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Monday, August 06, 2007

Such a deal for transit riders

Commuters' fares fall short of fair share

By Dennis Byrne
Chicago Tribune

Did you know that every time a CTA rider pays his fare, you figuratively match it? Two bucks from him, almost two bucks from us taxpayers.

Pace suburban bus riders get more from taxpayers: We pick up about two-thirds of the tab. Even though Metra serves some high-tone suburbs, we cough up 45 percent of its costs.

These facts have been strangely overlooked in the legislature's fight over increased state subsidies for the CTA, Metra and Pace. The state already gives Chicago-area transit about a half-billion dollars a year but still the halls of the state Capitol reverberate with threats of big service cuts and higher fares unless Illinois taxpayers come up with yet more money for mass transit.

The arguments for a subsidized mass transit system are well-worn but legitimate: It's transportation for people who can't afford to drive and a sensible alternative for those who can, it reduces pollution and energy consumption, it helps direct sensible land use in the suburbs and so forth.

In a nod to its importance, the Illinois General Assembly in the early 1970s started providing annual mass-transit subsidies, through the newly created RTA. But lawmakers thought that the taxpayers shouldn't pay for all the costs, so they created a requirement that the riders in the aggregate must pay for at least half of the total costs. In other words, if the total cost of mass transit in the region was $500 million, riders would have to pay at least $250 million, and the rest could come from other sources, namely government subsidies. If the total cost increased $100 million, to $600 million, riders' fares would have to generate $300 million. Obviously, that would require a fare increase.

But why was their share set at 50 percent? Why not 60 percent or 75 percent? Fifty percent was an arbitrary number that was determined by political compromise; there's nothing magical about it. Indeed, New York City and District of Columbia riders pay a higher share of the cost of their rides.

If CTA riders, for example, were required to pay 60 percent of the total cost, it would generate well more than the $110 million that the CTA wants in increased subsidies this year. Yes, it would require a basic fare increase of roughly 38 cents. But more creative ways are available for increasing fare revenues other than an across-the-board hike. One would be a higher rush-hour fare, when it can be justified by higher demand.

Of course, the RTA and the local transit boards could raise the fares on their own authority because the state-mandated 50 percent rider share is only a minimum. But politically speaking, it would be easier for the legislature to take the heat by forcing a higher rider share. Chicago Mayor Richard M. Daley would be able to say that the legislature made us do it.

Think about it. We don't pay half a motorist's costs when he drives to work or goes shopping. When gas costs $3 a gallon, he pays $3 a gallon, and a $1.50 check doesn't arrive later. Airline passengers and freight shippers don't get this kind of break either; their customers pay most of the costs. Yes, there's an argument that government provides motorists and truckers "huge" subsidies through highway construction and maintenance. But those subsidies fall far short of half the cost of highways; most of those costs are paid by the motor fuel tax, which is a user tax. No similar user tax exists for transit users; in fact, the biggest transit subsidy here comes from a six-county RTA sales tax, which falls on all of us.

Suggesting a fare increase is memorialized as "touching the third rail." Doing so immediately makes you an enemy of the poor, as if the only people who ride trains and buses are scraping out a living in bum jobs or on welfare. They're not; those who are too poor to afford a fare increase should be helped in other ways than by giving a subsidy to every rider, whether or not he needs it.

Transit riders have generally escaped the huge energy cost increases that have afflicted all forms of transportation. And they have benefited from the political cowardice of politicians and transit boards that have failed to impose regular, reasonable increases. A state mandate requiring that riders pay a bigger share of their costs is the only way to ensure more realistic fares.

Of course, there'll be carping, e.g., "I shouldn't have to pay one penny more for such rotten service," even though the criticism is unfairly broad-brush. But here's a thought for the crabbers: The next time you're furious about your late bus or train, maybe things would be better if you paid more of your share.


Jeff said...

I support everyone paying their fair share and don't believe that subsidies and government controls benefit in the long run.

