Is Mass Transit Better Without Fares?

[TheNiche]

http://www.chron.com/disp/story.mpl/metropolitan/6856178.html

...

“I've been concerned that Metro has been drawing the line in the wrong place,” Parker said. “They're too concerned with the bottom line and not concerned enough that their job is to provide transit to people who really don't have any other option.”

Metro says its operating ratio — the share of its costs covered by fare collections — has increased from 17 percent in 2005 to an estimated 21 percent this year, still well below the national average of 33 percent.

Eliminating fares, of course, would make cost-benefit analysis meaningless, since every route would be fully subsidized. But allowing passengers to ride for free might attract enough riders to reduce congestion for drivers and produce other benefits, Parker said.

“I don't really care so much what they collect at the fare box,” the mayor said. “I'm not going to tell them to do this, but I am personally interested in exploring — unless we're leveraging those dollars in some ways for other kinds of matches — dropping the fares to get more people on board.”

...

Wow, for a policy wonk and former comptroller, I wasn't anticipating some of this stuff. Statements to the effect that a transit agency in the midst of financial turmoil ought to be less concerned with their bottom line (pretty much under any circumstances or in the context of any other statements) are dangerous ones.

If METRO reduces or eliminates its fares, then in order to maintain balanced books, it will have to reduce costs by a matching amount if outside matching funding proves elusive...which it probably will be, given that the City is itself not on fiscal terra firma. On the one hand, the elimination of fares (which would overcome a psychological barrier to transit use) paired with a reduction of service could be cause for fewer seats to be empty, meaning that asset utilization would be dramatically increased. Efficiency is good. (And yes, Mike Snyder, we CAN do cost-benefit analysis even without fares. ) On the other hand, if METRO is expected to maintain or expand services to poor neighborhoods as Mayor Parker has stated should be its focus, then it will have to sap resources away from more well-off neighborhoods to accomplish that. And that may also create a systematic long-term PR problem, as well, if Mayor Parker's philosophy about the bus system being a feeder for light rail coupled with her views about transit being primarily a means of moving poor people culminates with light rail getting a reputation as being transit for the poor. On-vehicle vagrancy could also contribute to that problem, particularly during bouts of inclement weather. There'd definitely be some kinks to iron out, here.

To her credit, I'm glad to see that Mayor Parker recognizes that the FTA rules may not be accommodating to the idea of transit without fares. However, the FTA's primary concerns have always seemed to be gross costs and ridership, project-by-project. Eliminating fares system-wide could possibly induce such significant ridership as to move us toward the front of the line for federal matching funds. But of course, there's a lot more to it than just that, so her caution is justified.

[jfre81]

Drop local fares back to a buck. Makes it more convenient whether paying with cash or with a Q-Card. I thought it was goofy to raise the fares as ridership was at its highest when gas prices shot up in '08.

But really what needs to be focused on is timely service. No unnecessary delays. Get people from A to B on time. As it is, METRO works only if you're not in a particular hurry to get anywhere, unless it's a short ride along one route, and even then you never know. No having bus drivers pull over at Wendy's to get food and eat IN THE RESTAURANT while people just sit there on the bus. Look at extending/improving service on some lines. Hell, I think it would be nice to be able to have a drink downtown on Saturday and not have to leave at midnight so I can make sure to catch the last bus home after connecting to the route on rail, even though the rail runs after 2.

The fare removal is not a very good idea - not only will the FTA not like it but there will be a lot of people, the ones who think mass transit is only for the poor anyway, further opposed to future projects like rail expansion if it is fully subsidized. But it's refreshing to see some out-of-the-box ideas (to use a tired cliche) being thrown around.

[kylejack]

On the Red Line its completely untenable. When enforcement was lax and there were a lot of free riders, the trains were very very full (often so full that it was SRO and nobody else could board). Maybe after the other lines open it will reduce some strain on Red Line, but even then it seems absurd.

[jfre81]

I was thinking that too. Maybe, if anything, they experiment with it on a few underperforming bus lines and see if it has any effect at all.

Since you mention the enforcement on the Red Line, another change I'd like to see is when they come onboard to check tickets/cards, they get on and the train is rolling, and any freeloaders are just booted off at the next stop instead of the train being held up at a station while they check everybody.

[kylejack]

Their current favorite tactic is to man a station and check everyone coming off the train for a fare, so the train isn't held up. Thankfully they're doing this in the evening so its not a big deal to wait in a line for a minute while they check fares. Rarely they will man every station finishing out the line, ensuring nobody stays on the train to avoid a farecheck. If they did it in the morning in the Med Center when I'm always rushed to get to work I think I'd probably start a letter writing campaign. Another occasional tactic is to get on board the train and check people's fares as they board.

