Changing the Game for the Worse

A 3/4-cent sales tax increase for transit is “seen as a game-changing model to fund transit service — and the envy of many cities nationwide,” reports the Minneapolis Star Tribune. What the article doesn’t say is how the tax will change the game for the worse for transit riders and transportation users in general.

Twin Cities transit ridership had been going downhill before the pandemic, declining nearly 10 percent between 2015 and 2019. Photo by Metro Transit.

What this means is that Metro Transit will no longer care about ridership numbers. Instead, it can freely spend hundreds of millions of dollars a year on projects that do little to generate ridership with no repercussions.

In 2015, transit fares covered more than a fourth of Metro Transit’s operating costs. But ridership declined between 2015 and 2019, reducing fares to around 23 percent of operating costs. The pandemic reduced fares by more than 70 percent, while the agency managed to reduce its costs by less than 4 percent. As a result, fares in 2021 covered just 7 percent of operating costs.

As of August, 2023, Metro Transit ridership was still only 55 percent of pre-pandemic levels. But now, thanks to the Minnesota legislatures generosity with other people’s money, Metro will no longer have to worry about whether it collects any fares or carries any riders. Between 2019 and 2021, it lost $60 million in annual fares, but the new sales tax is expected to bring in well over $400 million a year.

Metro will no doubt want to blow all this new cash on light-rail and other infrastructure-heavy projects even though such projects are not likely to generate many new riders. Before the pandemic, Metro’s downtown-oriented system carried about a third of downtown Minneapolis commuters to work, but only about 3 percent of commuters in the rest of the urban area rode transit to work. New light-rail lines will focus on downtown while mostly ignoring travelers to other parts of the region.

The problem with this is that downtown Minneapolis is the third-slowest to recover from the pandemic of any major downtown in the nation. The latest data indicate that downtown has only 40 percent of the economic activity of the pre-pandemic era. If downtown workers don’t come back to downtown, then most of Metro’s lost riders won’t be coming back to transit.

As detailed in this report, one thing that Metro Transit has managed to retain despite the loss of riders is crime, particularly on light rail. Metro light-rail passengers suffered more than twice as many assaults and other crimes in 2021 as they did in 2018, while bus crimes increased by only 16 percent. Crimes per billion passenger-miles on Metro’s light-rail system are about six times the national average for light rail and more than 10 times the national average for all transit.

The main reason why light-rail crime rates are so high is that fare collection is on an honor system. Potential criminals, discovering they can ride the light rail without paying a fare, then realize they can get away with other crimes as well.

Based on the experience of Kansas City and other cities that are offering free transit, Metro could use some of its new money to simply eliminate transit fares. Since fare revenues are currently running around $50 million a year, this could easily be done with the new sales tax. Doing so would be likely to increase criminal behavior on buses as well as light rail, but Metro has already shown it doesn’t really care about that.

About the only hint of opposition to the new sales tax reported in the Star-Tribune came from a state representative who noted that the sales tax was regressive. He should have added that, according to 2022 census data, less than 5 percent of workers earning less than $25,000 a year in the Minneapolis-St. Paul urban area relied on transit to get to work. In fact, low-income workers were more than twice as likely to work at home and more than 13 times as likely to drive alone to work as they were to ride transit to work. That means the regressive tax burden is particularly unfair to the 95 percent of low-income workers who don’t ride transit.

Metro was failing to maintain ridership before the pandemic. It has failed to recover ridership since the pandemic. It has failed to provide safe travel experiences for its customers. It is failing to help low-income workers get to work. The state legislature has rewarded Metro for these failures by giving it a huge boost in tax dollars, thus proving to the agency that ridership, safety, and customer service are irrelevant. No wonder it is the envy of transit agencies nationwide.