Thursday, October 20, 2005
Good news and bad news for transit
Good news: High gas prices have increased transit ridership by 13.8 percent.
Bad news: High gas prices have increased transit costs by 2.2 percent (i.e., 2.2 percent more than costs were expected to increase) -- and revenue from the new riders is not covering this added cost.
This is a memo from the general manager of Madison, Wisconsin's transit agency, but similar memos are probably going out from the general managers of most transit agencies in the country. Madison Metro's solution is more taxes -- specifically, the general manager would like to have the power to tax the entire Madison metropolitan area.
Yet this only shows the deepness of the dark pit that transit has fallen into. We accept the proposition that transit will lose money, so we completely lose sight of any need to contain costs. With bloated costs, transit riders pay such a small fraction of operating costs -- in Madison Metro's case, just 17 percent -- that the system is extremely vulnerable to a tiny change in operating costs (link will download Madison Metro's transit profile for 2003).
Just what would Madison Metro do if it had regional tax authority? Raise taxes every time fuel prices go up? Of course not; taxpayers wouldn't stand for it. So the system would be just as vulnerable to changes in operating costs as it is today. The general manager is merely using fuel prices as an excuse to get more tax subsidies.
The only real solution is to get transit riders to pay a greater share of costs. If they did, then transit agencies would be less vulnerable to changes in fuel prices and would also be more inclined to provide better services so they can earn more revenue. This doesn't mean increasng transit fares. It means reducing costs.
How do you reduce transit costs? Here's a hint: 79 percent of Madison Metro's costs are labor, while fuel and other supplies are less than 7 percent. This suggests that the real problem is that transit agencies are so beholden to unions that they are unable to address their bloated labor costs.
By comparison, Las Vegas's transit agency contracts out all of its bus operations to private non-union operators. Fares cover 39 percent of expenses, and costs per passenger mile and costs per rider are both less than 60 percent of Madison Metro's. During the 1990s, Las Vegas saw a huge increase in transit ridership, while Madison Metro's ridership was stagnant.
Is the purpose of transit to give people mobility? Or is it to give labor unions more members and power? Transit can't do both, so we have to make a choice.
Bad news: High gas prices have increased transit costs by 2.2 percent (i.e., 2.2 percent more than costs were expected to increase) -- and revenue from the new riders is not covering this added cost.
This is a memo from the general manager of Madison, Wisconsin's transit agency, but similar memos are probably going out from the general managers of most transit agencies in the country. Madison Metro's solution is more taxes -- specifically, the general manager would like to have the power to tax the entire Madison metropolitan area.
Yet this only shows the deepness of the dark pit that transit has fallen into. We accept the proposition that transit will lose money, so we completely lose sight of any need to contain costs. With bloated costs, transit riders pay such a small fraction of operating costs -- in Madison Metro's case, just 17 percent -- that the system is extremely vulnerable to a tiny change in operating costs (link will download Madison Metro's transit profile for 2003).
Just what would Madison Metro do if it had regional tax authority? Raise taxes every time fuel prices go up? Of course not; taxpayers wouldn't stand for it. So the system would be just as vulnerable to changes in operating costs as it is today. The general manager is merely using fuel prices as an excuse to get more tax subsidies.
The only real solution is to get transit riders to pay a greater share of costs. If they did, then transit agencies would be less vulnerable to changes in fuel prices and would also be more inclined to provide better services so they can earn more revenue. This doesn't mean increasng transit fares. It means reducing costs.
How do you reduce transit costs? Here's a hint: 79 percent of Madison Metro's costs are labor, while fuel and other supplies are less than 7 percent. This suggests that the real problem is that transit agencies are so beholden to unions that they are unable to address their bloated labor costs.
By comparison, Las Vegas's transit agency contracts out all of its bus operations to private non-union operators. Fares cover 39 percent of expenses, and costs per passenger mile and costs per rider are both less than 60 percent of Madison Metro's. During the 1990s, Las Vegas saw a huge increase in transit ridership, while Madison Metro's ridership was stagnant.
Is the purpose of transit to give people mobility? Or is it to give labor unions more members and power? Transit can't do both, so we have to make a choice.
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