Out of Control

Over at Flypaper, Liam Julian offers more proof that competition has positive effects on public schools. He writes about how competition from charters is helping Houston public schools:

HISD school board member Diana Davilla told the Chronicle about KIPP, “They’re attracting more students than we are. Somewhere, we’re missing something because they’re building schools and we’re closing them.” The district hopes to change that:

Leaders said they’re also working on ways to use data, including performance pay information, to create a profile of ideal teaching candidates. They plan, for instance, to use the data to determine which universities are producing HISD’s best teachers.

I’ve noticed an interesting effect of competition from charter schools here in Los Angeles. More than 7 Percent of Los Angeles students are enrolled in charter schools. The big education story in California this spring has been the school district pink slip mania where around 20,000 teachers were given preliminary layoff notices in March. Curiously, Los Angeles Unified, the largest school district in the state with 700K + students and more than a $430 million estimated budget deficit did not issue one single pink slip to a teacher.

In July 2006, the Los Angeles Times ran a story with the headline: L.A. Unified Losing Staff to Charters; Frustrated teachers and administrators are being lured by independent schools with promise of more support and freedom.

Amid the continuing growth of charter schools in Los Angeles, hundreds of teachers and administrators have left the city's school system to take jobs at the independently run campuses...

The loss of teaching and administrative talent has angered and worried some members of the district's Board of Education.

"It is not a healthy competition. It's not healthy for us at all," said board member Julie Korenstein, a staunch critic of charters. "We have groomed these teachers and they have risen up with us," and then the charters "come in and harvest them."

Flash Forward to 2007-2008

Green Dot takes over Locke High school and the district loses an entire high school staff.

Reason TV’s Drew Carey Project covered the takeover in: UnLocked: Education Revolt in Watts.

Therefore, with a recent history of teachers abandoning the district for charter schools, I guess the district administrators thought it was prudent to avoid teacher layoffs. The official version: Roger Buschmann, Los Angeles Unified's chief human resources officer, told the Los Angeles Times, "We gave it a lot of thought and decided, 'Why worry them unnecessarily?'"

The media has made a lot out of other states like Nevada recruiting California teachers. Yet, in Los Angeles the teachers would not have had to leave the state, they have local charter schools. Today when I went to EDJOIN.org which offers a comprehensive listing of teaching positions for the entire state of California, I counted more than 314 teaching positions listed for charter schools in Los Angeles for 2008-2009. Here’s a few examples from a long list: Alliance for College Ready Public Schools has 29 openings, Aspire has 10, Environmental Charter High School 8, Green Dot 13, KIPP LA 5, Rosie the Riveter charter 5, Accelerated School 4…. Bright Star Schools with six openings even advertised in their posting: “We pay 10 percent over LAUSD Scale.”

So who did get pink slips in Los Angeles? Los Angeles Unified notified about 3,000 administrators and senior management contract employees that they may not return next year. While it is doubtful that 3,000 central administrators would be let go in Los Angeles, it is apparent that except for a few principals or heads of schools, charter schools are not competing for administrators.

In two recent columns for Reason, I cover the education budget and teacher layoffs as a rhetorical strategy.

Closer Look at California's Proposed Education CutsState budget deficit makes some cuts necessary

Are Over 100,000 California Teachers Getting Pink Slips?
When it is time to make budget cuts, teachers shouldn't be the first to go

From the Star-Telegram, "Texas and parts of Tarrant County appear to have gotten the message that fine-tuning traffic signals reduces traffic congestion and air pollution." and "'People who say we can't do anything about congestion are wrong. We can do lots,' said Joel Marcuson, a specialist in urban intersections with the Jacobs Engineering Group in Phoenix."

Read the rest.

The big news today is that both California State University and the University of California will raise tuition fees.
From the Sacramento Bee:

The cost of a university degree for the more than 500,000 undergraduate students at the state's public universities went up Wednesday.

On University of California campuses, fees will climb 7.4 percent, bringing resident undergraduate fees to more than $8,000 a year.

The Sacramento Bee notes that "Student fees in California remain among the lowest in the country compared with similar universities."

Rather be here than anywhere: according to the College Board :
The average college tuition for 2007-2008

Private four-year $23,712

Public four-year $6,185

Cal. State is really a bargain at $3,800 and so is the UC system at $8,000 bucks--especially considering the prestige of UC schools.

The Web is abuzz today with reports and analysis of the latest network neutrality bill to be introduced this year. The as-of-yet unnamed bill, sponsored by Reps. John Conyers (D-MI) and Rep. Zoe Lofgren (D-CA) seeks to amend the Clayton antitrust act to specifically prohibit Internet service providers from prioritizing or managing any data traffic as it crosses the network and offering any sort of price tiering that would say allow a major applications provider, say Apple, Google or Disney, from paying for better quality for services, such as video or gaming, that require special treatment.

