an out-size significance if you get on the wrong side of that equation.
NUVO: It is hard to compete against no income tax, right? Isn't that what Florida has?
Kenley: We've been careful about trying to compete with Florida. It's true they have no income tax, but they have other taxes that we do not have, so need to measure the whole tax impact and see where you stand. It's becoming an issue in today's world because people have so much flexibility on where they live.
NUVO: I've enjoyed living in cities where I can get on a train and work as I'm commuting instead of daily road rage.
Kenley: I do know that there is a culture of people where this is a lifestyle they want to choose. That's a pretty amorphous thing and I'm trying to measure: What is the value of that? How much would you attract other people to you because of that? And is it worth the cost of doing that to create that lifestyle.
For example, my daughter lived in San Francisco for seven years. I loved going to San Francisco and we used their transit systems when we were out there, but I think there were other things in San Francisco that made it more fun to go there. I don't think it was just having the bus.
NUVO: The squeezing of the middle class is a real thing with health care costs and the cost of living. And you know how the productivity numbers have been driven up on the workforce; they are squeezing more out of us. The cost of owning your car, paying the gas, paying the insurance are far higher than it would be to buy an annual transit pass.
Kenley: The larger statement of the problem, I'm extremely concerned about the middle class and making sure they have a reasonable and comfortable lifestyle. Whether or not we can accomplish that by the subsidization of transit is a little different question.
NUVO: It relates to over-all budgeting, though. And it's so disheartening to hear about people who choose to live on welfare because they get more money than they could at work. How do you change that culture? Maybe providing better transportation could help turn that corner.
Kenley: If we were having the transit discussion inside of discussion that said, "Look, we've set up the incentives the wrong way and there are too many people living on the rest of us without even making an effort to do any fair share." I think if that were all part of this discussion, it might be easier to say, "Hey transit deserves a place." But when you're in a position where you're being forced to give all these other benefits and subsidies, and now we're getting one more request, it makes it a harder question.
NUVO: Well, we've got an interesting few months ahead of us. Is there any way it can possibly pass next session?
Kenley: There's a possibility. But I'd also comment that I think it's very important for the General Assembly to take this seriously, that the General Assembly should not have passed on this thing last year on the first view, that the issues go much deeper. All the advocates say, "We've been presenting this for 20 years and you just won't give it to us." I think that's a total misstatement of things, and I think we're finding that out as we're having these discussions.
NUVO: Are we getting closer with the preliminary recommendations outlined?
Kenley: We may be getting closer to understanding the reality of the thing. Now, if you're someone who says, "I want transit no matter what and I don't want to discuss any alternatives," then you may not feel we are not getting closer. But I don't think that is a fair and objective way to look at the problem. The problem has to be looked at in conjunction with everything else we're doing.
NUVO: The other alternatives being subsidizing cars for everybody?
Kenley: Not for everybody, but I'm just trying to think: Where is technology driving us? That's why I asked the question the other day: Who are the people who need this service? Some people need transit service because they cannot drive, either because of physical restrictions or age or maybe the law says you don't get a driver's license anymore, and then you've got another crowd that says, "This is my preference." I think it's perfectly reasonable for the General Assembly to try to break these things down as to "Who needs the service, why do they need the service?" Let's make sure we've examined all of our alternatives. That's all we're trying to do here.
NUVO: What do you think of the statistics about Indy's ranking about the ability to get to a job in less than 90 minutes and that only half the jobs could be accessed by mass transit within a half mile?
Kenley: I thought that actually cut against the argument because underlying that argument was that you could never put in enough transportation infrastructure to get people close enough because Indianapolis is so spread out.
- This illustration from Cincinnati TransitForum plays on pro-transit sentiment. Quantifying the cultural value of transit is "amorphous," Kenley says, and he wonders how the costs and benefits actually play out.