An Easy Explanation for Why Fixed Doesn't Fix as Many Parking Tickets as Expected

The tech company Fixed promises to be the easiest way to fix a parking ticket. The LA Times (reported by Government Technology, link here) did some analysis of how well the company performs as found that Fixed clients are successful 20% of the time having their tickets dismissed. This is better than zero percent but less than the 28% of tickets dismissed by regular (meaning non-Fixed client) people. The founder of Fixed takes umbrage with this discrepancy:

When presented with the numbers by The Times, company founder David Hegarty accused the San Francisco Municipal Transportation Agency of possibly "willfully discriminating against our contests."
"To rub salt on our wounds," Hegarty said, "when they deny our contests, they do not include a reason for denial."

Perhaps there is discrimination about the tech clients, but I doubt it. Here is the SF MTA response from the story:

A spokesman for the San Francisco Municipal Transportation Agency denied Hegarty's allegations, saying, "We do not have concerns if people want to use this third-party service.... There is no secret to overturning a citation. If there is a valid reason to dismiss, then that citation gets dismissed."

What is almost certainly happening is that David Hegarty has a poor grasp of economic incentives, at least as far as the Fixed pricing structure goes. Fixed clients are almost certainly not representative of the ticketed public overall. The way Fixed makes money is to take 25% of the savings for a ticket that gets dismissed, but does not charge for a failed contestation. Effectively there is no cost to whoever received the ticket for contesting the violation through Fixed, and Fixed clients will contest tickets they never would have before. Because of the high relative cost of contesting a ticket yourself people who contest in person should have a higher rate of dismissal. They likely believe in their innocence more than a Fixed client. If you take time to sit through traffic court to contest a ticket, you are either burdened by the fine or you really believe you shouldn't have been cited. Contra this, there are few reasons not to contest each and every ticket through Fixed as the only costs to the client are the time it takes to take a photo and fill out an online form. Even if you know full well you're guilty you should contest your parking tickets through Fixed. If you can get one of five dismissed you are doing well gaming the system.

The case for (and against) public subsidy for public transport

David Levinson and I write about why and why not subsidize transit at Streets.mn. Here is one part:

Subsidy should be considered two ways: capital subsidy and operating subsidy. These are related, but different enough that they should be considered separately.
Capital subsidy can be direct or indirect (such as assistance with land acquisition), and these monies come from federal, state, metropolitan, local and sub-local sources. Traditionally capital subsidy has largely come from federal and state sources, though recently local sources through sponsorship (see the Emirates Airways gondola in London, for instance) or value capture have been used. Capital subsidy for transit expansion rarely, if ever, considers the effects capacity and network expansion have on operating subsidy, however. Since every transit system in the United States requires an operating subsidy, every service expansion increased the required operating subsidy and makes the financial position of transit agencies worse over the medium and long term.
Operating subsidies are from local, regional and state sources. The federal government placed severe limits on using federal money for operations in the 1970s, in part because most of the increases in subsidy went to total wages without any increase in productivity. The primary reason for operating subsidy for US systems now seems to be “that’s the way we do it here,” which is not a proper justification. Many of the cities around the world—and in North America if we look to Canada, where the Toronto system is required to maintain 75% farebox recovery in order to receive provincial subsidy for the remaining costs—have much higher farebox recovery, fewer operating subsidies and much higher ridership, which suggests a justification for less subsidy and higher fares: planning without prices leads to bad planning.

How Much Control Do States Have Over Transport Funding

The proposed (and DOA) House transportation spending bill has lots of people thinking about the federal role in transport funding. In short, the US House bill eliminates federal transit support and allocates the gas tax to roads. It's a bit jarring, for sure, but raises lots of issues about federalism and transport policy. Lisa Schweitzer has a series of excellent posts about this at Urban Ethics and Theory (start with her conclusion), and I suggest you review what she has to say about this.

But others are supporting the federal role because they claim that states and local governments are already making their transport investment choices, so the federal role doesn't alter how the money is spent. The Transport Politic has a post about this here. He argues that "devolution is overrated." I'll argue that this analysis is not quite right because it is limited to the role of fuel taxes and because it undervalues the political distortions.

Freemark does say that states and localities have screwed up spending projects before, and he's right that they have. This doesn't mean that the federal government is better in the role of deciding what projects to fund, however. In fact, many states, counties and metro areas use sales taxes to build new systems and maintain roads, and these taxes are often voted on directly buy the voters. (Sales taxes may be a more regressive form of paying for infrastructure than fuel taxes, and perhaps an analysis of tax incidence might support a federal role, but that's not what the opponents of the House measure are arguing.) When put on a ballot new taxes for transportation projects are overwhelmingly passed (about 75% of the time), even when the new taxes are going to be used for expensive transit investments. These may not be good investments in many cases, but there is ample evidence to suggest that in the absence of federal funding or a complete devolution to local and state decision making transit would not be defunded or in danger of going away.

The federal role complicates local decision making due to political constraints. First, as a piece of background, nearly all gas taxes collected are returned to the state where they were generated. By law at least 92% of all receipts has to be returned to the state where they were generated, and in many cases it is much higher. (This is a new-ish law so don't look at historical donor-donee figures for this.) But all new projects, even if they are listed as a priority by the states, must comply with all federal guidelines and policies. These can greatly increase the costs of projects in both time and money. New York City moved forward with the 7 line extension of the subway system without federal money because of compliance concerns.* Moreover, the federal guidelines through SAFETEA-LU favor commuter oriented projects that have a lot of time savings. These may not actually be high priorities for states and cities, but if you want any money you have to adhere to these guidelines. In addition, federal matching money policies act as incentives for transport plans to maximize their matching dollars, not design the best transport investment. Remember, 10 years ago no one was considering street cars in US cities. Now there are over 70 projects under consideration because the Obama administration committed $280 million for streetcars. Those 70 projects are there because of federal priorities, not because of local preferences. (I've mentioned this before.)

To make a point about local mistakes versus federal mistakes, these streetcars are likely to be a disaster. Operating in mixed-traffic, they will slow down transit, congest auto travel and worsen pollution. This occurred in Paris as dedicated bus lanes were replaced with streetcars. However, if cities paid for these themselves then a few would install streetcars and the rest would realize they are a bad idea.Instead, the federal government will pay for all the streetcars so everyone will realize they are a bad idea after they are all built, so rather than a few bad projects and a little cost we will get lots of bad projects at a lot of cost.

Overall, the role of federal funding for transportation has likely peaked as the gas tax has peaked. I doubt that any federal tax will replace that buying power, and it will be the onus of states, regions and cities to  fund more of their transport investments. (If you think the prospects of higher federal gas taxes are grim, you should consider how much worse the prospects for federal user fees are.) I won't speculate as to what that means for road or transit funding, but will say it will be different. The sooner that states and cities start crafting policies to pay for their transport priorities the better off we will all be, and the more responsive these policies will be to people's concerns.

*The city did ask for federal help with a second station when costs increased but was turned down.

Maybe Someday I'll Retire to Take Care of My Own Little Toll Bridge

The BBC reported on a toll bridge in Herefordshire that was recently purchased. That's not so unusual, but it was bought by a fellow who will retire on the property and hang around to collect the tolls motorists pay. The even better part is that all the toll income is completely tax free! Such a deal. Maybe future pensions should be funded by giving people roads directly to collect money as they see fit. Lots of public pensions are already investing in P3 projects. This is just more direct!

Here Michael Munger translates the toll bridge story to a nice class exercise for econ students.