We’ve been hearing, during the current campaign to allow voters in Walker to decide their own tax rates, that the Interurban Transit Partnership (The Rapid) provides a benefit to the local economy to the tune of $100 million per year. Where does this number come from and does it hold up to scrutiny? As we’ll show you, it’s completely, demonstrably false. At its most basic level, the $100 million number is simply made up.
This $100 million number comes from a “Transit Benefit Model” that was released by the State of Michigan’s Department of Transportation in 2010. Did the DoT itself create this report? No, it was put together by HDR Decision Economics, a division of HDR Inc., a massive company that designs and builds transit systems around the world and is currently under contract with The Rapid. The Rapid’s board just approved a $417,000 contract with HDR for “engineering services.”
The Transit Benefit Model (TBM) is really just a Microsoft Excel spreadsheet that spits out “benefits” based on how much each transit agency spends. This model is calculated in the spreadsheet for each transit agency in Michigan. You can view it yourself here. Feel free to download the excel spreadsheet to review and follow along with this article, including the manual on how to use it.
Once you’ve downloaded the spreadsheet, click on the “Control Panel” tab at the bottom, and then at the top of the screen choose “Agency” and then “Interurban Transit Partnership – Urban” to see the data that they claim applies to The Rapid. You’ll see in the chart on the right side of the screen that, based on The Rapid’s annual spending, alleges a combined economic “impact” of almost $100 million (based on 2010 numbers).
Great, so how does it do this? As you can see from the middle of the chart, it estimates the cost of driving a car, the amount of money that each person who rides the bus makes per hour, and how many trips people don’t take in a car because they use The Rapid instead, amongst other things. Using that data, the spreadsheet estimates how much the local economy is “impacted” by The Rapid’s spending.
How do we know that this $100 million number is completely false? Because the spreadsheet allows you to enter your own estimates for how much each of those costs are saved.
For instance, if we put “0” in every “user input” value, meaning that the spreadsheet is now calculating The Rapid’s “benefits” based on the cost of a car being $0, the amount each person on the bus earns being $0 per hour, that 0% of work trips are foregone, that 0% of The Rapid’s riders are using it to get to work, and 0% of the riders are using The Rapid for medical purposes, the economic benefit still comes out to $79 million per year! In other words, no matter how few people are using The Rapid, according to this “Transit Benefit Model,” it will still output a ridiculously large “economic impact” number. It’s magic!
But wait, there’s more. If you enter $0 for the total spending by The Rapid, the “model” still tells us that tens of millions of dollars of economic benefit will result. That’s right! If The Rapid’s budget were $0, The Rapid would still create untold benefits. Someone, please notify the Nobel committee because HDR and The Rapid have figured out how to create economic benefit from literally nothing!
What if we changed the amount that The Rapid spends by increasing it in the spreadsheet? What if The Rapid spent a trillion dollars a year? Well, then the economic impact would be $1.9 trillion! Even more magical!
This spreadsheet is basically saying that if the entire budget of The Rapid was being spent to dig and re-fill ditches, it would still benefit the economy to the tune of over double the money spent. It’s absurd. It’s designed to always show a benefit, no matter what.
This is what The Rapid is hoping you’ll rely on to make an informed decision.
We’re not surprised because we’ve pointed out in the past how HDR uses demonstrably false data to make its case for more spending by government agencies. It’s really just a circle of bureaucracy. Here’s how it works:
- Government agencies want to raise taxes,
- They hire HDR for hundreds of thousands of dollars to issue a “report” showing that whatever project the agency is proposing will result in dazzling benefits,
- The local media reports on the “benefits” conjured up by HDR,
- Agency raises taxes,
- Agency then hires HDR for millions more to provide its services to that government agency!
This “benefit model” is no different. No matter what, it will claim wildly false “benefits” to the local community. It has no connection with reality at all. As though an excel spreadsheet should inform us of sound taxing policy in the first place.
Of course, this model doesn’t take into account the lost jobs due to wasteful spending of tax dollars taken out of our communities by The Rapid for such things as $350,000 of artwork in its headquarters, millions on hybrid buses that don’t substantially reduce fuel usage, or $200,000 a year on the salary of The Rapid’s Director (Peter Varga), who decided to live in Belmont, far outside of The Rapid’s taxing district. He’s happy to raise your taxes, without your permission, that he himself isn’t subject to!
This article is available in printable format by clicking here.