If enacted, it will mean, at the very least, conventional broadband users will be forced to subsidize the bandwidth-intensive entertainment applications used by a small percentage of the population. This, Conyers and Logren assure us, is fairness.

The new bill, which would put Internet price regulation in the courts, stands alongside a net neutrality bill introduced last month by Rep. Ed Markey (D-MA), which aims to make the FCC the final arbiter of Internet business models. Sadly it seems that the debate is no longer whether to regulate, but who will regulate.

As many people have heard, a 7.8 magnitude eqarthquake rumbled through Chengdu, China yesterday, killing more than 9,000 people. Full coverage from the New York Times can be found here.

Chengdu is a city of 10 million people--larger than New York City--and a logistical hub for the interior of China. It is also a center of development for the entire nation (and the "gateway" to Tibet). Fortunately, Chengdu is likely to recover faster because the Chinese government has embraced an outward approach to economic development. If this had happened 20 years ago, the death toll would likely have been much higher and the recover much longer.

Adrian Moore and I had the distinct pleasure of visiting Chengdu when we visited China last year to study transportatin and infrastructure issues. Chengdu is also a tourist destinatin in its own right as the capital of the Sichuan Province (and home of the Panda), a haven for amazing food, and the home of an incredibly friendly and open people.

You will be able to read more about Chengdu and its transportation challenges in our forthcoming book (October 2008) from Rowman & Littlefiled, "Mobiltiy First: A New Vision for Transportation in a Globally Competitive Economy"

After my previous post about a serious academic paper on biofuels, I came across this amusing article about a fight in California over collecting fuel taxes from people who burn used cooking oil in their diesel cars.

Alt fuels and alt vehicle technologies are accelerating rapidly. Which means fuel taxes are an increasingly unsustainable way to fund transportation infrastructure, a key reality my colleagues and I are wrestling with on the National Surface Transportation Infrastructure Finance Commission.

What struck me about this article though, is the central point that CA's regulatory system cannot handle the very green innovations the system is supposedly set up to encourage. The stories of people who so desparately want to use greener biofules and just can't do so legally are jaw droppers. That lightweight Terry Tamminen says in the article "When you go through a period of change, there is always a clunkiness to the bureaucracy." That misses the mark by a mile. Regulatory systems are designed to find what is believed to be the one best way to solve a problem, and force that on everyone and expunge all else. Our crazy over-regulated energy system will continue to suppress innovations and thwart progress.

After my previous post about a serious academic paper on biofuels, I came across this amusing article about a fight in California over collecting fuel taxes from people who burn used cooking oil in their diesel cars.

Alt fuels and alt vehicle technologies are accelerating rapidly. Which means fuel taxes are an increasingly unsustainable way to fund transportation infrastructure, a key reality my colleagues and I are wrestling with on the National Surface Transportation Infrastructure Finance Commission.

What struck me about this article though, is the central point that CA's regulatory system cannot handle the very green innovations the system is supposedly set up to encourage. The stories of people who so desparately want to use greener biofules and just can't do so legally are jaw droppers. That lightweight Terry Tamminen says in the article "When you go through a period of change, there is always a clunkiness to the bureaucracy." That misses the mark by a mile. Regulatory systems are designed to find what is believed to be the one best way to solve a problem, and force that on everyone and expunge all else. Our crazy over-regulated energy system will continue to suppress innovations and thwart progress.

Researchers at UC Berkeley took a close look at biofuels in a paper called Review of Environmental, Economic and Policy Aspects of Biofuels. It is notable because unlike sooooo many other things I have seen about biofuels, this paper looks at a broad range of strengths and weaknesses and effects of different biofuels. The main takeaways are a) each of them entail tradeoffs, and you have understand all of those tradeoffs to judge the merits of any biofuel, b) policy cannot treat all biofuels the same, but has to tackle them based on their individual characteristics if we want to maximize the good and minimize the bad.

Here is the abstract of the paper. You can download it here.

The world is witnessing a sudden growth in production of biofuels, especially those suited for replacing oil like ethanol and biodiesel. This paper synthesizes what the environmental, economic, and policy literature predicts about the possible effects of these types of biofuels. Another motivation is to identify gaps in understanding and recommend areas for future work. The analysis finds three key conclusions. First, the current generation of biofuels, which is derived from food crops, is intensive in land, water, energy, and chemical inputs. Second, the environmental literature is dominated by a discussion of net carbon offset and net energy gain, while indicators relating to impact on human health, soil quality, biodiversity, water depletion, etc., have received much less attention. Third, there is a fast expanding economic and policy literature that analyzes the various effects of biofuels from both micro and macro perspectives, but there are several gaps. A bewildering array of policies - including energy, transportation, agricultural, trade, and environmental policies - is influencing the evolution of biofuels. But the policies and the level of subsidies do not reflect the marginal impact on welfare or the environment. In summary, all biofuels are not created equal. They exhibit considerable spatial and temporal heterogeneity in production. The impact of biofuels will also be heterogeneous, creating winners and losers. The findings of the paper suggest the importance of the role biomass plays in rural areas of developing countries. Furthermore, the use of biomass for producing fuel for cars can affect access to energy and fodder and not just access to food.

