Is Transit a Private Business or a Public Service? Either Way, We Have to Pay For It

[M II A II R II K]

Is Transit a Private Business or a Public Service? Either Way, We Have to Pay For It


September 2, 2020

By Sandy Smith

Read More: https://nextcity.org/daily/entry/is-...we-have-to-pay

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We still don’t expect roads to turn a profit, but we still regard transit as more business than public service, and we have come to think the same way about the mail. Transportation consultant Jarrett Walker says we’re thinking about both in the wrong way: What matters in each of those cases is less how many people use it and more how available it is to everyone and what we expect it to do. That, he says, means we also have to rethink how we pay for it and how we expect it to be run.

- If one of those expectations is to reduce the number of cars whizzing to and fro, one way to advance that goal is to stop charging for transit at the point of use. This has led to growing interest in making transit fare-free. So far, the biggest city to propose this has been Kansas City, which announced it would aim for that goal last year. Now, the nation’s second-largest transit system is contemplating the same thing. --- Mass transit agencies are operating service at or close to pre-pandemic levels so it will be available when riders need it. And even with COVID relief, this is producing oceans of red on transit agency balance sheets. This has led several agencies to warn of coming disaster if more relief funding does not materialize or if states don’t provide more reliable funding.

- Noted transit planner Jarrett Walker, writing in Bloomberg CityLab, says that the way we think about transit and about paying for it needs to change. Noting that most transit bond issues and taxes pass handily even though the people voting for them probably won’t use the facilities once they open, he argues that most Americans have the same high opinion of public transit that they have of the U.S. Postal Service. --- We should stop thinking of them in terms of “efficiency” in the business sense of serving the most users at the least cost. Instead, we should measure “efficiency” in terms of availability: How well does it provide service to everyone who might use it? --- Walker does not call for a specific method of paying for universal transit service, but he does say we need to get clear about what we expect from that service.

- According to a report on LAist, Philip Washington, CEO of the Los Angeles County Metropolitan Transportation Authority (LA Metro), yesterday launched a study to look into what he has dubbed the “Fareless System Initiative” (FSI). His goal, he told the LA Metro board of directors, is to make mass transit in the nation’s most populous county totally free by the start of next year. --- Of course, the question of how to pay for this remains, but the article notes that passenger fares account for only four percent of the agency’s originally projected revenues for fiscal year 2020. Nearly half was projected to come from four sales tax measures approved by Los Angeles County voters. Fares cover 17 percent of the agency’s operating and maintenance expenses; much of the revenue from the sales taxes goes towards transit construction projects.

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[llamaorama]

I think there needs to be a nominal fee to use public transit or otherwise there will be homeless people loitering inside buses and trains all day long.

However I agree that it should be thought of as a public service, at least in places like Kansas City. If the US had the cities and land use patterns of Europe or Asia than self-sustaining fare funded transit systems would make sense. I know a certain forumer is outspoken in their support for radically increasing fares to improve service with the logic that service would improve and so would demand. But in a place like Kansas City there is probably no real business case for $10 bus rides even if the bus was ultra clean and ran every 15 minutes, because driving would still be easier and at that price point it would not be worth maintaining a transit pass and paying for car insurance at the same time, etc.

Realistically, in cities that aren't New York, Boston, Chicago, SF, etc, mass transit already is basically either a fall back public service for people who can't afford a car, or an urban planning tool to motivate people to commute via an alternative to congested highways. And if it's operating deep in the red already and heading for financial ruin then maybe lowering the fares to increase ridership a lot could help it politically, to attract a bailout.

[SFBruin]

I feel like it's a combination of both.

Like, it makes sense to have public ownership of rail / bus lines, but we need some degree of business thinking to have quality.

[accord1999]

Originally Posted by SFBruin

Like, it makes sense to have public ownership of rail / bus lines, but we need some degree of business thinking to have quality.

Agreed, even if transit shouldn't be looking for profits, the concept of return on investment and best bang for your buck is important. Transit projects should still be judged on carrying as many passengers and trips as possible.

The KC system thinking of free-fares isn't so much as progressive policy as it is an indictment of its low ridership and high operating costs.

[ssiguy]

I have always disagreed with free-fare transit. It can reinforce, especially in the US, the idea that transit is dangerous and a moving homeless shelter as llamaorama noted. Whether that is true or not doesn't matter, the stigma will be there.

It is also can lead to stagnating or even transit usage declines over the long term. In the short and medium terms it will certainly result in higher ridership as people take advantage of it but that success can lead to it's demise. As ridership rises, revenue doesn't. This means that as routes become busier they have no financial ability to improve service or create new ones resulting in packed buses with the same poor service they had prior to the free- fare introduction.

Even a small or nominal fare of, for example, $25/month results in higher revenue and the ability for the system to expand as ridership does.

[casper]

Originally Posted by ssiguy

I have always disagreed with free-fare transit. It can reinforce, especially in the US, the idea that transit is dangerous and a moving homeless shelter as llamaorama noted. Whether that is true or not doesn't matter, the stigma will be there.