They've thankfully done away with the 'stop the train and check everyone' thing they used to do, it seems.

[jfre81]

They've thankfully done away with the 'stop the train and check everyone' thing they used to do, it seems.

I was last onboard for one of those around Christmas. There weren't a whole lot of people on at the time so it didn't take too long. I remember one time though it was a good 10 minute delay.

[sarahiki]

I agree that dropping the fare to a dollar makes sense. And I'd like to see that $2 all-day pass come back. I like that she's recognizing it doesn't have to be about the bottom line. Nobody expect freeways to make money, but we keep building them. We shouldn't expect public transit to operate in the black, either.

[jfre81]

Might also look at bringing back the free "trolley" buses downtown. I know they killed that in '04 but it was too soon; now rail is established and there's more stuff to see and do downtown than there was six years ago and that trend should continue. Would be a nice connector not only to the various office/commercial buildings but to amenities like Discovery Green and the new Market Square when that gets finished.

[editor]

In some cities (Seattle is the only one I can think of right now, though) public transit is free within the downtown core, and then costs when you go to the outlying areas of the city. In Houston the equivalent would be within 610 plus the Galleria area.

This achieves one of the main goals of mass transit -- it takes people out of their cars and puts them in higher capacity vehicles. Having taken buses all over Seattle, including the downtown free zone, the neighborhoods, and into the suburbs, it appears to work. People hop on and off the buses as casually as if they were moving sidewalks at the airport since they don't have to worry about exact change or if their fare card is topped off, etc...

A lot of people get all sweaty when they hear a mass transit agency is losing money. Take a deep breath and try to understand that mass transit agencies aren't supposed to make money. That's not their function. Their function is to reduce congestion and also to move people. You wouldn't get all hot and bothered if someone told you that the library doesn't make a profit. Neither does the sanitation department. Or the street repair crews. They're not supposed to. Mass transit is a public service as much as those items are.

I was at a transit meeting a few weeks ago and learned that one way that transit systems measure themselves is through the "recovery rate." That is the percentage of the cost of a ride that is recouped through fares. For example, if it costs an average of $2 to move someone, and the average fare is $1, then the recovery rate is 50%.

At this meeting we learned that a recovery rate above about 30% is considered amazing, and most agencies in America are below 30%. In Europe the rate is usually in the single digits.

A quick Google turned up a study by Booz Allen Hamilton showing Houston Metro's recovery rate is was 16.5% in 2008. Is that good? Maybe. Is it good enough? I'm not qualified to say. I'd wager there isn't anyone else on HAIF qualified to make that judgement, either.

If lowering fares on Metro brings convinces more people to use it, then great. Maybe it should be free within the 610 Loop. Maybe Metro should run free trollies like the state of California does to reduce congestion in downtown Los Angeles.

You shouldn't fear Metro losing money any more than you should fear the library is losing money, as long as funding from other sources (gas tax?) makes up the difference.

--edit--

I just remembered -- Pittsburgh is another city with free transit downtown, though it might only apply to the subway. I didn't take many buses when I was in Pittsburgh, so I'm not sure if they're included.

[kylejack]

Speaking of Annise Parker, the other day she alleged that the Ziggy's parking problem is compounded by the fact that there is no easy access to mass transit to Ziggy's. Metro stops right in front of the restaurant! Apparently she does not consider buses mass transit.

http://blogs.houstonpress.com/hairballs/2010/02/annise_parker_interview.php

[editor]

Just found this chart showing the recovery rates for various American transit systems:

It looks like the larger and more developed a city's transit system is, the higher the recovery rate. Though that's not always true, as you can see Houston, Tampa, and Detroit are ahead of Dallas. It's my understanding that Dallas has better transit than those three.

[kylejack]

Recovery rate seems to favor cities with more rail that built their systems a long time ago? While the losers seem to be the newest construction that are still paying construction bills?

[ToryGattis]

The recovery rate favors cities where parking is very difficult or expensive, so high fares can be charged without losing too much ridership.

[TheNiche]

Nobody expect freeways to make money, but we keep building them.

Actually, once the Crosby Freeway is finally completed, it'll probably be the last un-tolled freeway ever built in the Houston area. And toll roads are designed, built, and operated with the expressed intent of being 100% paid-for by users. There has even been significant private-sector interest in purchasing and operating them.

I like that she's recognizing it doesn't have to be about the bottom line. ... We shouldn't expect public transit to operate in the black, either.

Bear in mind that operating profit (or loss) is different from the "bottom line". The bottom line in governmental accounting is really damned important.

[totheskies]

Unfortunately, the recovery raito is Houston is very important... we simply don't have enough riders that are using mass transit to warrant large areas without a fare. One of the main reasons that people move to Houston is because it's C-H-E-A-P, which means that we're not paying enough of our tax monies to METRO for them to warrant something like "free zones". I'm willing to pay a 2 cent sales tax or something towards METRO, but it would be impossible to get that to pass a city-wide voting measure.