If there was any question whether investors would be interested in a long-term lease of Chicago's Midway Airport, it was answered in the affirmative at the beginning of April. Six high-powered teams submitted their qualifications to the city, which will presumably winnow them down to the best-qualified subset, who will then be invited to submit formal bids. With the basic terms of the lease already decided (in order to win agreement from Midway's airlines), the winner will be the firm offering the highest dollar amount.

The six teams included mostly firms that had been expected to bid-though noticeably absent were industry giants Ferrovial (which may have its hands full refinancing its costly acquisition of BAA) and Fraport (which had been rumored to be seriously interested). The six that did submit qualifications are:

* Abertis/Babcock & Brown/GECAS-Abertis owns TBI which operates Albany and Burbank airports under contract, and has long-term leases for the terminals at Orlando-Sanford.
* Macquarie Capital/Macquarie Airports/Macquarie Infrastructure Partners I and II-Macquarie already has a Chicago presence via its lease of the Chicago Skyway and holds stakes in Sydney, Brussels Charleroi, Bristol (UK), and Copenhagen airports.
* Hochtief AirPort/GS Global Infrastructure Partners I-Hochtief has major stakes in Athens, Budapest, Dusseldorf, Hamburg, and Sydney airports.
* YVR (Vancouver) Airport Services/Citi Infrastructure Investors/John Hancock Life Insurance-YVR operates airports in Chile, Dominican Republic, Jamaica, and Canada.
* Morgan Stanley Infrastructure Partners/Aeroports de Paris/HMS Host-ADP owns the three major Paris airports and operates other airports in Cambodia, China, and Europe.
* AirportsAmerica Group/Carlyle Infrastructure Partners-a somewhat mysterious group about which Carlyle has declined to provide details (except, presumably, to the city of Chicago).

The city has not released a timetable, but it's likely to announce the short-list within a couple of months, along with a formal invitation for the short-listed teams to submit their bids. Lisa Schrader, the city's deputy CFO, told Aviation Daily that they expect to close the lease transaction within 9 to 12 months, after approvals from the FAA, TSA, and the City Council.

There is much speculation as to how much will be offered for the 50-year lease. In Issue No. 32 of my Airport Policy Newsletter, I expressed skepticism that the figure would be in the $3 billion range that has been mentioned in many media reports, given the airport's small land area (one square mile), limited airside capacity, and already fairly well-developed retail operations. But in recent weeks I've had several knowledgeable people suggest to me that there is more potential than meets the eye at Midway. For example, as of now, there are 1,895 weekly airline departures, but as recently as 2004 that number was 2,449-so we know that a 30% increase (at least) is possible. An attorney advising one team suggested that his team had come up with a number of creative options to maximize value at the airport. Another told me that there has been recent interest by developers in acquiring land bordering Midway, in hopes of being able to negotiate joint-development deals with the winning bidder. So while I remain somewhat skeptical, I'd be pleased to be proven wrong.

If Midway does generate significant value for the city, the lease could be as precedent-setting as the city's January 2005 lease of the Chicago Skyway. That transaction focused global attention on the United States as a new market for privatization of toll roads. But for the same thing to be possible in the airport sector would require Congress to amend the Airport Privatization Pilot Program legislation it enacted in 1996 . Although it permits four air carrier airports to be leased, only one can be a large hub, which is how Midway is categorized by the FAA. The FAA's reauthorization proposal, which was largely ignored by Congress last year, had called for liberalizing the pilot program. It would probably take active lobbying by America's mayors to open up additional large-hub privatization opportunities.

Reason Foundation's Airport Policy and Air Traffic Control Research

"Despite 100 years of heavy social and financial costs, and no indication that victory is attainable, the U.S. government continues to wage its war on drugs," says Drew Carey in a new Reason.tv video that tells the tragic story of Cory Maye and Ron Jones. Maye was in his home late at night with his one-year-old daughter. A stranger kicked down his door and barged into his daughter's dark bedroom. Maye shot and killed the intruder - just as millions of other Americans would.

