Rising Above the Transit Paradox
Everywhere I go these days, I am beseeched by friends and neighbors who ask me why, at a time when transit demand is rising, RTD is considering service cuts. Instead, shouldn’t RTD be increasing service? That certainly sounds like a logical model for meeting human mobility needs in the face of rising gas prices and other economic hardships.
But, therein lies the terrible Transit Paradox. It turns out the same factors that are driving a spike in demand for transit services are having an unfortunate negative impact on RTD finances.
Fuel costs, roughly 9 percent of the RTD expenditure budget, have risen 47 percent over last year’s rates. At the same time, sales and use tax income, which accounts for approximately 66 percent of RTD operations revenue, is coming in at about 5 percent below projections. The cumulative impact of these two economic factors, alone, is expected to be a hit of about $23 million to RTD’s total operations budget.
Adding insult to injury, the fares transit riders pay only cover a portion of the cost of each bus or train trip. Thus, the unprecedented 9 percent increase in transit ridership that RTD is welcoming into the system is actually creating a substantial additional financial burden.
RTD staff is still processing all the numbers, but the writing is on the wall: We will have a significant budget deficit to overcome in 2008, with even more red ink predicted for 2009.
So, at a time when we desperately need to get more transit service on the roads and the rail lines, RTD Board members are presented with a draconian list of optional measures for addressing the current budget deficit. Everything from cuts in discretionary expenditure items to hiring controls are on the table. But, most painfully, the one option that rears its head as having the greatest budget impact is service cuts.
Staff recently provided the RTD Board with a list of bus and train routes that have the lowest ridership. Fortunately, relatively few of these routes are in Boulder County due to our high transit use. Even so, any service cut will mean a loss of convenience for some and, worse, a real mobility hardship for others.
I opposed the first round of recommended service cuts due to last-minute changes in the staff proposal that I felt deviated from a fully objective assessment of route productivity. That does not mean RTD should carry under-performing bus and train routes. Fiscal prudence demands that RTD deploy its limited resources in areas that will have the greatest mobility benefits.
But, we need more transit service now, not less… which returns us to the Transit Paradox and the need to craft a sound funding model for our public transit system.
Discussion of this issue is timely, as the state is currently wrestling with options to address the funding gap for all of its transportation functions. We need to make sure that the needs of transit passengers are well represented in this debate.
In the coming weeks, I will be reaching-out to my fellow RTD Board members, state and local elected leaders, and the citizens of Boulder County in a search for the best short and long-term solution to overcome the Transit Paradox.
Ultimately, we must arrive at solutions that help transit keep pace with the growing public need for this mobility option.
Thank you in advance for sharing your suggestions and ideas via the comments form below.
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john@johntayer.org
Since some folks have decdied simply to contact me directly, I though I would share their anonymous feedback:
____________________
Dear John
Just read your piece in today’s Camera. I checked out your web site, and I must say I’m impressed. You’re doing an excellent job. Please continue to speak against service cuts. This is the time to increase service and snare in new riders. Actually, we need to spend more money!
The bulk of the funding has to come from the State, i.e., taxpayers, but those of us who use the bus have to contribute to the solution, too. Fares must be increased to more realistically reflect the real cost. As long as that cost is less than that of using a car, it only seems fair. Provisions can be made for the needy – as they already are, through the passes given out by various social agencies.
As for the under-used routes, first find out why. Send interns door to door if necessary. But before finally cutting the route out altogether, consider a surcharge.
Again, thank you for your valuable service to the community.
Sincerely,
(name withheld)
Here’s another one I received yesterday:
Hello,
I read your interesting article about the challenges of public transit under the current fuel cost situation.
I would suggest increasing efforts for improvement ridership — revamp the Neighborhood EcoPass program so that the inequities that prevent so many of my neighbors from riding the bus–I think all you have to do is REMOVE homes from the calculation where residents are already participating in some bus pass program — either at work or through the government or through the University. We are, after all, a University town and to include some ridiculous figure like $800 per home where the family is already getting a pass is patently unfair.
I live in a very active neighborhood where hours and hours of volunteer labor goes into the EcoPass program to no avail because of the constraints of the calculations necessitated by RTD (i.e., your board).
When you can add $$$ to your budget to fill empty seats on the bus, I think you are remiss in not doing it. While the EcoPass program offers a bargain rate to the customer, it the seats are empty, this is a win-win.
If you think the seats are not empty all day, offer a pass for non-peak hours. Do something.
Thanks for your efforts and for stimulating the conversation.
Sincerely,
(name withheld)
And more feedback . . . this time from out of state:
You might find it interesting that SEPTA, Philadelphia’s transit company, is running a surplus for perhaps the first time in its history:
http://www.philly.com/inquirer/home_top_stories/20080628_SEPTA.html
How?
Most of the government share of operations costs comes from the state (instead of a local tax), and this money was recently increased and stabilized. But it is also important to note that fare revenue is up significantly.
SEPTA recently increased fares. Usually, when fares increase, ridership sags a little. This time, it jumped. Essentially, SEPTA is enjoying market power where it can increase prices and still maintain its overall customer base. This is indicative, I think, of how enmeshed transit has become in Philadelphia.