It is also can lead to stagnating or even transit usage declines over the long term. In the short and medium terms it will certainly result in higher ridership as people take advantage of it but that success can lead to it's demise. As ridership rises, revenue doesn't. This means that as routes become busier they have no financial ability to improve service or create new ones resulting in packed buses with the same poor service they had prior to the free- fare introduction.

Even a small or nominal fare of, for example, $25/month results in higher revenue and the ability for the system to expand as ridership does.

The Canadian model is that the system is generally run by a government agency. The government agency in some cases operates the service and it others contracts a private operator to actually deliver the service.

The one case that comes close to free, is post-secondary education. In many cases the student union negotiates a deal with the transit operator where for a fixed deeply counted fee billed through the student society anyone with a full time student IT gets free access to transit. In reality this is just a bulk buy.

[M II A II R II K]

It Shouldn’t Cost 31x More To Take Transit Than Park

https://usa.streetsblog.org/2020/09/...sit-than-park/

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- The average price of a monthly parking permit in cities is $2.25, compared to $70.00 for a transit pass. — The triumph of asphalt socialism is reflected in providing unlimited free or underpriced private car storage on public streets a scarce and valuable commodity while charging people to make use of transit, a public good with positive externalities, and plenty of excess capacity. The benefits of free private car storage of city streets accrue to those wealthy enough to own cars. — Those who can’t afford cars get no benefit, plus they have to pay to use the only feasible alternative for many trips: transit. No one should invoke the term “equity” in urban transportation without insisting that we start asking those who convert public property to private use for car storage pay for the privilege.

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[llamaorama]

Suddenly raising parking costs sounds like a good way to reinforce the current trend of work-from-home and totally kill off downtowns.

Who wants to pay for tolls and parking or pay a lot of money for a transit pass when you could just do everything from home?

[Doady]

Rising costs is not the sign of a dying downtown or a place that few people want to be in. Quite the opposite, actually.

A healthy downtown means having to pay a premium for the land there, and that means higher densities, which in turn means less surface parking. That's the entire point of a downtown. Buildings taller, buildings closer together, people closer together, increased face-to-face contact. If companies don't need that, that's why they can locate in some office park in Meadowvale instead of a skyscraper in the Financial District.

Do you really think it's the employees rather than the employers who choose whether they work from home or not? Come on.

We can talk about US cities not being Asian and European cities, but lack of fare revenue might be a large part of why transit ridership in many US cities is so low in the first place, even compared to Canadian cities. Something 10% or 20% lower fares might not seem like much, but the service lost as the result of that lost revenue will hurt the ridership, which will hurt revenue and diminish service even more. It's just a downward spiral.

Kansas City provided $97 million to transit operations in 2019, and fare revenue only added $10 million. Here in Mississauga, of the $195 million operating budget, $87 million came from the city, $18 million from the province, while passengers paid $90 million. Taking into account the exchange rate, that's 40% more money for transit operations with 20% less government support.

We can see also Winnipeg Transit getting $87 million from the city, $40 million from the province, $70 million from fares. Brampton Transit got $66 million from the city, $16 million from the province, $85 million from fares. The RTC in Quebec City got $119 million from municipalities, $27 million from the province, $75 million from fares. These are all systems that received less funding from government than Kansas City's system, but had larger operating budgets thanks to fare revenue. Around 40% or 50% fare recovery ratio is typical in Canada and that is probably what US systems should be aiming for as well if they want to have ridership like Canadian systems. 17% is just not enough, let alone 0%.

[electricron]

In my lifetime, I have seen bus fares paying 100% of the costs to ride it down to 10%. Some cities are going to no fares to ride the buses. It slowly creep down, first to 90-10 split when the cities bought the private bus companies, to 80-20, 70-30, 60-40, 50-50, 40-60, 30-70, 20-80, 10-90 as the years progressed, as citizens demanded some service for the public revenues with lower fares, while at the same time public employee unions demanding higher salaries for less work.

I not suggestion what I saw is prototypical or not, but that is what I observed and how I feel about it.

[mrnyc]

Originally Posted by electricron

In my lifetime, I have seen bus fares paying 100% of the costs to ride it down to 10%. Some cities are going to no fares to ride the buses. It slowly creep down, first to 90-10 split when the cities bought the private bus companies, to 80-20, 70-30, 60-40, 50-50, 40-60, 30-70, 20-80, 10-90 as the years progressed, as citizens demanded some service for the public revenues with lower fares, while at the same time public employee unions demanding higher salaries for less work.

I not suggestion what I saw is prototypical or not, but that is what I observed and how I feel about it.

no.

where did public employees or anyone demand higher salaries for less work? the answer is nowhere. also, do not forget almost all unions have been effectively destroyed or evaded except for public employment unions, and they are among the very last to be formed. and lastly -- the trend in labor negotiations is always downward with givebacks for any raises.

if you want a problem, the ever widening gulf between executive pay and the other company employees is the biggest pay related concern in the nation. it has grown far wider in the states than any developed nation since the 1960s and is accelerated today. that is a crime in and of itself and is one reason of many why we need even more and stronger unions.