But it turned out the intruder was actually Police Officer Ron Jones, raiding the home for drugs. Maye had no criminal record or past. The police did not find any drugs in his home at the time, but a few days later claimed to have found small amounts of marijuana. Police found marijuana, crack cocaine residue and scales at Maye's next-door neighbor's home, but never charged that person with a crime.

Instead of the cops admitting they had the wrong part of the duplex, received bad information from an unreliable confidential informant, and that Maye was protecting his family and acting in self-defense, they charged him with capital murder. Maye was convicted and sentenced to death. Thanks in part to the reporting of Reason magazine's Radley Balko, Maye's sentence was later reduced to life in prison.

More Drew Carey Reason.tv Videos

The Arizona Republic reports, “Kick off your boots and get ready to two-step because dancing is now allowed at San Tan Flat. Pinal County Superior Court Judge William O'Neil overturned a decision from the county Board of Supervisors that said the country-Western-themed restaurant was operating an illegal dance hall by allowing patrons to dance to live music on its back patio. The judge's ruling brings closure to the conflict between the county and restaurant owner Dale Bell, who have been at odds for more than two years after San Tan Flat neighbors complained about noise coming from the property. The saga of San Tan Flat drew national attention, prompting commentary from actor Drew Carey and conservative Washington Post columnist George Will. The case also received several comparisons to the 1984 Kevin Bacon film Footloose, in which a small town bans rock music and dancing.”

Here’s the Reason.tv Drew Carey video on the case: Footloose in Arizona.

Reason.tv Editor Nick Gillespie’s take.

Reason Foundation’s Shirley Ybarra, Virginia’s former secretary of transportation, looks at how Virginia and Florida are saving millions with fixed-price maintenance contracts.

Reason’s Transportation Research

Reason’s Foundation’s Adam Summers details job licensing regulations in Arizona, writing, "In Arizona, if you want to be an acupuncturist, a hunting or fishing guide, landscape architect, pre-arranged funeral salesperson, or even a well driller you'll need a license. There is even government registration required to be a geologist…More and more often, if you want to work or start a business, you have to seek permission from the government, pass arbitrary requirements, and pay fees to the state. More than 1,000 occupations are currently regulated by the states, and many others are regulated at the federal and municipal levels. According to a recent Reason Foundation study, Arizona requires licenses for 72 jobs, below the national average of 92 and similar to neighboring Colorado (69) and Utah (84). California topped the list with a whopping 177 licensed occupations."

Your "First Five" dollars working for poor children?

NOT.

From the "you can't make this stuff up files," the San Francisco Chronicle reports on some San Francisco parents benefiting from some dubious First Five grants.

Scores of savvy San Francisco parents have tapped a pot of taxpayer dollars for everything from children's ice skating lessons and Monterey Bay Aquarium field trips to supplies for Halloween parties and chartered buses to the Jelly Belly factory in Fairfield.

Last year, about $564 million in Prop. 10 revenue was distributed by the state and its 58 county First 5 commissions, which have wide discretion over how the money is used. San Francisco's commission receives about $9 million annually and uses $200,000 each year to fund its unique Parent Action Grants program, which began in 2001.

A sampling of the grants:

-- "Families of La Piccola Scuola Italiana" included holiday party space rental and the purchase of a Babbo Natale (Italian version of Santa Claus) costume.

Check out these "savvy" parents justification ...

While she was grateful for the grant and its positive impact, she did feel uncomfortable knowing the funding came from a cigarette tax, which is regressive.

"Even though we're well-educated enough to apply for the grant and carry it out doesn't mean we have the financial resources to do this on our own," she said. "Families that are willing to go through the process - regardless of income - should be allowed to have it."

[T]he question of whether walking (or bicycling) is better or worse than driving has been discussed for more than two decades. The “drive vs. walk” question goes something like this: you’re at home and need to go to a store three-quarters of a mile away (1.5 miles roundtrip). Concerned about your potential contribution to climate change and conscious that the production and transportation of the calories you’ll burn in walking or bicycling can be very carbon-intensive, you wonder if driving to the store would release fewer greenhouse gases.

In his book, How to Live a Low-Carbon Life, Chris Goodall answers the question this way: “It makes more sense to drive than walk, if walking means you need to eat more to replace the energy lost.” [...]

The media have already repeated Goodall’s claims, with limited or no critical analysis. The Times (U.K.) stated: “Walking does more than driving to cause global warming, a leading environmentalist has calculated.”

The Pacific Institute has just released their calculations for the walk vs. drive question, and the winner in terms of greenhouse gas emissions is: it depends. (That conclusion shouldn't surprise anyone who is familiar with comparative life-cycle analyses.)

According to the Pacific Institute, Goodall's calculations compared the greenhouse gas emissions associated with one of the most energy-intensive foods (top sirloin beef produced in Japan) with greenhouse gas emissions from a gasoline-fueled car that gets ~30.3 mpg.

