Build Trains = Raise Fares + Cut Bus Service

Denver’s Regional Transit District (RTD) says it will have to raise fares and cut service due to higher-than-expected operating costs and lower-than-expected revenues. I am sure this has nothing to do with cost overruns for RTD’s rail lines that are under construction, right? Because operating and construction funds come from two entirely different sources, right?

Well, no, RTD sales tax collections can be spent on either operations or construction. And it is only a coincidence that RTD is thinking of proposing to raise those sales taxes in order to fund those cost overruns.

RTD has plenty of company, as the American Public Transportation Association (APTA) says that transit agencies across the country are raising fares and cutting service. Interesting how every example in this story, from New York to Salt Lake City, is of a transit agency that is struggling to build or maintain an expensive rail system. If they didn’t have to spend hundreds of millions of dollars on trains, they would have plenty of money to operate their buses and wouldn’t have to raise fares and cut service. APTA sort of admits to the connection when it reports that 20 percent of transit agencies say they have not only cut service but delayed new construction due to revenue shortfalls.

The Antiplanner is aware, of course, that the economy (and therefore the tax collections that support transit) is down and fuel prices are up. But recessions are an inevitable part of the business cycle, and just about every transit advocate in the country has been predicting that petroleum prices would go up sooner or later. Why couldn’t the transit planners, who have no hesitation to plan a rail line that requires years to construct and decades to amortize, plan for such inevitable events such as recessions and high gas prices?

The really funny thing is that staid newspapers like the New York Times and Denver Post act like transit is important. Maybe it is in New York City. Everywhere else, including all the cities mentioned in the Times article, not so much.

Transit riders “are often low-wage workers trying to get to their jobs,” says the Times in an effort to generate some sympathy. But they are often well-paid salaried workers trying to get to their jobs too. Also, highway users are also often low-wage workers trying to get to their jobs, but the Times never thought of that when it argued that a stiff federal gas tax is absolutely necessary so transit agencies, which carry 1 percent of passenger travel in the country (and zero percent of freight) can siphon off 20 percent of gas tax collections to fund their boondoggles.

It is time to reform transit so that it can stop lurching from crisis to crisis. Maybe the best way to achieve that reform is for Congress to fail to renew the gas tax, which will put transit agencies in an even bigger bind than ever and force them to consider real solutions, such as contracting out and privatization.

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22 thoughts on “Build Trains = Raise Fares + Cut Bus Service

  1. Sandy Teal

    The Antiplanner’s argument that building rail transit eventually leads to reduced transit service is one of his strongest arguments. I had not heard that before reading this blog.

  2. bennett

    A couple of clarifications. I think fares would increase regardless of expensive rail projects, though here in Austin there is a very strong correlation between the new commuter rail and cuts to other transit services.

    As for the “zero percent of freight” claim. This is not true. Many transit agencies that run intercity services have cargo areas in the buses that are used to transport goods. It’s actually a decent revenue stream for these agencies. They’re already headed somewhere, why not take a few boxes?

  3. Scott

    If tickets/prices charged paid for public transit costs…

    Also, must raise gas raise taxes by $0.50 to $1.00 [per gallon] to pay for more roads costs & much better roads — by the states, get the feds out. (Get rid of the unjust, unsafe & inefficient HOVs)

  4. C. P. Zilliacus

    The Antiplanner wrote:

    It is time to reform transit so that it can stop lurching from crisis to crisis. Maybe the best way to achieve that reform is for Congress to fail to renew the gas tax, which will put transit agencies in an even bigger bind than ever and force them to consider real solutions, such as contracting out and privatization.

    (1) I agree with the first sentence above. Part of that is to STOP using federal dollars to build more rail lines, unless they can serve as many patrons as New York’s Second Avenue Subway is forecast to carry (just Phase 1 of the project is supposed to be serving 290,000 people per day (FTA source document here (.pdf format)). Check that – if a proposed rail project can carry half as many patrons as the Second Avenue Subway, it can be considered for funding, though this bar is so high that it would (properly) end federal funding for most of them.

