Funding Crisis
Posted by Fred Jandt
Mass Transit editor
I knew that operating costs were a problem for transit authorities, but I don’t think I had an idea of how bad it has gotten out there. Rather than just a dip in funding as we await the passage of the next funding bill, we may be looking at the tip of the proverbial iceberg when it comes to funding shortages.
Transportation for America released a report recently that looked at transit agencies in the United States and how they are handling a surge in ridership coupled with the funding crunch. Quite simply, they’re raising fares. All of them are.
According to the report nearly 90 percent of transit agencies have raised fares in the last year and 10 of the 25 largest agencies have raised fares by more than 13 percent. Almost every one of those agencies also had cutbacks in service in the same time frame. And here’s the thing they don’t mention, it’s not nearly enough.
So we have more ridership than ever, a chance to show for the first time that public transportation works, is a preferable transit choice and isn’t just “transporting air†(as I’ve heard too many times). And how do we meet that challenge? By slashing service and raising fares.
If that’s not the ultimate Catch 22, I don’t know what is.
Are we really giving riders a choice or just the illusion of choice? Sure, you can park your environmentally unfriendly and expensive car, but when we get too many of you to make that choice, we’re going to charge you more and go less places.
Transit agencies are too often charged with not being businesses. “They need to be run like a business.†“If you ran a business like that you deserve to fail.†“Put the private sector in charge and see how they do.â€
But it’s not that simple. Transit isn’t a business, it’s a service. It gives the illusion of being a business, but it isn’t. And because of this illusion people think transit needs to make a profit — like a business — or at least break even.
Since when have our highways turned a profit? How can we expect that of our public transportation?
Simply, public transportation is being starved. It is led by great people doing great things with what meager funding they scratch together and work a lot harder at what they do because they either love the business or know if they fail they will fail everyone who uses their services.
Transit’s benefit is much greater than the sum of its parts. It’s about time it got funded for that benefit and not based on some formula totaled to equal its sum.
Thanks for reading the MT Position updated every Friday,
Fred
fred.jandt@cygnusb2b.com
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August 28th, 2009 at 12:53 pm
Many critics of the current financial policy of the transit industry is that most transit agencies are not using a business approach to control cost overruns and increase productivity.
The statement from the article “Transit isn’t a business, it’s a service” is rather ambiguous. The true distinction is that transit isn’t a business, it’s nonprofit service that relyies mostly on government subsidizes.
Since the vast majority of the funding for transit operations (and personnel salaries) comes from government subsidies (and not the farebox), there is no incentive to control costs and increase productivity. Due to the over reliance on subsidies, the transit industry is not subject to the economic feedback used by the business community, there is no corrective force to make improvements.
Therefore in order for transit to provide quality service, some form of strict economic feedback must be established to act as a corrective force to curb unproductive operations, wasteful practices, and provide regimintation to correct lax employee behavior. Accordingly, if the industry had to rely more on revenue from the farebox, everyone in the process would have an incentive to improve the quality of service.
Also the article makes the comment “Since when have our highways turned a profit?” Actually all of the toll bridges in the San Francisco Bay Area and Southern California do recoup their cost and they also have a large surplus to fund transit projects as well.
However, except for toll roads and bridges, most highways do not charge a “point of use” fee (or a fare) so the exact return on investment of a given stretch of road cannot be measured by toll receipts.
However, the “profit” can be indirectly measured in the economic productivity of the commuting public who are mostly private auto users.
Unfortunately, with the exception of the regional commuter rail lines, most transit routes consist of bus lines which have an average speed of only 1/2 to 1/3 the speed of the private autos driving over the exact same streets.
There’s an old saying “Time is money and people are voting with their pocket book” and accordingly, the extra time spent riding on transit VS using a private auto is seen as their money being lost.
August 28th, 2009 at 12:59 pm
I have absolutely no sympathy whatsoever for the transit agencies’ funding problems. Every agency on the top 10 deficit list is a bastion of protected union labor. 2/3 to 3/4 of every agencies’ expense budget is labor. Their funding problems could be solved overnight by outsourcing operations and maintenance to private service providers. Whether it’s from management incompetence or political pressure, the agencies’ priorities are completely upside down. Providing efficient transport is so far down the list it’s not funny. The major problems with transit agencies are spelled SEIU and ATU.
August 28th, 2009 at 1:15 pm
Fred:
Raising fares in today’s transit world makes total sense to me. When was the last time YOU saw flowers discounted on Mothers’Day?
The more a transit agency is run like a business, the more it will prosper. For one thing, the revenues brought in from the fare box can be used for things that the transit agency wishes to use it for, like track maintenance, and is not tied to the strings attached to some government grant. In addition farebox revenue flows in evenly, not in spurts from government grants.
The money from the farebox remains LOCAL and I think that is where it should be gotten from. I know of one transit agency that had its first fare increase recently since 1996. Rather than raise the fare a little bit each year pacing inflation, they waited until they are on the edge of financial disaster and wonder why the public screams at a large fare increase.
Art Wheeler
August 28th, 2009 at 1:19 pm
Here in California, with a $45 billion state budget shortfall, they’re not picking on transit per se, they’re picking on everyone. A transit agency agency generally has few reserves and must cut service, costs and raise fares merely to survive. Almost every agency in the Bay Area is under the knife and responding by cutting programs, costs and raising fees. So transit is not alone in this issue. To think that takes a narrow view of the global economic collapse and its subsequent effects on state budgets.
August 28th, 2009 at 6:26 pm
Will it get worst before better??? Me thinks it will. The other side is that transit takes too long in its planning stages…too long too plan, too long to implement, too long to construct. We develop plans that span decades, only to run into an economic downturn like we’re in. Then those very expensive plans are now being redone at more expense. Is it possible to stay with 5-year plans, then update/expand every three years? Smaller bites just might get us the system we all desire and need.
September 4th, 2009 at 11:07 am
Thanks, Fred, for bring up a point we’ve been trying to make with Aerorail since the early 1990′s. Transit should be “for profit”, but it limits itself to low speeds and limited service to places where people really want to go. Aeroail is also designed to take advantage of existing rights-of-way, thereby making it more economically efficient. Until we start thinking of transit more as a “for profit” business and less of a perpetually subsidized service, nothing much will change.