In a more nuanced analysis, you could think of this more like a typical energy efficiency calculation, with the overall greenhouse gas emissions by mode a factor of both the carbon-intensity of the fuel/food and the fuel economy of the machine/person. We know that most humans (at least those who have not specialized in walking to the store and back) are not all that fuel-efficient themselves--we're constantly burning calories to run non-essential functions, like cognitive processes that allow us to invent cars and drive them. We also already know that fueling cars with corn ethanol is a losing proposition, so it's not shocking that feeding corn* to beef to fuel people to walk is no silver greenhouse gas bullet, either.

What about feeding a more average diet to an average person to walk, bike (said to be the "most efficient machine on Earth"), or drive an average car under average conditions? Pacific Institute calculates that "a typical person walking 1.5 miles in the U.S. would generate less than 25% of the GHG that would be generated if that person drove the same distance." Their calculation includes interesting assumptions such as beginning the automobile trip with a cold engine and the extra caloric demands on drivers having to navigate through congested traffic. The details are important, and in this case a good read. Unfortunately Pacific Institute doesn't appear to have run the specific calculations for pedicabs, which John Tierney requested on his blog earlier this year, but they do look at milk and other food sources.

The assumptions are also revealing. Goodall makes no secret of his agenda, which is to draw attention to the carbon-intensity of meat and dairy production. Livestock are thought to be comparable to transportation in greenhouse gas emissions at a global level. Car-lovers, car-haters, vegetarians, beef-eaters, environmental do-gooders, evil-dooers, and cynics will each have their own spin on these calculations. Mine is (still) that this is just yet another justification for making sure individuals are free to make their own decisions on how to personally economize on energy- and carbon-intensive activities--and possibly that my more physically-fit friends should run errands to the store for me in the future.

(*In the Japanese beef example, the animals were fed a mix of corn, wheat, soy and alfalfa.)

This week, the Florida DOT issued an RFQ for a potential 50-75 year concession of Alligator Alley, the 78-mile, tolled stretch of I-75 connecting the Fort Lauderdale/Miami area with Naples/Fort Myers. According to The News-Press:

FDOT is requesting sealed Statements of Qualification from proposers desiring to receive the right to lease, maintain, operate and receive toll revenues from the project known as Alligator Alley through a public-private partnership concession agreement.

The primary objective of this concession is to maximize the value of Alligator Alley to Florida for reinvestment in transportation while maintaining the project’s high safety standards, service levels and overall quality.

. . . .

FDOT is seeking a private partner that is experienced in operating and maintaining large toll roads under a concession approach and that is willing to share risks.

The successful proposer must have proven ability to arrange and close financing on favorable terms as well as demonstrated skill in managing and operating toll roads on behalf of public sector owners.

The concessionaire will be required to fund an upfront payment of rent and periodically share toll revenues with FDOT in accordance with the requirements of the public-private partnership statute, and be obligated to operate and maintain the project during the concession period.

More details are available at the project's website, www.alligator-alley.com/.

The good news on the farm bill front is that the anti-privatization provisions have been stripped. The provisions would have prevented states from privatizing welfare eligibility and processing functions a la Texas and Indiana:

A move in Congress to limit the role of private firms in doling out food stamps is dead for now, allowing Texas to move forward with its privatization plans.

U.S. House and Senate negotiators voted late last week against including a privatization ban in a $300 billion farm bill that lawmakers hope to finish this week. The ban would have prevented states from allowing employees of private companies to interact with people who are applying for food stamps or to decide someone's eligibility.

The House included the ban in a farm bill last year in response to problems in Texas, where some families were improperly denied food stamps, Medicaid and cash assistance during a 2006 privatization test in the Austin area.

But the Senate did not put the ban in its version of the farm legislation, and negotiators from the two chambers voted to keep it out of the final bill.

More in the Austin American-Statesman.

The bad news is...there's still a farm bill coming, and it doesn't look like we're going to see any major reforms of our Depression-era farm program.

Good news from San Diego. Only a half a year after opening, the privately-financed South Bay Expressway is meeting its traffic projections and delivering measurable congestion relief. According to the San Diego Union-Tribune:

Nearly six months after its debut, San Diego County's first tollway is living up to its promise of giving harried commuters badly needed breathing room.

The privately run South Bay Expressway draws an average of 30,000 drivers each weekday, about what state transportation officials expected.

Ben Monzon of Chula Vista said the road has cut about 20 minutes off his morning drive to his Rancho Bernardo office. “And to me, time is everything,” he said.

. . . .

