Is $100 Million Enough to Hold on July’s Metro Fare Hikes?

4_13_10_bus.jpgAre we racing to fare hikes for no reason? Photo:

As part of the compromise allowing Governor Schwarzenegger to eliminate the gas tax and replace with with an excise tax (ABX8 6 and ABX8 9), monies collected from the diesel tax are being used to partially replace the funds being removed from the State Transit Assistance Fund (STA). Despite the removal of the transit funding mechanisms in the gas tax, these bills ensure that transit operators have steady funding for operations by using the sales tax on diesel to replenish the State Transit Assistance Fund (STA).

In L.A. County, that means that, for at least one year, that $115 million will be coming to help aide Metro and other regional operators during this time of major fare hikes and service cuts. For L.A. Metro, the agency that already has an increase on the books for this July, the nearly $100 million it will receive, $99.8 million to be exact, will go a long way in relieving the quarter of a billion structural deficit on the books for the fiscal year beginning July 1.

Some advocates are already looking at the arrival of these state funds as reason to hold off or cancel this summer’s fare hikes. Esperanza Martinez, from the Bus Rider’s Union, argues that

It should definitley go to stop the proposed 2010 fare increase, protect the 145,000 hours of bus service proposed to be cut in the 2010 budget. The proposed 2010 fare increase will bring about $24 million, the MTA could stop it with the $115 in STA funds, clearly this would help protect many of the jobs that MTA is talking about cutting.

Of course, not everyone feels that way. Other advocates have argued, and the L.A. Times agrees, that fare increases are necessary because Metro has a low percentage of its operations paid for at the fare box, 26% compared to 40% at most other major city agencies, and state money won’t change that.  A stable "farebox recovery ratio" is considered a hallmark of stable transit operations

The Metro Board of Directors hasn’t made any decisions on how to use the $115 million, or decide if it will have any impact on this summer’s hike. The state has been vague about when agencies can expect this cash infusion, and as a result the Metro Board doesn’t want to spend money until it knows when it’s arriving.

However, it does appear that the crisis for transit operations caused by repeated raids on the STA might be over.  SF Streetsblog printed the details last month.

"We see this as making great progress toward establishing stable and
reliable transit operating funding," said California Transit
Association (CTA) Spokesperson Jeff Wagner. "While it eliminates
sources of funding that transit should have been getting, it will
create a source of funding that will provide transit with far more than
it has been getting, on average."

According to the CTA, the
laws signed by Schwarzenegger will establish a baseline of $350 million
each year for transit operations starting in 2012, with allocations
projected to reach $400 million in 2016-17 and $500 million in 2020-21.
Compare that with the average annual STA allocation of $258.5 million
over the last five years and $189.9 million over the last ten years and
operators could see light at the end of a long tunnel of state transit
raids.

  • Spokker

    Even if Metro won the lottery, the base fare must be raised to $1.50.

  • Eric B

    I don’t have a problem paying $1.50 per ride, but the fare structure needs to change. BRU should concentrate their energies on discounted rides for specific groups instead of lowering everyone’s ticket price.

    Metro should move away from a pass system and take advantage of the cash-balance feature of TAP. I very rarely use Metro enough to justify a day or monthly pass, but use it all the time for just a trip or two. This must be the case with about half of their customers judging by the number of people who wait in line with me to pay cash (slowing the bus at every stop). It seems like every other smartcard system implemented by other transit agencies lets their customers hold a cash balance and just TAP as needed, never having to think about exact change, day pass, transfer, etc. I know this gets into the broader issue of TAP program failure, but why was this strategic blunder made?

    It’s bad enough having to carry singles and a quarter all the time, but having to burn two quarters per bus is going to be very inconvenient. Inconvenience –> less riders. Probably not going to push me back into my SUV, but very well might make me ride my bike more.

  • Simon

    The way TAP is implemented is just bizarrely awful. Thing just sits in my wallet, never charged or useful.

  • A cheaper fare for the poor seems attractive at first, but how would it be implemented? Would you have to sign up for an “I’m poor” card like a Senior/Disabled card for each transit system you ride?

    Seems to me that if it’s really true (just going on the above BRU claim) that the fare increase will only raise $24 million per year and there’s $100 million in new money coming in, it’s kind of hard to justify a fare increase this year (although it may be justified in a few years).

    Why create unnecessary hardship for people during a recession and lower ridership?

    I agree with Eric B that the lack of a widespread TAP debit card feature is a barrier to riding, and if some of this money can be used to fix that problem, and speed up other systems getting TAP readers, that would be good.