However, let's not conveniently forget the benefits drivers receive today:
- Most transit riders in my neighborhood have a transit price which makes them a driver instead of a rider (this is even more the case for families which might pay $20 for a roadtrip on the CTA)
- mass transit keeps road costs down, keeps travel times down, and keeps parking costs down --- thus everyone is benefiting significantly by their tax payment. For example, if more people start driving downtown, I will be willing to bet parking prices rise within a month.
- In the broader view of the world, consider the "gas/oil" subsidy that the US govt has invested on energy over the last century. The USA and other civilized countries have "invested" in supporting puppet govt, dictators, and kings in the middle east to ensure cheap energy
- supporting false govts in the middle east (which has been done by every country and both political parties) has led to a majority of the issues today including the Iraq war. I hate to say this, but I read it recently - the middle east would be treated like Africa if we didn't need their oil - and the govt and terrorists wouldn't have had the reasons nor the money if we had invested in energy independence
- In the end, this is the past and today....the military / war costs are extraordinary.

I would therefore suggest our country needs to invest in more ways to become energy independent instead of less. Clearly the RTA (Metra, Pace, and CTA) may need to be more efficient (and let's ensure this)....but let's be clear we need to encourage and not discourage energy independence. And drivers (which include me) are getting a great deal and have the cheapest gas prices in any civilized country in the world.


Marie said...

While it may be true that CTA users may need to pay more, there are valid reasons for government to encourage use of public transportation - improving traffic congestion and air pollution with fewer cars in a city. We often travel to Portland, OR, which has a great public transportation system including a "fareless square" in the downtown area where all public transportation is free. It is heavily used, clean, safe and cuts down on car traffic and air pollution in the city. Here is a link to the fareless square:


lake county democrat said...

Unfair Dennis -- you didn't quantify any of the savings to society that bus/train riders give to the rest of you. How much is all the saved time from less traffic jams worth? Millions (combined)? Billions? And remember we don't have a crosstown expressway. Similarly, what would happen to air polution if we took, oh, 20% of the commuters off Metra and into cars?

Anonymous said...

I believe your position should not be about raising fares, but rather holding RTA/CTA accountable for their costs. Raising fares will put CTA beyond the threshold where it will be better for more riders to drive. Today, at $2.00 a ride, it costs my wife and I $8.00 a day to take CTA to work in downtown. We are currently able to park downtown for $9.00 at early bird rates. The extra $1.00 plus the cost of gas (we calculate it at $3.00 a day) plus the convenience of not having rely on what has become an unreliable service (our once consistent 45 minute door to door public transit commute has turned into anywhere from 60 to 80 minutes), forces us to drive to work more often than we would like. Further rate increases will only cause more individuals to choose to drive versus take public transportation, placing additional burden on those who don't have the option to drive. RTA and CTA need to cut the fat, become operationally efficient and then push for state and federal funding to make capital improvements to their aging and crumbling infrastructure.

Dennis Byrne said...

As I acknowledged, the motoring public does receive substantial subsidies. One that you failed to mention was the outrageous ones given to the ethanol industry. Yet, those subsidies still don't amount to half the cost of every trip taken by a motorist

Dennis Byrne said...

Dear Lake County,

And how do you quantify all the benefits of the mobility that cars, trucks and highways provide to the nation? Despite their downside, the contributions to the GDP of cars to the freedom of movement are probably incalculable. Again, I'm not against transit subsidies, but I am in favor a careful questioning of assumptions that have been treated, without thought, as sacred cows.

Matt M. said...

Mr. Bryne has a good point that riders should pick up more of their share. However, he avoids the obvious benefits of mass transit including:
-Less traffic. Less traffic means less wasted time and greater productivity. Imagine the financial toll of everyone presently taking mass transit taking to the roads.
-Less pollution. One Metra locomotive moving 1200 persons creates a tiny fraction of the CO that would emit from the 400K daily Metra riders alone.
Moreover, as a U of C graduate student in transportation/economic geography, I researched thoroughly the subsidies provided by the federal government--and to lesser extents states and localities---to building highways. Mr. Bryne's references are not based on historical evidence nor current facts. Trucks that state phrase such as "this truck pays $4800 in annual roadway taxes," ignore the well known fact that a semi-truck causes as much damage in one pass as 9300 automobiles (DOT). Having an opinion is the nature of his columns, but like all columnists, Mr. Bryne is a journalist, not an avowed expert on transit. Simply writing opinion should not be taken as factual information instead of the fiction it is. For example, trucks in particular, but all highway users, enjoy a hugely subsidized ride courtesy of the federal government. Highways and bridges also cost several times more to accomodate truck traffic.
General Motors spent millions to destroy Chicago's surface streetcar system (and most notoriously Southern California's extensive system) by promoting busses and cars as the future of mass transit.
The real issue is not paying one "fair share," but a more thoughtful examination of the need for greater mass transit throughout the city and region that enhances everyone's quality of life. Hopefully, this will be the focus of a future column and follow-up discussion if, as he states in his blog opening, that is the purpose of his writing.

lake county democrat said...