According to the Macquarie Infrastructure Group, the parent company of South Bay Expressway, the tollway generated an average of $54,600 in daily revenue from mid-January through March, or about $2 per vehicle. The road attracts an average of 26,500 vehicles daily, including weekends. Nearly four out of five motorists pay through FasTrak.

Greg Hulsizer, chief executive officer of South Bay Expressway, said most of the revenue goes back into tollway operations, including covering CHP patrol costs. “It's been a very good start-up,” Hulsizer said. “It's performing pretty much like we thought it would.”

What's particularly striking in the article are the early results on the congestion front:

Transportation experts say the tollway is having a noticeable ripple effect on other major roads.

According to Caltrans, the volume of morning traffic on northbound Interstate 805 in Chula Vista has dropped 11 percent in the past six months. Driving speeds average 65 mph, up from 45 mph.

“Obviously the effect on I-805 through the Chula Vista area has been very good, and that's where we expected the major benefit to be,” said Joe Hull, a Caltrans deputy district director.

He said congestion has increased, however, at two interchanges north of the tollway: at state Route 125 and state Route 94, and at Route 125 and Interstate 8 in La Mesa.

Hull said the agency may adjust the timing of the ramp meters at both interchanges to improve the flow of cars.

Frank Rivera, a civil engineer with the city of Chula Vista, said he has noticed a decline in crosstown commuter traffic since the opening of the tollway.

“The traffic doesn't back up as much as it used to,” Rivera said.

The city is conducting a detailed traffic study to assess the tollway's impact on East H Street and other major roads. The results are due in a few weeks.

I look forward to seeing the results of that study. The South Bay Expressway is one of those premier projects that demonstrates so many important things in one package: (1) you can indeed build new capacity and reduce congestion; (2) you can accellerate road development and stretch limited tax dollars through private financing and public-private partnerships (PPPs); (3) you can successfully build environmental protection and mitigation into PPP projects; and (4) highways run like businesses will focus on delivering value to customers--in this case, time savings and a state-of-the-art road. And even in an economic downturn with high gas prices, the success of the South Bay Expressway demonstrates that there's still a significant percentage of people out there willing to pay a premium for improved mobility.

For more on the South Bay Expressway, see Reason's recent interview with Greg Hulsizer, the Expressway's CEO, here. We also discuss ithe project in the recent Reason/Show-Me Institute transportation paper here (page 26).

The city of Provo, Utah, announced today that it will sell its money-losing municipal fiber network, iProvo, to Broadweave Networks, a Jordan, Utah, start-up for $40.6 million. This represents, I believe, the largest sale of a municipal fiber operation to a buyer that plans to maintain and grow it. Lebanon, Ohio, sold is failing muni broadband system to Cincinnati Bell last year for $7 million.

Reason has covered the financial disaster that Provo was becoming in two reports, the latest issued last month. Through the end of its fiscal year last June 30, iProvo had lost $7.4 million, and has been on pace to lose another $2 million this current fiscal year. The system was built in 2005 with a $39.5 million loan backed guaranteed by local taxes.

Nonetheless, the sale comes as something of a surprise. Separate reports from two consulting firms issued the week after the Reason policy study urged continued city funding of iProvo, although they recommended substantial changes in organization and operations. Up to last month, Provo Mayor Lewis Billings was expressing confidence in the system and stated that the city planned to stay the course.

Billings should be commended for his reversal. He’s unloading the system while there is still value to be derived for the city as well as Broadweave. Other cities, particularly Ashland, Ore., have stubbornly held on to losing operations as growing debt drained any net value. They’ve become white elephants.

Moreover, the $40.6 million sale to Broadweave Networks demonstrates that significant investment dollars exist for fiber-optic development. The market for small-city fiber has not failed. If incumbent cable and telephone companies do not meet local demand it is apparent that other companies will step up. And Broadweave is no fly-by-night. It’s an exciting, growing local company funded by Sorenson Capital, one of Utah’s most respected venture capital firms.

That makes it all the more important for cities to pursue policies that encourage telecom infrastructure investment: franchise reform, low taxes and deregulation. These do a much better job at bringing viable broadband service that consumers actually want to buy to cities like Provo, while at the same time nurturing entrepreneurship, capital and job growth. This doesn't happen when government attempts to compete with the private sector through municipally-funded schemes.

Finally, Provo’s decision to privatize coincides with the decision by (so far) 10 of 11 other Utah communities to refinance UTOPIA, the statewide fiber-to-the-home initiative with a new 33-year bond that could end up costing $505 million. It will be interesting to see how government-provided in these cities fare compared to Provo. Chances are residents of Provo, with a private sector provider, will have better choices, better prices, better service and higher take rates in 12 months than any of the UTOPIA cities.