  • S.S. Sam Taylor

    The Metro budget gap was over $220 million earlier this year and then went down to $185 million. OK, so the state is kicking in $100 million. That still leaves a shortfall of $85 million. A fare increase: $24 million. So, we still have a gap of $61 million. The complete executive staff at Metro: $8 million, so you can’t cut from the management that has been trimmed down steadily over the last 6 years. So, what is left? Metro needs fare increases every year for the next 5 years just to get to the rate charged in Chicago, New York, San Diego and other big cities.

    Sadly, Damien is mathematically challenged in this post. And the bus rider union employees like to put out mis-truths, as that is what their owner has taught them to do.

    YIKES.

  • The BRU in the past opposed any need based discounted pass based on incomes. They said it would stigmatize the working class.

    Chewie, the structural deficit is $250 million as Damien notes. Metro needs the $100 million plus the monies the higher fares will bring in PLUS probably do some trimming of service hours and staffing to balance its budget. Waiting isn’t an option. Besides it is a transit agency not a social welfare one. Instead of building support the mindset of transit being justified as being a necessity for the poor undermines its ability to draw broad support as a public service. The BRU’s underlying stereotypes and ideology are corrosive to transit being able to be seen as a public good instead of just for a narrow subclass.

  • @ Dana

    Fair enough, if the deficit is $250 million (which I don’t see in the original post) then both the fare increase, the new intergovernmental transfer and more will be necessary just to break even.

    However, I’m not sure I agree so much with the second part of what you said. Transit in LA is mainly a social welfare service for the poor and the disabled. It also attracts some people who are neither poor nor disabled, and I hope it attracts more of them in the future. But in doing so, it should never loose sight of the reason why it has managed to survive the ascendancy of the automobile: some people just can’t drive, and they need affordable, reliable transit more than most.

  • Ahh, the $250 million deficit thing is in the link to the LA times piece. I think that’s worth making more explicit in the post.

  • Chewie, the original post notes “quarter of a billion structural deficit”.
    I think that is pretty explicit.

    Not everyone on the bus fits your narrow definition of bus rider=poor person. I don’t, for one. And transit managed to survive on the basis it is a public service not a social service. “Transit in LA is mainly a social welfare service” is a mindset that allowed 95814 to rob us of funding.

  • Earl Richards

    There is a leadership crisis in Sacramento. Why did the governor allow the budget crisis to happen in the first place?

  • Ah shit, you’re right, I skimmed right over that looking for a dollar sign (everyone makes mistakes!!!) :)

    You misread what I said though. I never said everyone on transit is poor. But to pretend like there isn’t an income element to who rides transit on average just seems a bit divorced from reality for my taste. You can prove it with census commuting figures.

    Poor people rely on transit, and while we cavalierly talk about raising fares and cutting service, they’re the ones who suffer most. Sacramento can’t get it’s shit together, and the poor pay the biggest price. Say what you want about the BRU, I appreciate the fact that they focus on access to transit as a social justice issue. That’s missing from a lot of the rhetoric about transit as a solution for the environment.

    Whatever, this recession is merciless, and there will be a lot more pain one way or the other before it’s over. That’s what I take away from this.

  • Eric B

    I think it was Human Transit that explained the best solution for the social service/public service dilemma. Essentially, you acknowledge the fact that transit serves both purposes and you budget accordingly. Assign, say, 80% of the budget to public service (running the most professional, business-like, efficient organization possible) and set aside, say, 20% to filling gaps in the social service network. This roughly parallels the split coming from the Feds between social service FTA funding from the general fund and public service funding from the gas tax.

    There will obviously be cross-pollination between these two purposes. For example, the most effective social service might be increasing frequency on a public service route above what business demand dictates. Alternatively, public service funding might find it to be a wise use of resources to increase frequency on a social service line to achieve some kind of economy of scale.

    A decent illustration might be to look at the Metro Rapid system, which commands high ridership because it fulfills the demand for a public service. Metro still operates local buses along the corridors (204, 20, 4, etc.) served by Rapid as a social service to those not willing/able to walk the half mile to the closest rapid stop. I imagine farebox recovery is much higher on the 720 than the 20.

    Thinking about it in these terms can pull us away from generalizing about “poor people take the bus” or “white people only like rail” and get us thinking in terms of providing the most effective/efficient/equitable overall service to the public at large. The “business side” of Metro would focus on service that attracts so-called discretionary riders, and probably capture decent farebox recovery by meeting a demand for transportation. The “social service side” fills in the gaps for the so-called transit-dependent and will meet that need regardless of terrible farebox recovery.

  • Spokker

    “Sacramento can’t get it’s shit together, and the poor pay the biggest price.”

    The poor and the rich pay no federal taxes in this country. The middle class gets screwed the most.

  • @ Spokker

    I agree that the poor don’t pay a lot in taxes. I believe in progressive taxation. The way our budget crises get addressed is very hard on the poor though: cut transit (they’re less likely to have cars), cut K-12 education and university subsidies (they’re less likely to be able to afford private school), etc. Anyway, we could argue this for a long time.

