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Tillberg/My Turn: Rail service fine print

The front page of Jan. 24’s Recorder shouted out good news — “broad support for more frequent commuter train” service. On Monday, Tim Blagg reiterated the good news. We will be asking the feds to add $31 million to an existing $12.5 billion budget for rail improvements from Montreal to New Haven to add “enhanced intercity service” between Springfield and Greenfield.

Good articles about a worthy project which, like many articles describing governmental grants, contain two glaring omissions: no discussion of who will pay for these improvements and no discussion of who specifically will benefit financially from them.

The “who will pay” is easy, taxpayers. With a family of two out of 300 million citizens, you can put me down for $85. I’m willing to pay my $85 because I, and the rest of the Pioneer Valley, am getting all the nonfinancial benefit discussed in the articles; cleaner air, new economic opportunities, reduced traffic on I-91, assistance (somehow) for the new casino in Springfield, and “help for area private school students.” All these benefits — except for the students and the casino — have one thing in common; they all are generalized benefits, they all aid huge groups of people who, in turn, through their sheer mass, directly benefit the region with increased spending power.

Generalized payments (from taxpayers) for generalized benefits (to taxpayers) has worked in the U.S. since before canal building — the “public benefit” in the public benefit model. What’s not to like?

Well, how about the special financial benefit? It is just a fact, as Mr. Blagg points out, that properties adjacent to or near transit stations typically increase in value. The facts are especially compelling for urban transit. And who captures that value? Adjacent or nearby property owners who, if not a part of the 1 percent, are clearly a part of the upper 20 or 30 percent.

In short, in addition to all the good things listed in the articles and by their proponents, this rail project is also a way for government to engage in the sort of income redistribution it does so well — up!

Spending public dollars for private benefit was not mentioned in the articles — as it is seldom mentioned in any articles that tout the advantages of some governmental expenditure for the common good. But whenever dollars flow, they stick to some fingers more than others. And generally, it is those with the largest hands, which category includes property owners, who have the stickiest fingers.

This writing is not a screed against property owners who are likely to make windfall profits for no other reason than that they own property near a newly resuscitated railway station. Rather, it is to ask if there weren’t some way to “recapture” this windfall profit and return it, or some portion of it, for the public good. If there were only a way to say to nearby property owners, “Hey there, each man, woman and child in the U.S. shelled out $42.50 for these railroad improvements. Now its years later and the value of your property, through no activity of your own, has increased more than that of comparable properties not so fortunately located in the valley. How about some reimbursement?”

That windfall profits from public largess should be shared with the public fits two public policy issues that loom large in the news. As stated above, governmental expenditures and tax breaks tend to end up disproportionately in the hands of wealthy people. Income inequality has, finally, become a national issue. In its own little way, “granting” property owners windfall profits from government activities artificially contributes to income inequality.

Secondly, the federal deficit is large. Whether in this instance a large deficit is a monster in the night or the result of federal recession busting, still surplus is generally better than deficit and small deficit better than large deficit. Paying some money back from windfall profits can only help reduce the deficit.

While we are congratulating ourselves on securing new Federal money, let’s look at the financing behind the curtain — who pays, who benefits. Federal money is not free money — we need to attach cost/benefit analyses to grant monies the same way we do to our own personal income and expenditures.

And, by the way, without going into great detail, there is, in fact, a way to repay windfall profits.

Massachusetts has a provision for betterment assessment districts which generate taxes on properties that have been “bettered” by the construction of a public improvement. Such a district would be a perfect method for capturing excessive windfall profits from the happenstance of being located near an improved train station. Such assessments could be levied against the difference between the assessed property’s value and the value of comparable properties.

Just a thought.

Richard Tillberg lives in Whately.

Related

Garceau/My Turn: A community investment

Friday, February 7, 2014

In the Feb.1 Recorder, Richard Tillberg’s My Turn portrays the reintroduction of passenger trains to our towns as an income redistribution scheme. He asks the questions “Who pays? Who benefits?” and claims that bringing rail service back to the Pioneer Valley will take from the have-nots and give to the haves and, to solve this, proposes using a betterment assessment … 0

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