Streetsblog Capitol Hill

Budget shortfalls exacerbated by the lingering recession have forced 84 percent of local transit agencies to hike fares, cut service, or begin considering one or both of those options since the beginning of 2009, according to a report released today by the American Public Transportation Association (APTA).

APTA's bleak survey reflects data from 151 rail and bus systems throughout the nation, which together carry more than eight of every 10 U.S. transit riders. Sixty-nine percent of that group reported looming budget gaps for the coming fiscal year, with 11 agencies facing a deficit larger than 20 percent (see chart at right).

The economic downturn has taken a particular toll on agencies' operating budgets, putting layoffs in the mix and prompting a schism within the industry over redirecting federal formula grants to cover transit operating costs.

Nearly one-half (49 percent) of every transit system surveyed by APTA has redirected capital funds, which are set aside for acquiring or upgrading equipment, to cover operating budget shortfalls. Another 18 percent of responding agencies said such a capital funding transfer was under consideration for the future.

“As bad as things are today, more drastic service cuts, fare increases, layoffs, and deferred capital projects will occur if this problem is not addressed,” APTA President William Millar said in a statement on the survey results, urging Congress to approve temporary federal operating aid beyond that already approved for the Obama administration's economic stimulus law.

The White House's annual economic report, in addition to its endorsement of inter-city rail and transit spending, also sheds more light on transit inflation, which is often reported anecdotally in the many cities struggling with fare hikes but rarely put in statistical terms by economists.

In the appendices of its report, the president's Council on Economic Advisers estimated the overall U.S. consumer price index (CPI) at 214.537 in 2009, with the period of 1982-1984 signifying the 100 level. In general, then, prices for major goods have more than doubled over the past two-and-a-half decades.

The changes in price for what Americans pay for food (218.249 in 2009) and housing, including utilities (217.057), have kept pace with the overall CPI, according to the White House. But in the specific category of transportation, the difference was notable -- private transportation, a category that includes new or used vehicles and motor fuel, had a CPI of 174.762 in 2009, while transit's CPI hit 236.348 last year.

To be sure, transit costs were not the most out-off-control expense singled out by the White House. Inflation for medical care reached 375.613 in 2009, and the cost of shelter, not including utilities, was 249.354 last year.

Still, the palpable disparity between the costs of private and public modes of transportation is a trend that should be catching the attention of policymakers on both ends of Pennsylvania Avenue.

We tend to have a few good laughs when Randal O'Toole fires up his Cato computer and weighs in on transportation issues. It's hard to take seriously a man who thinks that having the government tax people to build something which it then gives away for free is the libertarian ideal.

But occasionally O'Toole provides an opportunity to discuss some interesting aspects of the transportation planning process and learn from his errors. And so we turn to his latest policy paper, which was released yesterday. Therein, he writes:

The Interstate Highway System accomplished all of this [construction of the system] without any subsidies. Federal highway user fees paid for 90 percent of the cost of the system, and state highway user fees covered virtually all of the remaining 10 percent.

This brings up an interesting question: What is a user fee? Common sense would suggest that a user fee is a fee paid by a user of something in order to use that something. A common example might be a train fare. When one wants to ride a train, one purchases a ticket. One doesn't purchase a ticket if one doesn't want to ride the train, and one doesn't ride the train without a ticket. A ticket is specifically meant to extract a fee from a potential user, that that user might then be allowed to use the train.

So do gas taxes count as highway user fees? Well, one might pay gas taxes even if one never uses highways. You pay the gas tax on gas used to drive down local roads or private driveways, or to power lawnmowers and tractors that never even see publicly-funded blacktop.

And one can use highways without ever paying gas taxes. Anyone able to obtain a vehicle powered by natural gas or electric batteries or canola oil can ride on the federal highway system for thousands of miles and never pay one cent to do so.

So gas taxes are not user fees. Indeed, the lack of actual user fees is one reason American highways suffer from severe congestion problems; when you give away something valuable for free -- like scarce highway space -- it ends up seriously over-consumed.