If there was any silver lining to the global food price crisis, it was that countries around the world started tearing down long-standing trade barriers such as tariffs and quotas against food imports. But that silver lining proved short-lived as another threat to free trade emerged: export bans and export taxes on domestic food.

To return soaring food prices to earth and placate irate consumers (read: voters): India announced a temporary ban on some varieties of rice; China slapped export taxes on rice; Pakistan imposed a 35 percent duty on wheat; and Russia quadrupled wheat-export taxes to 40 percent.

But the problem with such measures is that the relief they provide will be temporary – and the pain they cause more enduring. Why? Farmers who can’t command the market price for their produce will have little incentive to invest in yield-enhancing technologies, making it much harder for food production to catch up with demand. Farmers will certainly lose out -- but so will consumers.

The only country that seems to understand this is South Africa which has refused to jump on the export-ban bandwagon. “We don’t believe banning exports will help us in the long run,” noted Lulu Xingwana, the South African agricultural minister.

Bonus:
Check out Noble laureate and Chicago econ prof Gary Becker's brilliant analysis of the Malthusian fallacies underlying the discussion of this issue here.

Arizona transportation researcher John Semmons has an excellent oped on the inefficiency of light rail transit worth reading. The oped was published in the Oregon Statesman Journal and distributed by the Independent Institute in Oakland.

Critics of LRT point out that it is not theoretical capacity that is crucial, but actual ridership and the cost incurred to garner this ridership. National figures indicate that on average, LRT carries about 5,000 people per track-mile per day, while urban freeways carry over 20,000 per lane-mile per day. So, in actual numbers of people served, freeways seem to handle over four times as much traffic as LRT does.

Also, Semmens points to an excellent 2006 study by the Arizona Transportation Research Center that analyzed freeway, light rail and alternative transportation projects based on cost effectiveness: Multimodal Optimizaiton of Freeway Corridors.

Wanted to alert readers to my latest Bacon's Rebellion column on the new sales tax proposals rumored to be floating about in Richmond these days as "solutions" to closing the transportation budget gap:

"Virginians, hold on to your wallets. Gov. Timothy M. Kaine and the General Assembly are looking for ways to close the large and growing transportation funding gap, and the only ideas we’re hearing in Richmond these days involve variations on the tax-hike theme. Before considering a variety of sales tax increases of 20 percent and higher, there should be a fundamental rethink of current transportation policy and planning to ensure that we’re taking advantage of every opportunity for more efficient infrastructure delivery.

Where do we start?"

You'll have to read the whole thing for the long answer, but the short answer is performance-based planning to prioritize congestion relief, more contracting for highway and bridge maintenance, and a far more aggressive pursuit of PPPs for new capacity.

See Reason's other transportation work here.

A study performed last fall by the Central Texas Regional Mobility Authority found that the new tollroad 183A has cut trip times down from 36 minutes to 19 minutes and reduced traffic on the parallel US 183 by 27-29%. Eighty five percent of tolls are collected electronically by tag, and some zip codes have 90+% market penetration. The press release can by found here.

LA and the federal government have signed an agreement for LA to get $213.6 million in federal funds to convert some HOV lanes around the metro area to toll express lanes. It is a big and very exciting project to convert HOV lanes that do little good into a set of lanes that could really give people and option to the stop and go congested trip when they need it.

These lanes could be the foundation for conversions throughout the network. A region wide network of such toll lanes could a) allow transit buses to get out of congestion and provide better service, b) allow people to go around congestion when they need to and are willing to pay a toll. The experience with the Riverside to Orange County 91 Express toll lanes shows that people from all income levels are sometimes willing to pay the toll to avoid congestion. Public support for those lanes is very high.

Peter Samuel dissects all the details of LA's plan here.

The LA Times really digs down into the pros and cons of DNA evidence in this feature article.

DNA is a huge help in forensic science. But the system creates strong incentives to push DNA evidence too far. The biggest problem in the court room is that the prosecution often misrepresents the odds of a DNA match, making it appear much more likely to be a match than it really is. As the article says:

Two national scientific committees, including the FBI's DNA advisory board, have recommended portraying the odds more conservatively. But interviews with expert witnesses and DNA analysts from crime labs across the country show that few if any have adopted that approach. The FBI lab, which oversees the nation's offender databases, has disregarded the recommendation of its own advisory board, bureau officials acknowledged.

Roger Koppl in this study for Reason shows the problems that come from having the forensic labs work for one side of justice system--the prosecution. He makes a great case and lays out how to make the forensic system more objective, and points out that the key to fixing the way DNA evidence is presented in court is ensuring that the defense can tap into forensic expertise.