Dennis, I don't diminish those benefits in the least, I'm arguing that transit subsidies, by encouraging Metra and CTA ridership, empowers those same car drivers and truckers.

And here's a benefit that's hard to quantify: the war on terror. If subsidies reduce oil consumption, that's less money propping up Iran (note that their economy is so shaky they just started gas rationing) and filtering through Saudi Arabia to the wahabbi extremists. It might not be the most efficient way to do that (I prefer a gasoline "non-tax" where prices go up $1/gal but you get the amount refunded at the end of the year -- a lot of people would conserve now and spend the rebate on something else later), but it's definitely a positive.

Dennis Byrne said...

Dear Matt,

Yeah, well I have a master's degree in urban affairs from the University of Wisconsin, and covered transportation (including mass transit) for a decade for the Chicago Daily News and the Chicago Sun-Times, so I guess that makes me an expert too, but what has that have to do with anything? The issue at hand is whether, as a way out of the present mass transit funding crisis, riders should have to pay, say, 5 or 10 percentage points more of the share of their ride. Going on and on about how much subsidies motorists and truckers receive--and I still don't see any hard figures that show they get more than transit riders--doesn't address the issue head on. By the way, not included in the cost of the transit ride that I'm discussing is the federal, state and local capital assistance that pay for buses, trains, bridges, elevated structures, rights of way, subways and so forth, but as an expert, you knew that already.

Dan L said...

Unfair Dennis -- you didn't quantify any of the savings to society that bus/train riders give to the rest of you. How much is all the saved time from less traffic jams worth? Millions (combined)?

Ok. I'll call your bluff. Let's close the CTA down and see just how many of the CTA mouthy can actually afford cars.

No really!! Let's do it!!

The self-entitlement, nay this completely unsubstantiated belief that we owe cta riders is something that drives me nuts.

Anonymous said...

Oh tisk, tisk Dennis. Seems you are a bit defensive about your "expertise" in urban affairs. Does that expertise extend to chemistry, foreign affairs, economics, and health care as well? Guess you are 99.9999% certain - right?

Anonymous said...

Dennis said "As I acknowledged, the motoring public does receive substantial subsidies. One that you failed to mention was the outrageous ones given to the ethanol industry. Yet, those subsidies still don't amount to half the cost of every trip taken by a motorist"

That argument is weak. You cannot compare the cost of a single rider in a Hummer and one in a CTA bus and say federal subsidies are not equal on a percentage basis per ride. It costs a lot more to ride in that Hummer than it does to ride on that bus. Maybe you should go back to UW for classes in math and logic.

Matt M said...

I never said I was "an expert." You did. I only attempted to provide some authenticity to my blog. I agree with fellow blogger that UW should add logic and common courtesy to its core curriculum. But as a UW alum and transit expert, you already knew that........

pc said...

Simply looking at the line item figures for transit and driving does not provide an adequate accounting of the costs that we, as a society, will end up paying.

All economic actions have "externalities," which are costs or benefits that are outside the direct transaction. For instance, let's say that I run a paper mill next door to your house, and dump the sludge into a stream that runs downhill into your yard. The noise, smell, and sludge don't bother me, since I profit, but they will cost you dearly.

It turns out that driving is an activity which has low internal costs (once you own a car, gas is practically the only marginal cost) and very high external costs -- whereas transit has high internal costs but even higher external benefits. Even worse for transit, its external benefits are very widely diffused, while driving directly and obviously benefits the driver.

For example, direct proximity to transit typically improves property values much more so than access to a road; this is especially the case in downtown Chicago, and you could even say that access to railroads is what built Chicago in the first place. Yet all that property value created by the railroads largely did not accrue to the railroads -- it benefited third parties. Similarly, properties in the Loop (which generate untold billions in property, sales, income, payroll, and other taxes) wouldn't be generating nearly as much economic activity in the absence of transit; after all, that's how half the people get there. In fact, that's why most of America's streetcars were built by property speculators, and why the world's only profitable subway system (in Hong Kong) is a subsidiary of a huge property corporation.