As a thought experiment, let's consider a world in which federal gas taxes functioned more like a user fee. That is, let's imagine that when drivers fill up, they pay a federal gas tax only on the gasoline consumed while driving on federal highways. That's still not really a user fee, but it's a little closer.

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Two weeks ago, Hillary Clinton introduced a bill in the Senate to provide emergency funds for local transit agencies. Since then, the rest of the delegation from New York and New Jersey appears to have lined up behind the legislation. "We believe that Senators Schumer, Lautenberg, and Menendez support it," says Larry Hanley of the Amalgamated Transit Union, which helped to push the bill forward in both chambers of Congress (the House passed it in June). That leaves 56 votes to achieve a filibuster-proof Senate majority.

The problems that the bill addresses are not confined to two states. News of service cuts and fare hikes keeps pouring in from places as far-flung as San Diego, Corpus Christi, Cleveland, and Burlington. All are getting squeezed by fuel costs while handling ridership surges as great as 35 percent or higher. 

Keeping service running smoothly while new riders switch to transit is not solely the concern of one party, either. Republican Senator George Voinovich of Ohio just directed a $1.5 million earmark to Dayton's transit agency, saying "it is critical that we continue to make our public transportation systems more efficient and accessible."

Securing funds through national legislation rather than piecemeal earmarks will send a stronger message: Better transportation choices can provide relief for people hit hard by high gas prices. Discussion of this bill, say transit advocates, will help set the tone as debate ramps up about next year's national transportation funding package.

The Senate Banking Committee, which is considering the bill, needs to hear from people who support it, says Hanley. "We need 60 Senators ready by Labor Day to return to the Senate and insist on transit stimulus."

Photo of a bus boarding in Allentown, PA: Allentown Morning Call

Waiting for the bus in Syracuse, NY.

Transit agencies all over the country are nearing a state of emergency. At the same time that rising gas prices are leading more Americans to opt for buses and trains, transit operators are being forced to cut service and raise fares due to budget shortfalls.

In Minneapolis, the local transit agency is pondering not one but two fare hikes. Seattle's Metro is considering bumping up fares for the second time this year to stave off service cuts. Gainesville, Florida is confronting a double whammy of higher fares and reduced bus service. In western Massachusetts, one county transit authority faces what its manager calls a "make or break" moment, as many locals try riding the bus for the first time and evaluate their options.

As the Wall Street Journal reported last month (preview only), much of this is due to the impact of higher fuel costs on transit budgets. The upshot? The capacity of many transit systems, particularly in smaller cities, is shrinking just when more service is needed most. People looking to save money and travel more energy-efficiently are being penalized in the process.

"This is an emergency," says Larry Hanley, an International Vice President at Amalgamated Transit Union who negotiates transit worker contracts in towns and cities throughout the Northeast. "Particularly in smaller cities where the transit systems don't have any cushion or margin for increased operating costs."

Nationwide, 48 percent of bus operators and 69 percent of rail operators have already raised fares due to increased fuel and electricity costs, according to a survey released in May by the American Public Transit Association. In terms of service cuts, the figures are 21 percent and 19 percent, respectively.

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"If you were to design the ultimate system, you would have mass transit be free and charge an enormous amount for cars."

So said Mayor Michael Bloomberg last April, right about the time he unveiled his plan to charge motorists a fee to drive into Manhattan's central business district. Eight months later, as the mayor's original proposal mutates for better or worse, the MTA is hours away from raising transit fares. Neither idea has exactly caught fire with the public, and the fare hikes could actually end up a foil for congestion pricing -- a plan originally intended as a sustained financial boost for the transit system.

And then there's Theodore "Ted" Kheel. The environmentalist, philanthropist, and renowned labor attorney has lobbied for free transit in New York for over 40 years. Last February he commissioned a $100,000 study that, as it turns out, could put the city's money where the mayor's mouth is. A summary of findings released late last week shows that if the city were to impose a $16 congestion fee ($32 for trucks) below 60th Street in Manhattan, 24 hours a day, seven days a week, along with higher curbside parking fees and a taxi surcharge, the MTA could remove its turnstiles and fareboxes forever.

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