    (2) I partly disagree with the second sentence (even as I disclose that much of my personal income is tied to that tax), because that’s going to disrupt a lot of needed highway construction and repair work in all 50 states – and even some highway expansion projects.

    (3) Transit privatization is needed. See, for example, an excellent discussion by Jim Bacon of Hong Kong’s private MTR, which runs transit in the former crown colony, and does it well and profitably here. MTR recently won a competitive tendering process to operate the Stockholm tunnelbana for the next 7 years.

  5. C. P. Zilliacus

    Sandy Teal wrote:

    The Antiplanner’s argument that building rail transit eventually leads to reduced transit service is one of his strongest arguments. I had not heard that before reading this blog.

    In most cases, it leads to turn-backs of transit bus service, so persons wanting to take transit to a downtown location have to first take the bus to a rail station, then do a (often time-consuming) transfer to rail. In the outbound direction, that transfer can be even more time-consuming, because there’s often a long wait for the outbound bus to arrive.

    Single-seat transit service is very important to a lot of transit customers, and rail frequently does not provide it.

  6. C. P. Zilliacus

    bennett wrote:

    As for the “zero percent of freight” claim. This is not true. Many transit agencies that run intercity services have cargo areas in the buses that are used to transport goods. It’s actually a decent revenue stream for these agencies. They’re already headed somewhere, why not take a few boxes?

    Aside from some freight operations on transit tracks (usually at night on New York’s Long Island Rail Road), I am not aware of any transit agency moving freight in the United States.

    Now Greyhound does move packages on its passenger buses, but they are a private firm, not a transit authority.

  7. LazyReader

    What a shock, starting up any transit service typically begins with buses. If you go to Hawaii, the Honolulu area has a bus transit service. Ironically called “TheBus”. It has 70.6 million boardings annually on its fleet of nearly 500 buses, providing daily service on 107 routes. It is privately managed by O?ahu Transit Services Inc., which operates the system under a public-private partnership with the City and County. Its low cost and wide coverage, TheBus is a very popular with high school students. The fact that free school bus routes are not provided for the majority of the area.

    For years the region has pushed for a elevated rapid transit rail system of their own. An over 20 mile long system similar to Vancouver’s SkyTrain. A ground-breaking ceremony to signal the beginning of construction was held last February. Conceived in the 2000′s it’s route go as far back as the 1960′s. Plagued by delays and difficulties, including doubling budgets many times. No state officials have attended it’s recent financial review meeting. Opposition from archeological groups finding human remains and artifacts, of course state law requires the full length of the rail line to have an archaeological survey conducted before any construction. The single line will cost more than the entire sum of Portland’s light rail. Construction was to start in 2009, did not occur due to delays in the in project review process, including delays getting federal approval of the environmental impact statement. No doubt they’ll find some sort of revenue by cannibalizing the bus service to pay for it’s construction then both systems will be in financial trouble. The Antiplanner already posted a feature regarding the system and regards the fact it’ll take vast amounts of energy to build and almost as much to rebuild every 30 years than the amount of energy they intend to save by taking hypothetical drivers off the road.

  8. LazyReader

    From what I’ve seen Buses are taking a lot of Amtrak passengers. Abracadabra, I am the great Bolt-ini. Watch as I make these passengers dissappear.

  9. bennett

    C.P,

    There are many transit agencies that provide Greyhound-like services on a regional scale, and they do it just like Greyhound. It’s more common than you think because they don’t advertise that their doing it and on the federal reporting it usually falls into the very small “other” category for revenue.

    I believe that CARTS here in the capital area and TRAX up in the Texarkana carry freight. A lot of agencies that receive 5311f FTA grants (rural intercity) have started to do this, and the ones that aren’t probably don’t know they can. It’s bonus $$$.

  10. Frank

    “But recessions are an inevitable part of the business cycle…”

    Peter Schiff:

    “Legitimate economic expansions, financed by actual savings, do not need busts. It is only the inflation-induced varieties that sow the seeds of their own destruction. . . .

    “Boom/bust cycles are not inevitable and would not occur were it not for the inflationary monetary policies that always precede recessions.”