    Also, I wanted to come back with some evidence about income and commuting from the 2006-08 American Community Survey (really interesting stuff I think):

    In LA County
    The median income of people who drove alone to work was $35,741
    The median income of people who took transit to work was $15,998

    That’s a jaw dropping difference and the data can be found here:
    http://factfinder.census.gov/servlet/DTTable?_bm=y&-context=dt&-ds_name=ACS_2008_3YR_G00_&-CONTEXT=dt&-mt_name=ACS_2008_3YR_G2000_B08121&-tree_id=3308&-redoLog=false&-geo_id=05000US06037&-search_results=01000US&-format=&-_lang=en&-SubjectID=17554572

    That’s not to say it will always be like that, but we have to be sensitive to where we are now. I think the critical role transit plays in the lives of the poor is an argument for funding it more, not less.

  • Spokker

    I don’t know. I live under the poverty line and it’s not so bad. Tons of entitlements to take advantage of too. You can basically go to a community college/vocational school for free if your income qualifies. It’s not all bad.

  • Spokker

    “I think the critical role transit plays in the lives of the poor is an argument for funding it more, not less.”

    Supporting a fare increase is not an argument against funding it more. Some groups that are advocating a fare increase are fighting hard for more funding.

  • @ Spokker

    Hey, I agree. I’m not one to blame Metro on this. They have to balance their budget somehow. Either they raise fares, cut service, both, or they collapse. I’m more interested in getting people who aren’t riding to ride and getting more in subsidy money for transit.

  • la rider

    @Spokker

    I’ve got good news, the poor will be paying taxes just like the rest of us next year. I am also opposed to the poor paying no taxes and using kids as tax credits while the middle class suffers the tax burden while waiting to have kids.

    Our rates are too low compared to other major metros. But, it’s also not fare that drivers are much more subsidized than transit riders. Let’s increase the fare to $2 and increase services. I agree with Eric B. Run Metro like a business. Everybody I know hates the local buses. They serve no purpose. Increase red bus frequency and get rid of the non rapids. That alone would bring on a new class of riders.

  • ML

    “I’m more interested in getting people who aren’t riding to ride and getting more in subsidy money for transit.”

    I think there’s a false dichotomy there. Transit riding is not just a zero sum enterprise. There’s folks who ride transit very frequently, and folks who ride it infrequently, and folks who never do.

    I think assuming that getting the “never ride” group onto transit is the path to higher fare box recovery is dangerous. I think you’re better off looking at providing better service for those who ride less frequently — i.e. the working poor who have purchased cheap used autos, but still occasionally ride the bus.

    In a region as poor as ours, fanatically chasing after middle class “choice riders” is a waste of resources.

  • ML

    “I imagine farebox recovery is much higher on the 720 than the 20.” ( Eric B)

    As of a 2007 report on the issue

    Route 720 Subsidy per boarding: $.91
    Route 20/21 Subsidy per boarding: $1.16
    Route 18 Subsidy per boarding: $.49

    I imagine that discontinuing Route 21 has drastically changed the farebox recovery ratio for the Wilshire Local.
    But note how much lower the subsidy is for Route 18 (6th street and Whittier Blvds)

    I personally like and use local busses, especially the 16 and the 18 . And I think they are the only service that makes any sense for “owl” runs.

  • @ ML

    I don’t care whether someone has never ridden transit before or only rides a bit, I want everyone I can convince to ride more. I don’t care so much where the support comes from, as long as there’s more support. I don’t want to write people off just because they’re affluent.

  • spokker

    No problem, chewie. We all want to see transit become more successful.

  • One problem with raising the fares to the levels that other municipalities (NYC, SF) charge is with the structure of LA Metro (and most other Southern California operators, with the minor exception of Foothill). Fares in SF and NYC aren’t charged per boarding, they’re charged per trip. $2 on Muni gets you 90 minutes of access to the system, any line, any direction- many quick errands (or grabbing a quick bite to eat) can be accomplished with only one fare. $2.25 on MTA gets you all the subway you can eat- from north Bronx to outer Queens if you like- plus one free bus transfer, or 2 hours of free bus transfers. In LA, if you want to get to Long Beach from Union Station, that little trip on the Red Line costs the same $1.25 as the Blue Line all the way to Long Beach.

    If you want to re-structure the way fares are calculated, sure, Metro could start charging $2 or $2.50 a ride, but under the present system those fares are ridiculous.

    (For the record, I’m fine with an increase to $1.50- those of us out in the ‘burbs have been paying $1.50 for a year or two now: OCTA, Omnitrans, RTA, Corona are all $1.50 a ride. Foothill is still weird.)

  • Eric B

    @ Justin N,

    I hope Metro is listening. TAP technology makes a lot of what you say possible. About time they use it.

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