A couple of years ago I traveled to Buenos Aires, which has an excellent subway and extensive bus network, as well as a commuter rail system. All the modes are privately contracted, I think. In particular, privatization probably saved the subway. A large infusion of capital was needed to modernize and repair the system, and this was provided by the concessionaire. I am not sure of the amount of annual subsidy, or if the concessionaire, Metrovias, is making a profit, but the system seems to be thriving, and is being expanded for the first time in many years. The buses, while a bit frantic by North American standards, are very efficient and extremely well used. This approach seems to work well in that city. The government remains active in planning and service quality monitoring, but service delivery is accomplished through a variety of vendors.
I share these observations because I had been thinking about transit finances even before your column, as I shared with Will Toor a while back. If transit’s subsidy remains very large, this means that it cannot easily scale up to meet demand (because it would require even more subsidy). Ideally, transit growth would reduce the subsidy required (at least to a more favorable proportion) in order to allow transit to expand to fill the void left by shrinking automobile use. I am not sure exactly how to get there, especially in some regions, but I do think that gas prices may continue to climb for several years, so it would be nice to be able to expand transit to blunt some of the impacts.
When I was active in selling transit in the Denver/Boulder region, we were almost giving the service away. Perhaps as the price of auto travel increases, paying more of the true cost of transit through the farebox will become palatable — especially if we use a touchless credit card system instead of paper money — tied to annual family pass plans that incentivize daily use and minimize marginal costs.
Cheers,
(name withheld)
Philadelphia
John:
Thank you for framing a problem many of us knew about, but hoped would just …go away. Clearly the answer is raising more revenue and finding ways to use the existing funding in the most beneficial ways. We should be steadfast in the ideal that cutting back on service is not an option.
Sadly we may have to look at facilities in a more plain Jane finish…as long as they are clean and easily maintained. As new stops and stations are built they may need to be rater utilitarian in their construction. Fuel savings may be achieved in small amounts by cutting back on air conditioning. Even cutting back on the printing of schedules could be a small cost savings, but it seems every little bit helps.
But these steps will not solve the problem. More income is needed. Suggestions:
Lottery Money. A solid justification can be made that this is for the benefit of Greater Outdoors Colorado by the reduction in pollution through greater public use of transit.
Gambling Money. While this is certain to be a tricky lobbying effort, we see huge private busses hauling up and down the canyons taking people to part wither their money. There may be a way to tap into that stream.
Private Grants. I know RTD has a great history of receiving Federal transit dollars to assist in capital construction projects. Now is the time to apply for private grant dollars for both local and national foundations and philanthropic organizations. Hire grant writers on a percentage basis…so no initial outlay from RTD will be required.
Bus Token Program Have businesses throughout the district suspend their parking validation programs for customers and replace that with bus token (or passes) for the same people. This will be an additional source of revenue, and my guess is not all tokens paid for will be used, therefore giving RTD a bit of a boost.
Holiday Gift Cards Here is a campaign to both promote RTD and raise revenue…Create a nice package for a gift of transit.
Fund Raising Contests. Pit Fraternities / Sororities etc. from all schools and colleges in the RTD district against each other to see which group can raise the most money for RTD. While many groups already do good works for charitable organizations we must be careful not to take money away from them.
Some of these ideas may not raise a lot of money, they all add up.
Keep up the good fight!
Here are some half-baked ideas on how RTD can make some money to help fight the transit paradox:
What about charging a nominal fee to use the park and rides? $0.25/day or $50 for an annual pass…
How about “route sponsors”? A driver could recite (or play a recording of) something like, “Route B Denver Local is brought to you by [insert company name here]. Blah blah blah something about the company and its products/services.” A throwback to 1950s television.
Sell naming rights to stations and park and rides.
Ask the voters for…more money.
Hold a bake sale.
Speed up Fastracks. Let’s get this stuff rolling sooner rather than later so it doesn’t cost $30 billion.
Great explanation of the problem–thanks for highlighting it. In case you missed it, PBS NewsHour did a quite comprehensive piece on RTD’s “transit paradox” about a week ago. You can watch it (or read a transcript) online at:
http://www.pbs.org/newshour/bb/transportation/jan-june08/denvertransit_06-20.html
I’m particularly interested in the comments above from the Philadelphia poster. It does seem like the increasing demand presents an opportunity for RTD to begin to reduce its reliance on subsidy, or at least to offset the rising fuel costs via fares. I have concerns about maintaining the accessibility of the service to poor and working-class populations, which have the least flexibility in their budgets, but overall I think it’s an idea worth exploring.
A couple of different ways of partially accomplishing this would be: fares which are higher during peak demand periods, especially for regional routes at rush hour; and fares which are tied to the price of fuel, adjusting automatically on some set schedule (this would be much more easily handled, of course, if RTD had some kind of modern electronic fare-box system).
Again, thanks for helping get this issue the attention it needs.
Some more input I received in response to the Transit Paradox piece (all names are withheld since they came to my personal e-mail box):
Director Tayer,
Only because you asked for comments do I give the following.