But yeah, do that, and "no fares" would be a no-brainer, along with aggressive expedition of our transit lines and expanded HOT lane system.

[totheskies]

Might also look at bringing back the free "trolley" buses downtown. I know they killed that in '04 but it was too soon; now rail is established and there's more stuff to see and do downtown than there was six years ago and that trend should continue. Would be a nice connector not only to the various office/commercial buildings but to amenities like Discovery Green and the new Market Square when that gets finished.

This is an excellent starting idea IMO... only have a couple of trolleys,

-one that connects the various quadrants of Downtown (this is most needed and needs to be free)

-one that connects Downtown and Midtown

-one that connects Downtown and Montrose

-one that connects Downtown and the Washington corridor

The key is that they would have to run like clockwork, and be more frequent than every 20 minutes. If you do those things, it would a rousing success.

[editor]

Actually, once the Crosby Freeway is finally completed, it'll probably be the last un-tolled freeway ever built in the Houston area. And toll roads are designed, built, and operated with the expressed intent of being 100% paid-for by users. There has even been significant private-sector interest in purchasing and operating them.

It would be nice if every tolled highway built would have a strong law attached to it so that the tolls are removed after the road has paid for itself.

I only know of this ever happening once -- I-95 in Connecticut used to be the Connecticut Turnpike. In the 90's (IIRC) the tolls were removed because the road paid for itself. Never seen that since.

Bear in mind that operating profit (or loss) is different from the "bottom line". The bottom line in governmental accounting is really damned important.

I agree that governmental accountability is important, but it's also important to realize that it's OK for certain portions of the government to subsidize other portions that are less profitable. Like the way Microsoft used Windows and Office revenue for years to prop up the Xbox (and might still, for all I know).

We shouldn't cut back on filling potholes on city streets because doing so isn't profitable. It's a necessary service. We shouldn't shortchange transit for the same reasons.

That said, there are many ways for the private sector to fill portions of the transit gap. For example, many of the larger office towers in Chicago operate their own (really nice) bus service to ferry people between their buildings and the train stations. It's one of the ways the better buildings seek to differentiate themselves from each other. There's no reason the JPMorgan Chase Tower in Houston couldn't operate a shuttle bus service out to a park-and-ride or two. Or even a bunch of neighboring buildings could do it in Houston, like all the Allen Center buildings.

Forgive my ignorance if this is already going on. I didn't see it in the time I lived in Houston.

[kylejack]

I think what I am most alarmed by is converting current free roads into toll roads, as Rick Perry and company propose for the TTC, a deal which would funnel profit into private companies for a road that was formerly free. We built the road, we insured the bonds, and now they get to skate in and profit. Its absurd.

[TheNiche]

It would be nice if every tolled highway built would have a strong law attached to it so that the tolls are removed after the road has paid for itself.

I only know of this ever happening once -- I-95 in Connecticut used to be the Connecticut Turnpike. In the 90's (IIRC) the tolls were removed because the road paid for itself. Never seen that since.

Well then there's the other nice thing about toll roads, which is the prospect of congestion pricing as a means to efficiently ration capacity to the users with the highest economic need.

I agree that governmental accountability is important, but it's also important to realize that it's OK for certain portions of the government to subsidize other portions that are less profitable. Like the way Microsoft used Windows and Office revenue for years to prop up the Xbox (and might still, for all I know).

Well yeah, definitely. That happens all the time it's all accounted for above the "bottom line" and feeds into the "bottom line". What I'm saying, though, is that seeing as how government financials read somewhat more like cash flow statements than private-sector income statements, red ink at the "bottom line" can have an immediate and devastating effect on cash reserves. We have to be mindful that funds have to come from somewhere, whether from operating revenue, from taxes, from bonds, or from outside agencies. Otherwise our credit rating tanks and payroll checks start bouncing. Nobody wants to see that happen.

And that's why Mayor Parker's comments about METRO not minding the "bottom line" so much raised an eyebrow. She should know better.

That said, there are many ways for the private sector to fill portions of the transit gap. For example, many of the larger office towers in Chicago operate their own (really nice) bus service to ferry people between their buildings and the train stations. It's one of the ways the better buildings seek to differentiate themselves from each other. There's no reason the JPMorgan Chase Tower in Houston couldn't operate a shuttle bus service out to a park-and-ride or two. Or even a bunch of neighboring buildings could do it in Houston, like all the Allen Center buildings.

Forgive my ignorance if this is already going on. I didn't see it in the time I lived in Houston.

That's not a bad idea. There's even the political infrastructure for that to be done in most of the major business districts around Houston, by way of Management Districts that levy a tax within their jurisdiction that is separate and independent of that from the City or from METRO.