The New York Times has a front page story this morning reporting what a whooping rising gas prices are delivering to America’s Former Big Three. Car buyers are abandoning large SUVs and pick-up trucks – the segment that the American makers dominate and on which they have the highest profit margins – for more fuel-efficient subcompacts – that the Japanese dominate and on which they have the highest profit margins. The result is that while Ford and GM posted double digit declines in their April sales over the same time last year – Toyota actually posted an increase.

Under such circumstances, one would think that US car makers would treat John McCain’s (and Hillary’s) proposal for a gas tax holiday like manna from heaven. Whatever the flaws of the idea from an overall public policy standpoint – and there are plenty as Bob Poole has pointed out – at least it offers them a bandage to stop their bleeding.

But, as it turns out, America’s auto companies are vehemently opposed to a gas tax holiday, the Detroit Free Press reports. (Instead, Chrysler CEO Bob Nardelli wants the government to offer incentives to buy fuel efficient cars made in America. Talk about self-serving rent seeking!) Ford and GM are continuing to ask for higher gas taxes – even though that means potential annihilation of their most profitable products.

Why?

Essentially because the only way they can meet the government’s new, more stringent Corporate Average Fuel Economy standards is by shifting their vehicle mix from large, gas-guzzlers to smaller, more fuel efficient cars. And higher gas taxes would ensure a market for their new lines. Auto executives call this "aligning" consumer demand with the nation's fuel economy goals." Translation: If we are getting screwed by the government, why shouldn't American consumers as well?

Check out my recent interview with Commissioner Matthew Rose of BNSF Railroads at www.reason.org. Rose is a Commissioner for the National Surface Transportation Policy and Revenue Commission that is "working to examine not only the condition and future needs of the nation's surface transportation system, but also short and long-term alternatives to replace or supplement the fuel tax as the principal revenue source to support the Highway Trust Fund over the next 30 years." Mr. Rose chats with me about his aspirations for transportation public policy here.

I've been among the voices calling for more competitive sourcing in Atlanta as it struggles to close a major budget gap (estimates have ranged from $90 to 140 million). Looks like the message is starting to get though:

Atlanta is scheduled to accept bids Wednesday from companies that want to run the city's parking ticket and meter collection operation, now done by the Public Works Department.

As the city grapples with a $140 million projected shortfall for the fiscal year that starts July 1, some officials say Atlanta should privatize some services.

Leonard Gilroy, director of government reform for the Reason Foundation, a California-based nonprofit group that supports free markets, believes privatization is cost-effective.

He thinks Atlanta should invite companies to compete against city departments to run services such as trash collection and maintaining city-owned vehicles. Other cities, such as Charlotte, Indianapolis, Phoenix and San Diego, outsource some services under a concept called "managed competition."

"If managed competition were applied in a comprehensive, enterprisewide manner, Atlanta would likely be able to completely close its current budget gap," argued Gilroy, adjunct scholar at the Georgia Public Policy Foundation, an Atlanta-based think tank.

They should consider the model being pioneered right now by Mayor Daley in Chicago--applying the long term concession model (like that being applied to public-private partnership toll roads) to parking services. His administration also entered into a concession last year for the Millenium Parking Garage. Both follow the blockbuster $1.8 billion, 99-year concession for the Chicago Skyway in 2005.

More thoughts on using managed competition to solve Atlanta's budget crunch here.

Don't miss this profile of a modern day founding father--Oliver Porter--in yesterday's Atlanta Journal Constitution. Oliver was one of the primary architects of the new city of Sandy Springs--the first new city in Georgia in 50 years, and the state's first contract city (only a handful of city employees, with all non-safety services contracted out to a private sector provider).

Sandy Springs' incorporation in 2005 spawned three more new cities--John's Creek, Milton, Chatahoochie Hill Country, all run on essentially the same model as Sandy Springs--and Oliver is currently helping in the effort get the new city of Dunwoody (directly adjacent to Sandy Springs in Dekalb County) up and running. If the Dunwoody effort is successful, then over 200,000 taxpayers in Fulton and Dekalb Counties will be benefitting from higher quality services delivered at a far lower costs through municipal privatization. This provides a great model for existing cities and counties, which should seriously consider the merits of contracting out for the bulk of, or at least large bundles of, government services.

Here's Oliver in his own words:

"I'm in favor of bringing local government as close to the people as you can," he said. "In a huge local county [like Fulton and DeKalb], the services have moved too far away from the people. A community of over 40,000 people [like Dunwoody] is certainly able to support local government."

Dunwoody cityhood critics suggest that to pay for services, residents will have to bear higher taxes. Porter doesn't buy it.

"At least at this point, I'm quite confident Dunwoody can be started without tax increases," he said. More to the point, a city of Dunwoody would offer "a superior model of local government tailored to Dunwoody's needs," he said.

More on Oliver and Sandy Springs here, here, and here. And Reason's privatization polcy work is here.