Survivor: Borneo first aired on TV in 2008 with a jackpot of $1 Million. Today at only 80% of its original value, the prize is still the same. While most taxes are on a % of sales, fuel tax is on a non-indexed rate. That means that every year the value of this “user” tax goes down about 3%. So every year auto users pay 3% fewer taxes at the pump. So since some time in the 90’s both state and federal fuel taxes have actually had annual tax cuts due to inflation. Hence the Federal and State transportation fund crisis.
If municipalities are able to enjoy a sales tax on motor oil, tires, and auto parts – all transportation products – why is there local sales tax on fuel? If there were, RTD would likely find itself in a much more reasonable situation. A March 13, 1995 Passenger Transport article “Budget Cutters Looking at Wrong Subsidies” showed that the actual subsidy per gallon was between $2.86 – $7.08. So it isn’t really a user tax as many proponents would like to contend.
[personal comment withheld]
Please let me know if there are any questions.
Sincerely,
(name withheld)
Thanks for the article “Rising above the transit paradox” that appeared in last Saturday’s Boulder Camera.
The long term benefits of increased transit ridership are so great that it is extremely important to find ways to provide increased transit services at a time when high fuel costs are pushing more people toward transit. The use (or non use) of mass transit tends to become a habit. Now is the time to get more people habituated.
City, county, state and federal funds should be pursued vigorously. If enough people are converted to transit, other transportation costs, such as roadway construction and maintenance can be expected to decline (or at least to grow less rapidly).
There is one aspect of your article that may have been confusing to many readers. You write: “Adding insult to injury, the fares transit riders pay only cover a portion of the cost of each bus or train trip. Thus, the unprecedented 9 percent increase in transit ridership that RTD is welcoming into the system is actually creating a substantial additional financial burden.”
In many cases, the reverse will be true. The cost of operating a half-empty bus is nearly the same as the cost of operating a full bus. In addition, the full bus generates more revenue at the fare box. There may be a little extra cost from the greater weight carried and from more stops and starts, but this should be relatively minor.
Thus, major increases in cost only occur in cases where it is necessary to increase the number of buses operating on a particular route. In all other cases, increased ridership should improve the financial balance.
In any case, it is important not to give the general public the impression that taking the bus has a negative effect.
I agree with the concept suggested in another response that households that already have an eco-pass should not be counted as negatives in attempts to set up neighborhood eco pass systems. I have a pass as a member of the University faculty (now retired) and as a result I have in the past declined participation in a neighborhood program that I would have had to pay for from personal funds. Counting me as a negative unfairlly penalizes my neighbors.
Also, for routes with low ridership, it is important to determine why the bus is not being used. In some cases, a route that looks good on a map does not serve the needs of a neighborhood because it does not take them where they need to go.
For example, the SKIP on Broadway in Boulder is popular because it takes a lot of people where they want to go and runs often enough so there is no concern about scheduled times. I used it regularly while I was active at the University. On the other hand, if I want to go to the 29th Street center, I am likely to drive because of the transfers that would be involved.
In summary, I urge you to seek every possible means to maintain full service and increase ridership where it is inadequate.
In my opinion we as a society should look at public transportation as we do police and fire — a public service — and fund it out of taxes. Not property taxes, but income taxes. Make it free for everyone.
One of my concerns about FastTracks is that we are compromising the utility of the system. I have long thought that the Boulder line is poorly designed in that it should run to the University so that students who do not live in Boulder can take it to classes. This of course means running it down the US36 corridor and not out to some station on Valmont where students will have to transfer to a bus that will take some 20 minutes to get to campus. Multiple bus routes thru the city could funnel Boulder residents to say Table Mesa Park & Ride where there would be a station. Similiar routes in Louisville and Superior could funnel residents to a station at McCaslin. This would be more expensive than the existing plan because new track would have to be laid, rather than using existing tracks.
Similiar shortsightedness is being planned on the Golden route, where I here there is talk of only one track being laid into Golden. That of course would put a limit on the number of trains that could be routed to Golden, because a train into Golden would have to clear back before a second train could be routed in.
We MUST build a system that will be used. Thus it must be convenient for as many riders as possible. So don’t skimp on this system. If necessary, go back to the voters for more money. I would hope the public would be smart enough to understand if you explain what has happened to increase costs. This mass transit system will be a great gift to future generations of the Front Range if done right! It will be underused if done wrong.
It seems now that the reason for choosing diesel over electric trains for the Denver-Boulder commuter line (i.e., diesel was seen as cheaper) is no longer valid. I strongly urge the board to rescind its decision and begin to plan for all-electric trains. Solar, wind, natural gas, etc. fueling our electric utilities will soon be far less expensive than diesel (including biodiesel which requires some petroleum in the mix) and the oil required for lubricating the engines.
Here’s a letter that appeared in the Daily Camera in response to my opinion piece: http://www.dailycamera.com/news/2008/jul/24/24elet/.
Steve does make a strong argument for preserving Route 201, a cut that I voted against, and concludes, “The way out of RTD’s bind is ultimately to ask for more money.”