Is Public Transit Bankrupt?

March 31, 2010


With the announcement this week by Sacramento Regional Transit that it is reducing bus and train service by 22 percent, it’s never too late to address the problems faced by the chronic deficit-plagued transit systems in the state.

The American Public Transportation System (APTS) reported last year that the impact of America’s economic downturn on public transit systems is widespread because of declines in real estate transactions, property tax collections and sales tax revenue.

What these government-run transit systems fail to acknowledge is they cannot sustain ridership while cutting services and raising prices, at the same time as they continue to expand light rail train lines to sparse service areas.

Bus systems worked fairly efficiently up until the 1970’s, primarily moving people from where they lived, to places of work and shopping, according to many observers. Then when light rail trains came along, bus lines were altered to feed the trains instead of continuing to move people where they needed to go. It was a “If you build it, they will come” mindset. However, in many cities, not enough train riders ever came.

Currently, more than 80 percent of systems have seen flat or decreased funding from state sources according to the 2009 APTS report. “Among those systems facing a decrease, the average decline was more than 20 percent.  In some states these cuts are quite substantial.  For example, all transit systems in California are facing the complete elimination of state funding. Gov. Arnold Schwarzenegger recently signed the “gas tax swap” package, restoring funding to the State Transit Assistance (STA) program that was eliminated last year.  However, declines are seen in local and regional funding,” reported the APTS.

The report reveals that among those public transit systems reducing service, nearly 65 percent have eliminated or reduced off-peak service and 48 percent have reduced the coverage of public transit service.

Last July, San Francisco’s Bay Area Rapid Transportation District, raised fares by 6 percent and added a 25-cent “surcharge” for all commuter rides between San Francisco and the East Bay, a 2 percent increase to fares, more expensive parking rates and cuts to service, to cover a $25.2 million midyear deficit, according to a San Francisco Examiner story in January.

On the Frum Forum last April, Jeremy Carl wrote, “San Francisco’s inefficient, public sector monopoly rapid transit company, BART, is now running a large deficit. BART’S answer is to further cut service and raise prices (just the opposite of which any privately run entity would do.) This will have the effect of further depressing ridership and putting the system further into long term deficit.”

San Francisco’s BART rail line is expanding to the airport even with only about 60 percent of the ridership that was projected by rail experts to justify the massive and costly rail expansion. Sacramento is also proceeding with a light rail line to the airport and to a development outside of town that has not even been built.

In a December op ed I wrote for The Sacramento Bee about Regional Transit In Sacramento, research revealed while Regional Transit’s budget has exponentially increased in size since the 1970’s, the ridership has not kept up with the budget increases. This can be tied directly to Light Rail, which has been a financial drain on Regional Transit since its inception. The number of Regional Transit employees has also increased, perhaps reflecting the massive budget increases, but the ridership is not justifying the increases.

  • In 1974-75 the RT operating budget was approximately $9.6 million, bus ridership was 12.5 million with just 418 employees.
  • By 1990, the operating budget was $40.6 million with a ridership of 14 million on buses and 5.7 million on trains, and 652 employees.
  • In 2009, RT claims to have 32 million riders, 1200 employees and boasts an annual budget of $148.5 million. Sacramento’s population stands at around 2 million for the region.

RT General Manager Mike Wiley was quoted last October in The Sacramento Bee defending the continuing expansion, “Better to get these projects in place now. It will be more expensive later,”

The Texas Transportation Institute at Texas A&M issued a “mobility report” in 2009 which measured the typical travel delays, excess fuel consumption, and congestion cost for commuters in the nation’s major urban areas. The research found that all five of the most congested and traffic-plagued cities either invested in humongous mass transit experiments designed to reduce that congestion (Los Angeles, Atlanta, Miami, Dallas-Fort Worth) or else they boasted older, well-established, vast rail systems much-praised by urban planners (New York City, Chicago). The rankings in this mobility report give no indication that these projects do anything to solve the problem. Of the 15 cities with the worst delays, every one of them has invested huge sums in rail mass transit, without experiencing improvement on the highways.

As the Washington Policy Center aptly concluded, “light rail is expensive and it requires significant public assistance. On average, West Coast light rail systems need taxpayer subsidies to pay for 73 percent of operations and 100 percent of capital improvements each year.”

California cities subsidize free bus and light rail passes for welfare clients, and in Sacramento, state employees receive 75 percent discounts on bus and light rail service.

