We Have No Customers So Give Us Money

Transit agencies are stepping up their campaigns for more subsidies to make up for their lack of riders during the coronavirus pandemic. The New York Times reports that, unless Congress forks over billions more than it has already given the agencies, transit systems could experience a death spiral.

Technically, a death spiral takes place if cuts in service cause a loss of customers leading to more cuts in service. But if they don’t have any customers, they can’t spiral much further downward.

Out in California, Caltrain, which operates commuter trains between San Francisco and San Jose, has lost 95 percent of its customers. Before the pandemic, Caltrain riders earned an average of $120,000 per year, which means most of them are probably now working from home and many will probably never return to commuting. The logical thing for Caltrain to do would be to reduce service for the duration and start up again when riders return.

Instead, it is asking for an increase in the sales tax to support its empty trains. Caltrain is unusual among Bay Area transit agencies in that its fares cover around three-fourths of operating costs (not including depreciation). Since sales taxes are regressive, San Francisco’s board of supervisors refused to put a measure on the ballot asking voters for the sales tax increase, leading Caltrain to threaten that it will shut down without the increase.
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This is the same Caltrain that is spending $1.9 billion to replace its Diesel locomotives with electric locomotives with positive train control. This is called “modernization” even though electric locomotives with positive train control were developed more than a century ago.

San Francisco and Santa Clara county supervisors have proposed a “compromise” in which their county transit agencies (Muni and VTA) get to collect the new sales tax revenues and parcel it out to Caltrain or keep it for themselves if they prefer. Of course, VTA has been called one of the worst-managed transit agencies in the country, and there is no doubt that both it and Muni will end up keeping most of the money for themselves.

Muni probably actually does make a significant contribution to San Francisco transportation. But Caltrain and VTA could shut down, or greatly reduce service, for the duration and no one other than laid-off employees would notice the difference. Bay Area voters should reject any tax increase for transit.

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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.

3 Responses to We Have No Customers So Give Us Money

  1. JOHN1000 says:

    “Caltrain and VTA could shut down, or greatly reduce service, for the duration and no one other than laid-off employees would notice the difference.”

    The people at Caltrain and VTA will agree to shut down completely, ignore your layoff suggestion and just collect their salaries for doing nothing. They think that is a perfect solution.

  2. LazyReader says:

    Better Strategy: GET THE Federal government out of the transportation subsidy game and let the states handle it. Now when the state sees the poor returns on investing billions in transit no one uses maybe they’ll stop.

    One who would strongly disagree that. “Government should” build megaprojects. The Interstate Highway System was their best megaproject cause it was not built all at once. It took decades and was financed using the means that only the highway users would pay. Government “had” a history of megaprojects that came in on time or on budget. The Hoover Dam, the Grand Coulee Dam, the Golden Gate Bridge.

    In this day and age, Megaprojects are HUGE money pits. Countries build them if for no other reason than public jobs and overall prestige; Often as distractions away from deep rooted internal problems. That’s why the Middle East and China build so many of them. Human rights violations, Organ harvesting, modern day slavery……..but look this tower is 2,000 FEET TALL!

    Before being fired by General Electric ,Ronald Reagan said “the Tennessee Valley was periodically ravaged by destructive floods. The Army Engineers set out to solve this problem. They said that it was possible that once in 500 years there could be a total capacity flood that would inundate some 600,000 acres. Well, the engineers fixed that. They made a permanent network of reservoirs and lake which inundated a million acres (4,000 km²). This solved the problem of floods, but the annual interest on the TVA debt is several times as great as the annual flood damage they sought to correct. Of course, you will point out that TVA gets electric power from the impounded waters, and this is true, but today only 11 percent of TVA’s electricity is generated from hydroelectric.

    When states take federal money to build infrastructure they’re doing something rather rash. They’re taking from taxpayers in other states to fuel what may not be necessary. Worse off they demand more money or building a larger version of something than what’s necessary.

  3. Hugh Jardonn says:

    This Caltrain sales tax is offensive. Over the last several elections, voters in Santa Clara County have passed multiple tax and fee increases including gas taxes, two bridge toll increases, three VTA sales taxes, Santa Clara County’s Measure A 1/8 cent sales tax, the state prop 30 ¼ cent sales tax and the 2010 Measure B Vehicle Registration Fee of $10. Additionally, there are numerous state bond issues including high speed rail, the Proposition 1 water bond and the infrastructure bonds of 2006. Sales tax is also high in San Francisco and San Mateo counties.

    All this nickel and diming contributes into making the Bay Area a horribly expensive place to live; especially for people of modest means, who must pay the greatest percentage of their income in these regressive taxes and fees. Each increase by itself does not amount to much, but the cumulative effect is to add to the unaffordability of the region.

    It is time to reconsider transportation finance. With people hurting from the lockdowns, the last thing we need right now is another bump in the sales tax. When the virus scare began, the congestion problem went away when companies began encouraging staff to work from home at least part of the time. Let’s encourage more working at home when the virus scare is over. This tax would not be necessary if there were not as much demand.

    If you feel Caltrain must have more money despite increased working from home, the answer is to consider either diverting existing sales tax funds from the overpriced BART extension to San Jose (eliminate the Santa Clara portion and/or expensive tunneling alternatives) or raising taxes on the rich tech companies that are responsible for the congestion problem.

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