In the past, Dennis, you've doubted whether downtown Chicago is an anachronism. I'll tell you that it's not. Even as old face-to-face standbys like the trading pits disappear, industries remain concentrated downtown due to what are called "agglomeration economies." More than half of the region's office space is downtown, and that proportion is actually increasing -- as it is in Washington and New York City, the nation's two other "fortress downtowns." More importantly, offices rent for 30% more downtown, and apparently firms think it's worth the premium. In fact, transit is the big reason behind that: three-fourths of downtown executives surveyed in 2002 cited access to transit (and, more importantly, the huge labor pool it moves) as the biggest factor in their location.

Like participation in the arts, use of parks, or attendance at public schools, transit is a public service that all of us benefit from even if we do not consume the service. In particular, transit makes the compact urban form of downtown and of many neighborhoods possible -- you could not re-create a great walking neighborhood like Lakeview or Wicker Park with adequate parking for every visitor, since the parking lots would push everything out of walking distance. Without transit, and without the compact urban form that transit generates (both downtown and in the neighborhoods), Chicago really has little to recommend it over Atlanta or Indianapolis or Phoenix. I don't even usually commute by transit, but I appreciate that the endlessly fascinating city that's right at my doorstep is made possible by transit. In LA, where my family lives, there are also two baseball teams, an opera house, and great restaurants -- but they might as well not exist, since it takes hours of hand-to-hand combat on the freeways to get to any of them. That's not so in Chicago, thanks to transit.

On the other hand, driving is an activity that benefits pretty much only the driver while imposing considerable costs on the rest of society. Every additional car on the road costs every car behind it time, and that adds up. Surely, as a transportation reporter, you've heard of the Texas Transportation Institute's annual Urban Mobility Report. Well, those guys calculate that transit in the Chicago region saves every single rush-hour driver 22 hours of traffic jams a year -- that's time worth nearly $1.6 billion a year, just in productivity savings to rush-hour drivers! (As you might know, that figure is nearly twice the RTA's annual taxpayer subsidy.)

Others have attempted to calculate the full external costs of driving to Americans, and to the Chicago region in particular. A 1995 study looking just at the rather direct fiscal costs of roads to local governments found that Chicago-area governments spent one-third more on roads than they received in taxes and fees from road users. A number of studies have attempted to quantify a number of fuzzier costs to the public purse, like health care (to treat crash victims or asthma sufferers like me), securing oil supplies from the Middle East and elsewhere, and environmental degradation (half of all tailpipe emissions worldwide come from American cars). Six different studies from the 1990s -- before, I might note, we had a set price for carbon dioxide -- estimate that each car costs society anywhere from $2,000 to $5,000 a year, over and above what the owner pays to operate it. On a per-gallon basis, those estimates range from $3 to $7 per gallon in social costs. So yes, in fact, we taxpayers do"pay half a motorist's costs when he drives to work or goes shopping."

So, there you go: one economic argument for why we "subsidize transit."

Oh yeah, and NYC Transit and Metrorail cover more of their costs from the farebox because their boundaries are more tightly drawn -- neither of them operate money-losing suburban buses.

Doug Gries said...

Dennis, maybe we could extend this idea of ala carte (pay by yourself) public service to other sectors. I have been paying taxes in Chicago/Illinois for over 12 years and I do not and have never had any children. Why should I be paying for other kids education? Do you think I'm deserving of a refund for my money that supported the education of other people's children? Shouldn't only those who have kids pay for their education? Also, I didn't use the Chicago parks or libraries much last year - shouldn't only those that use them pay? Every park could have a toll gate and the libraries could charge an entrance fee. Do you get it? There are some things that need to be supported for the betterment of society and I can't think of many better than public transportation. Why is 50% not a reasonable share to pay? What is and why?

El Rider said...

I am a daily user of the CTA (the el's red and brown lines) and I must say that Dennis has a pretty good point concerning all transit riders paying more of their "fair" share. The $1.85 that I pay for a 1-way ride on the el system is an absolute steal as is the less than $4.00 fare that I recently paid to travel from Clyborn to Indian Hill on the Metra North Line. Besides it's not like we are talking about Wisconsin, the roads in Illinois are terrible and any complaints about the CTA are comparable to complaints about the roads here, especially in parts of the south side of Chicago. The commenter who wondered how many CTA riders would take to their cars is also right on the money, if twenty-five cents is going to get one off of the el the $20+ daily parking fees are going to send one right back to the el. Keep up the good work Dennis.