With 28 of Sacramento Regional Transit’s 91 weekday bus routes about to be eliminated, it appears that the light rail train system is being spared much needed cuts, and 200 of the 1,200 RT employees will be cut instead of the planned 300 employees to be cut.

Instead of real, meaningful cuts to costly light rail train systems, public transit agencies are cutting bus service – the only transit service that is regularly used to capacity.


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  1. Steve
    Steve 31 March, 2010, 12:42

    A very thought-provoking article.
    I agree that buses are more efficient in that they don’t require a new, dedicated infrastructure and their routes can easily be changed to match changes in commute patterns. Rail does not enjoy those advantages, although for this same reason they avoid traffic congestion and have much better on-time records than buses do. In any event, I think a good case can be made to put scarce dollars into preserving bus service rather than expanding rail service.

    I’m less convinced of the article’s suggestion that public transit should act more like a private business. Normal market signals don’t really work here. Even with fare increases, riders of public transit are still receiving a subsidy. And the beneficiaries of public transit are not simply the riders — the reduction in traffic congestion, parking congestion, and air pollution benefit the broader public. This is one reason that the public subsizes transit in the first place.

    The real issue here, I think, is not so much that transit agencies are raising fares or cutting service. The issue is that government is reducing funding for transit. I understand that government leaders don’t have much choice but to make cuts in this fiscal environment, but I sure wouldn’t blame transit agencies for raising fares and cutting service.

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  2. James Hawn
    James Hawn 31 March, 2010, 14:57

    Why in the world would the various forms of so-called public transportation entities operated by governmental bodies, do anything that makes sense or that has any real merit at this late date.

    I have been around long enough to remember the Red and Green lines (and others) of Los Angeles that really operated quite well. However, the bureaucrats thought as always that they knew better, and removed all such forms of functioning services at a tremendous cost to the taxpayer, and then replaced a working system, with bus line system that has never operated properly and is far more expensive to maintain.

    Now there exists a massive and inoperative system that does not function adequately, that in all reality few people use, since it really does not and was not intended to function usefully for the citizens, it was really meant to be nothing more than a Brownie Button for the bureaucrats, little different than most governments program. Does little, serves few, and costs more than enough for all to use. You just have to love our government officials and what they believe is good for us, since we are incapable of knowing what is best for ourselves.

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  3. Norris Hall
    Norris Hall 6 May, 2010, 07:22

    Sacramento public transportation is a joke.
    I just came back from a trip to Vancouver, Victoria and Seattle. Our group was able to get from downtown to the airport on public transportation in all those cities.
    When I got into Sacramento airport, our only alternative was taxi or shuttle bus. We took a shuttle bus. It cost us 5 times more than the light rail from downtown Seattle to SEATAC airport…a 40 minute trip.
    No public transportation to and from the airport? Sac international will never be a major airport hub no matter how many terminals they build.
    Without public transportation to and fron the airport you have too choices. Leave your car parked at the airport , rent a car, or take a taxi….all very expensive

    Reply this comment
  4. Michael Sexton
    Michael Sexton 11 May, 2010, 04:59

    Public transit is not a decongestant. It will only gain usage when there is congestion, so the article’s inference that because transit is placed in major urban areas with congestion it does not work is illogical. I am not suggesting that all is right with the current “politically correct” notion that public transit can do no wrong, but transit does have its place — regardless of what you say — as an example, how can you measure the benefits of reduction in parking spaces needed in downtown San Francisco — and its attendant increase in development?

    Reply this comment
  5. Jonathan
    Jonathan 15 November, 2010, 05:24

    Transit service in St. John’s, Newfoundland seems to be becoming obsolete now. Metrobus (St. John’s transit service) ridership has been in decline since 2006, and now there is a transit strike happening with which there is no end in sight. The strike will cause a deficit if it goes on long enough. If the strike lasts long enough, they will have to raise the fares sky high to make up for lost revenue. Before the strike, we paid $2.25 for riding the bus; if the strike goes on long enough I have a feeling they will be increasing to $3.00, and if that high public transit in St. John’s may end up becoming a luxury. $3.00 adult cash fare will keep riders away, and the company may end up on the verge of bankruptcy in due time. It wouldn’t surprise me if Metrobus in St. John’s loses riders after the strike ends, and I wouldn’t be surprised if they declare bankruptcy because of a significant drop in ridership and not being able to afford to continue operations. 2011 is looking to be a grim year for public transit in St. John’s, IMO.

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