Mass-Transit Fares Should be Eliminated, Not Increased

Mass-transit transit fares should be eliminated, not increased
By Irwin Kellner, MarketWatch
Feb. 9, 2009

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PORT WASHINGTON, N.Y. (MarketWatch) -- All across the country, mass-transit systems are raising fares and reducing service when our national priorities suggest that they should be doing just the opposite.
In doing this, these systems are taking a very narrow view of their reason for being. They are looking at themselves the way a private business does -- balancing costs versus revenues.
Because they think like a private concern, they are responding to rising costs and reduced subsidies from their governments by increasing fares and, in some instances, cutting back on service, as well.
Instead, they should consider themselves in a broader context. They are organizations whose mission is more than simply transporting people from their homes to their offices in the morning and back in the evening. They exist to provide the best quality of life for everyone who lives in the regions they serve.
By raising fares and cutting service at this time, they are doing a disservice to the communities they serve.
For one thing, ridership is up. This is in response to last year's surge in gas prices to $4 a gallon and more. And even though such costs have since fallen, most riders are sticking with their trains and busses, having discovered the joys of reading, writing or simply napping while commuting.
Raising fares is hardly the way to reward new customers much less hold onto one's existing customer base.
What's more, they come at a time when what is arguably the worst recession in at least a quarter of a century is squeezing those who rely on mass transit the most -- people of modest means whose incomes are on the low end of the scale. And when accompanied by service cuts, this is depressing buying power even more by forcing many people to resort to a car as a means of getting to work -- assuming they can afford to do this in the first place.
Keep in mind that Washington wants to reduce our dependence on foreign oil and is trying to get cities to clean up their air. You don't have to be a rocket scientist to realize that forcing commuters back into their cars will have just the opposite effect, both on our use of foreign oil and in polluting the air.
Not only should fares be lowered and service improved there is a good case that can be made to eliminate fares altogether. That's right, Virginia, make mass transit free!
This is not as far-fetched as it looks. On average, the fare box covers only one-third of the cost of a typical mass transit ride. The rest is made up with dedicated taxes, subsidies from state and local governments, and tolls.
Clearly, if these sources cover two-thirds of a ride, how much do you think taxes, subsidies and tolls would have to rise to take over the remaining third? The answer: not much.
Some of these funds can come from Washington's stimulus package.
Right now federal money for states and local governments is aimed at big capital projects such as buying new trains or busses. But what is the point of buying new transit equipment if the local systems are mothballing their fleet because of service cuts?
Better to use these funds to help eliminate fares and maintain or increase service. It also avoids the government giving people tax cuts with one hand while taking them away with the other.
Besides help from Washington, local governments can raise tolls, perhaps by charging congestion pricing, as a means of both raising revenue and convincing motorists to switch to mass transit.
Regional economies would benefit from the increased purchasing power that comes from free transit. Cities would have no trouble complying with federal clean air rules. And those who must use their cars to get to work would be allowed to, only they would have to pay more.
Best of all, no new infrastructure would be required. To avoid overcrowding existing transit facilities, businesses could stagger the work day and maybe even the work week.
A win-win solution, if I ever saw one. End of Story
Irwin Kellner is chief economist for MarketWatch, and is Distinguished Scholar of Economics at Dowling College in Oakdale, N.Y.