    Still waiting for the Antiplanner’s review of Crash Proof; is it not forthcoming due to the friction between Cato libertarians and Austrians?

  11. Sandy Teal

    My sense is that the DC Metro system is an important part of the transportation system, if only because the highways are so crowded and the dense concentration of government jobs at the center of the Metro system. But maybe that is only for government jobs, as the private sector jobs are more dispersed and served by the Beltway.

    It seems like the DC Metro is very crowded by the 9-5 government crowd, and very empty mid-day, evening and weekends. Tourists help fill the down times, but they are not numerous to fill the trains.

    San Francisco’s BART seems to be the same way.

  12. Andrew

    Sandy Teal:

    The Antiplanner’s argument that building rail transit eventually leads to reduced transit service is one of his strongest arguments.

    Except that if you look at APTA statistics, rail modes carry 50%+ of transit riders in most areas though of as having a developed rail system (Chicago, Philly, Boston, San Francisco, New York, DC, Atlanta), and are close to 33% or more in areas with new lines (San Diego, Phoenix, Salt Lake, Portland, etc.).

    How much bus ridership could posisbly have been lost to build these new lines? They had close to zero ridership to begin with.

    It seems like the DC Metro is very crowded by the 9-5 government crowd, and very empty mid-day, evening and weekends. Tourists help fill the down times, but they are not numerous to fill the trains.

    So just like the road network? Free flowing in the middle of the night and on Sunday mornings, and jammed up the rest of the time?

  13. Andrew

    Randall:

    If they didn’t have to spend hundreds of millions of dollars on trains, they would have plenty of money to operate their buses and wouldn’t have to raise fares and cut service.

    Of course not. Because then they would be useless systems with one bus per hour on a handful of routes not going anywhere particularly useful.

    When you provide less than zero service, there is never anything to cut.

  14. C. P. Zilliacus

    bennett wrote:

    C.P,

    There are many transit agencies that provide Greyhound-like services on a regional scale, and they do it just like Greyhound. It’s more common than you think because they don’t advertise that their doing it and on the federal reporting it usually falls into the very small “other” category for revenue.

    Thanks for sharing. Was totally unaware that this was something that any U.S. transit bus operator was doing.

    I believe that CARTS here in the capital area and TRAX up in the Texarkana carry freight. A lot of agencies that receive 5311f FTA grants (rural intercity) have started to do this, and the ones that aren’t probably don’t know they can. It’s bonus $$$.

    I’ve seen this type of service in some parts of Europe, usually bus service running “intercity” type coaches, or sometimes “suburban” type coaches, but never in the U.S., even though there are plenty of transit operators that I see on a daily basis operate the “intercity” type vehicles (“suburban” coaches, once rather common (WMATA inherited quite a few from the 4 companies it took over in the early 1970′s, all GMC “New Looks” with V-8 engines and standard (not automatic) transmissions, no rear door and luggage bays underneath) seem to have gone out of favor in Maryland and Virginia for reasons not entirely clear to me).

    Maybe because those private companies used the sub-c buses on (single-seat) express routes during peak commute times, and for charters on weekends and mid-days. These days the federal rules do not permit WMATA and other publicly-funded transit agencies to run charter services if the buses were purchased in part with federal funding.

  15. Andrew

    LazyReader:

    Can you provide a single example of a rail line requiring total reconstruction after 30 years?

    Has MARTA, BART, LRT’s in Edmonton, Calgary, San DIego, the SEPTA Airport Line and Center City tunnel needed rebuilding? They were built 30 years ago.

    There are rail lines being rebuilt, but they are mostly 100+/- year old elevated rail lines in Chicago, New York, and Philadelphia.

  16. John Thacker

    Seattle is another example, not in the New York Times story, of a locale that has recently built an expensive light-rail system, and is cutting bus service and raising fares.

  17. LazyReader

    @John Thacker: I think the rail your talking about is the “Sounder” It was a commuter rail they built in Seattle, Washington. It cost a billion dollars for start up. Annual capital costs exceed 100 million. Annual operating costs are nearly 40 million a year of which fares only compensate for 25 percent.

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