Here's a recession paradox: despite booming ridership, public transportation systems are raising fares, cutting back service, or both. Why? Because most of their budgets come from ever-scarcer state and local tax revenues, not from fares. The New York Times reported on the damage
recently:"In New York City, the Metropolitan Transportation Authority is considering steep fare increases and its deepest service cuts in years to help close a $1.2 billion deficit. In addition to considering a 23 percent increase in fares and tolls, the authority is weighing plans to eliminate more than two dozen city bus routes and two subway lines, reduce off-peak service and even close some subway stations at night....Big systems in Boston, Atlanta and San Francisco, and smaller ones across the nation, find themselves weighing cuts or fare increases that they fear could erode the gains they have made in attracting new riders."
Tragic, right? Irwin Kellner over at the Wall Street Journal thinks the solution is to make public transportation free
:"Raising fares is hardly the way to reward new customers much less hold onto one's existing customer base....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."
With the economy in the tank, more people than ever want
to use public transportation right now. It seems like the perfect time to expand and further subsidize service-with the understanding that any short term cash deficit is more than made up for in positive environmental externalities and the cultivation of a new ridership.But while making public transportation free might marginally increase demand, it's not going to solve the fundamental problem that public transportation systems don't have money. We should all do what we can to make sure stimulus money is set aside to bolster them.