Expanding Transit’s Mission (& Subsidies)

Due to stay-at-home orders, many small transit agencies that focused on providing transportation for elderly and disabled people are carrying hardly any riders anymore. So, to justify the subsidies they received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, they are getting into a new business: grocery delivery. They are doing so with backing from the Federal Transit Administration, which has written rules that allow agencies wide discretion for how they use CARES funds.

For example, Island Transit, on Whidbey Island, Washington, is offering free delivery service. “Offering free delivery service for essential items is just another way to fulfill our mission,” says the agency’s executive director.

Apparently, their mission is to take jobs and customers away from existing businesses. Numerous companies already offer grocery delivery, including start-ups like Instacart, Shipt, Peapod, Fresh Direct, and Boxed as well as existing supermarkets such as Walmart, Safeway, and Whole Foods (via Amazon Fresh). On Whidbey Island, for example, on-line shoppers can get deliveries from Instacart, Bailey’s Corner Store, Whidbey Island Seafood, Blackberry Moon, and something run by local high-school entrepreneurs called Whidbey Deliveries.

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Many if not most of the agencies contemplating free delivery are using paratransit buses. This bus service is the most heavily subsidized transit in the country, costing taxpayers on average about $30 a ride. Island Transit spent nearly $50 a ride providing transit services in 2018. They may offer “free” grocery delivery, but it will cost taxpayers a lot more than existing delivery companies charge for their services.

Free delivery by transit agencies probably isn’t going to bother Walmart much, but start-ups such as Instacart and Peapod hate it when a government-subsidized agency encroaches on their business. Why should transit agencies offer unfair subsidized competition against these innovative private operations? This is just one more excuse for transit agencies to suck money out of taxpayer pockets, and one more reason for taxpayers to say “no!”