Why Transit Systems Are in Such Bad Shape

“Why are our transit systems faltering just as more people than ever want to use them?” asks Thomas Wright of the Regional Plan Association, which has advocated urban planning in the New York metropolitan area since 1922. His answer is that it has to do with “with the way our government institutions are structured.” He is right in general but wrong on the particulars.


New York City subway and elevated train fares cover more than 60 percent of operating costs, but no maintenance costs. Wikipedia commons photo by AEMoreira.

Transit, at least in the New York metropolitan area, did just fine, he says, until the 1950s, when “the federal government started building the interstate highway system, offering big subsidies to states to connect to it.” When that happened, “mass-transit operators struggled to compete with these roads and started going bankrupt.” They were unwillingly taken over by the government, which “merged the workings of mass transit and toll roads to provide cross subsidies.”

Unfortunately, the evil government agencies kept “tolls and fares too low to raise money for capital investment” and pushed “investment to pet projects, rather than broad regional goals.” As a result, maintenance needs were neglected and transit lines today are prone to repeated breakdowns.

The first problem with this history is there were no federal subsidies for interstate highways. Instead, all of that money came from user fees. If users hadn’t wanted to use the roads, they wouldn’t have paid the gas taxes and other fees. If the roads weren’t less expensive and more convenient to use, they wouldn’t have abandoned transit.

The second problem is his sly implication that transit revenues cross-subsidized toll roads when, in fact, it was the other way around. Somehow, transit shortfalls are blamed on stingy toll road operators who weren’t willing to divert enough tolls to other modes of transportation that their customers weren’t using. That’s like blaming Kroger for A&P’s bankruptcy because the former company wasn’t willing to subsidize A&P enough to keep it in business.

If Kroger is better managed than A&P, we don’t expect the former to subsidize the latter. Why do Wright and other transit advocates expect auto drivers to subsidize transit? Autos and transit are both forms of transportation, they say, so they see nothing wrong with taking money from one and giving it to another.
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What’s wrong with it, as Wright himself points out, is that government subsidies lead to spending on pet projects. While transit as a whole has become the pet project, some transit spending has greater political value than other spending. New transit lines, for example, have more value than maintenance of existing ones, so we end up with transit systems in their current state of poor repair.

In New York, such pet projects include the Second Avenue Subway, the Long Island Railroad extension to Grand Central, and the cancelled but still controversial Hudson River tunnels. If they were all completed, these projects would cost well over $30 billion, money that instead should be spent on rehabilitating existing transit lines. Yet rather than support the “broad regional goal” of having a healthy transit system, Wright himself mentions and seemingly endorses all three of these multi-billion-dollar-per-mile projects.

While Wright is right that the problem is poorly structured government institutions, his solutions won’t fix that. He suggests New York should charge auto drivers what he calls a “congestion fee” (but he really means cordon pricing) and spend the revenues on transit. But that’s still a subsidy and still prone to be spent on pet projects.

Another of his ideas is to turn transit into “a for-profit agency” that “can avoid patronage hiring” (does he mean union contracts?). Then the agency can buy a lot of land and lease it out, generating revenue for transit. That formula sounds vaguely familiar: “1. Steal money to buy land 2. ??? 3. Profit.” Where is it going to get the money to buy that land? Even if it had land to lease out, it would still be a subsidy and still prone to pet projects.

In 2013, transit agencies in the New York area, including New Jersey Transit, collected less than $7 billion in fares but spent $14 billion on operations, $4 billion on maintenance, and $1 billion on improvements. As Wright observes, spending on maintenance should be much greater. But I don’t think the more-than-$12-billion gap between revenues and expenses can be made up by ending patronage and raising transit fares.

New York is the one urban area in the United States that can not get along without its transit system. Transit could disappear tomorrow and we would see virtually no change in the urban form of cities like Denver and Portland or almost no change in San Francisco and Chicago.
But without transit, Manhattan could not exist as we know it today.

What would happen to New York if transit fares were tripled? Or if transit agencies somehow managed to reduce costs by a third (most likely by getting out from under union thumbs) and transit fares were doubled? Such drastic measures may be needed to make New York transit truly sustainable. Wright’s proposals, however, are just more of the same and won’t truly solve the problems.

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About The Antiplanner

The Antiplanner is a forester and economist with more than fifty years of experience critiquing government land-use and transportation plans.

5 Responses to Why Transit Systems Are in Such Bad Shape

  1. prk166 says:

    I’m looking forward to reading Mr. Wright’s article. Unfortunately it sounds like the usual fantasy land rhetoric. Streetcars and interurbans were rarely profitable and never much when they were. Most of the companies consolidated or died out, and much of the service was dropped before the Interstate highways were built.

  2. FrancisKing says:

    Antiplanner wrote:

    “The first problem with this history is there were no federal subsidies for interstate highways. Instead, all of that money came from user fees. If users hadn’t wanted to use the roads, they wouldn’t have paid the gas taxes and other fees. If the roads weren’t less expensive and more convenient to use, they wouldn’t have abandoned transit.”

    Well, yes and no. Antiplanner is largely correct about federal expenditure, but state expenditure makes up a large part of interstate funding.

    It appears to be a bit more complicated than Antiplanner’s story.

    https://en.wikipedia.org/wiki/Interstate_Highway_System#Financing

  3. lewis.lehe says:

    Technically, the London scheme is not a cordon charge. Drivers do not pay to cross a cordon, as in Stockholm/Gothenburg/Milan, but to travel within a zone. There are cameras stationed all over the Charging Zone. So even if your trip begins and ends inside the CZ, you still have to pay.
    Singapore has sort of cordon charging. It has two cordons. But the inner cordon has some charges to travel inside of it at congested times, so it somewhat approximates a distance charge as best they can with extant technology. They want to go satellite in the next decade.

  4. FantasiaWHT says:

    Uh, much simpler answer – interstate highways were absolutely no competition for the intra-city mass transit systems that went private to public in the 1950’s. The major death knell for trolleys was rubber-tired buses, which could do everything trolleys could do much more cheaply and flexibly.

  5. prk166 says:

    I had a chance to read Mr. Williams op-ed. As I suspected, his does regurgitate some of the tired, inaccurate rhetoric about mass transit. As FantasiaWHT points out, the bus killed it, not cars. The relatively wealthy who previously could afford street cars shifted to buying autos. The growing working class and middle class that could finally afford mass transit on a regular basis was increasingly served by the more efficient technology we know as the bus.

    We should set those things aside and applaud Mr. Williams for doing something far too few in the progressive transit realm do —> call for honest accounting of expenses and proper maintenance. As he points out, these systems have little incentive to do proper maintenance. They know they won’t be fired and their organizations won’t be shut down if they neglect the basics.

    They can avoid taking care of the basics today, spending the money on relative luxuries, knowing that they won’t loose customers and that down the road, when things fall apart, later or sooner the politicians will come through and give them the cash they need. WMTA is a classic example of this. They have a little over 200 miles of track. In the grand scheme of things, that’s not a lot. Yet they’ve neglected capital investments in their existing system so much, they have a dozen sections today with slow orders. Give the large volumes of traffic they move, a properly capitalized operation would have those sections replaced. Instead they just limp along, waiting for their seemingly captive customers to hammer the politicians enough to get their capital funding handed over for free.

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