This is an interesting discussion itself. Many people argue for regionalism in transit. I think that there's a place for that in certain kinds of transit infrastructure, but I also think that there's a place for neighborhood-level transit in certain places (and most definitely not others) for which the burden ought to be borne by those who benefit from it. The Woodlands Express is a prime example.

[TheNiche]

I think what I am most alarmed by is converting current free roads into toll roads, as Rick Perry and company propose for the TTC, a deal which would funnel profit into private companies for a road that was formerly free.

To be clear, the TTC involved having private companies build new toll roads from scratch, not the tolling of existing roads.

We built the road, we insured the bonds, and now they get to skate in and profit. Its absurd.

Actually, TXDoT operates on a pay-as-you-go requirement. Counties, municipalities, and special districts issue and guarantee bonds, the federal government can issue treasuries, but TXDoT pays with cash.

[RedScare]

To be clear, the TTC involved having private companies build new toll roads from scratch, not the tolling of existing roads.

Actually, TXDoT operates on a pay-as-you-go requirement. Counties, municipalities, and special districts issue and guarantee bonds, the federal government can issue treasuries, but TXDoT pays with cash.

Didn't we just vote to allow TxDOT to issue bonds?

http://www.keeptexasmoving.com/index.php/news/Build_America_Bonds:_An_Overview

[kylejack]

To be clear, the TTC involved having private companies build new toll roads from scratch, not the tolling of existing roads.

On existing right-of-ways secured with eminent domain or purchase by the government, like 59.

[TheNiche]

Didn't we just vote to allow TxDOT to issue bonds?

http://www.keeptexasmoving.com/index.php/news/Build_America_Bonds:_An_Overview

Dammit. The longer I'm unemployed, the more dated is my knowledge. Its like I'm de-evolving back into an ordinary jackoff. ...no more being faster than a speeding bullet, more powerful than a locomotive, or being able to leap tall buildings in a single bound. This just sucks so much.

[AtticaFlinch]

Dammit. The longer I'm unemployed, the more dated is my knowledge. Its like I'm de-evolving back into an ordinary jackoff. ...no more being faster than a speeding bullet, more powerful than a locomotive, or being able to leap tall buildings in a single bound. This just sucks so much.

Your wordsmithery is suffering too. The word is simply devolving. There's no need for fancifying it up with hypens and redundant letters.

[jfre81]

Anyway...sure, highways are supposed to pay for themselves but how does that happen when you have a fixed per-gallon gasoline tax that doesn't adjust for inflation or changing driving habits, e.g. more efficient vehicles as what's come in vogue in recent years? Seems like the gas taxes would have to be much higher for it to break even? And that's with piecemeal maintenance (look at all the potholes).

The mayor's wording was probably not best, but I think what she was getting at is not half-assing it anymore just to do things on the cheap. That's a good part of why we have what we've had.

[TheNiche]

Anyway...sure, highways are supposed to pay for themselves but how does that happen when you have a fixed per-gallon gasoline tax that doesn't adjust for inflation or changing driving habits, e.g. more efficient vehicles as what's come in vogue in recent years? Seems like the gas taxes would have to be much higher for it to break even? And that's with piecemeal maintenance (look at all the potholes).

To the best of my increasingly-dated knowledge, the gas tax goes to the State and not municipalities. So that wouldn't be an issue for Mayor Parker. Things that will be issues are whether the City's claim to some of Metro's sales taxes for road work should be returned to METRO, and/or raising City property taxes in order to cope with budgetary pressures related to pension obligations or to increase the level of services.

[ricco67]

To the best of my increasingly-dated knowledge, the gas tax goes to the State and not municipalities. So that wouldn't be an issue for Mayor Parker. Things that will be issues are whether the City's claim to some of Metro's sales taxes for road work should be returned to METRO, and/or raising City property taxes in order to cope with budgetary pressures related to pension obligations or to increase the level of services.

I would hope that Metro would get it's entire share back if the Mayor wants to drastically reduce or eliminate the fares.

Does anyone have a breakdown on how Metro's 1% is broken down to?

[jfre81]

To the best of my increasingly-dated knowledge, the gas tax goes to the State and not municipalities. So that wouldn't be an issue for Mayor Parker. Things that will be issues are whether the City's claim to some of Metro's sales taxes for road work should be returned to METRO, and/or raising City property taxes in order to cope with budgetary pressures related to pension obligations or to increase the level of services.

Good points, but I was mainly coming from the cost vs. revenue for roads and freeways in general.

Don't beat yourself up too bad over being unemployed and out of the loop on stuff that you used to know well, I know a bit about that too. We don't always agree on stuff but you keep it honest and honest is good enough.