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Is It Time to Rip Out the Farebox?

Making public transit free might seem a crazy idea, but it has benefits that can outweigh the costs. It's widespread in Europe, and more American transit agencies should give it a serious look.

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We don't charge a fare for people to enjoy a walk through a public park. Does it still make sense to make them pay to ride the bus or the subway?

Fare-free public transit has long been widespread in Europe — more than two dozen cities in France and the entire country of Luxembourg provide it — but the idea has rarely been considered in the United States.

Until recently, that is. This year, Kansas City will become the first major American city to offer free trips on any city bus. In Boston, observers expect proposals for free rides on the Massachusetts Bay Transportation Authority's buses and trains to be a central issue in next year's mayoral race — the Boston Globe's editorial board endorsed the idea in January. And last month, the Los Angeles County Metropolitan Transportation Authority announced a plan to study fare-free transit for the third-largest transit agency in the United States.

One by one, transit agencies are realizing that the benefits of fare-free transit may outweigh the costs.

Removing farebox revenue from operating budgets may seem like a cataclysmic proposition. Yet few transit agencies rely on fares for more than a third of their total revenues. The Kansas City Area Transportation Authority recovers only about 10 percent of operating expenses at the farebox, according to Jameson Auten, KCATA's chief operating officer.

To make the math work, Auten and KCATA have emphasized the wider economic benefits of fare-free transit in hopes of gaining more financial support from the state of Missouri and private sponsors. "Is a dollar-fifty worth more [to the Kansas City economy] inside the farebox than outside the farebox?" Auten asked rhetorically. Indeed, a University of Missouri study on the potential economic impact of fare-free transit in Kansas City concluded that the move would increase regional GDP by between $13 million and $17.9 million.

Other benefits to fare-free transit are intuitive or a matter of simple arithmetic.

If, for example, fare-free transit leads more residents to opt against driving a privately owned car to work, roads will need less frequent repairs.

And in eliminating fares, transit agencies can also eliminate the cost of collecting the money — maintaining fareboxes and farecard vending machines and enforcing fare collection. Officials in Olympia, Wash., were persuaded to pilot fare-free transit when they projected the costs of implementing a cashless mobile app system to collect fares. "We were looking at fare-collection options that cost more to collect and process the fare than the amount of the fare," a transit agency board member told CNBC.

There's also the matter of federal funding. The Federal Transit Administration provides federal support based on the number of passengers a transit system has served during the past year. More passengers, paying or not, drive up federal subsidies.

Providing free public transit would have undeniable benefits in other ways. Cities that remain committed to the Paris Climate Agreement, for example, should view free transit as an invaluable tool for reaching their air-quality goals. Buses emit 33 percent less carbon per passenger-mile than privately owned cars, and heavy rail emits 77 percent less.

And the benefits for lower-income residents, who typically make up the largest share of public-transit commuters, would be clear. According to the U.S. Bureau of Labor Statistics, on average, Americans spend more than 15 percent of their personal budgets on transportation costs. It would be hard to imagine a more effective way of supporting low-income residents, who have suffered disproportionately during the COVID-19 crisis, than eliminating 15 percent of their expenses.

Free transit has its skeptics, of course. They argue, with evidence, that removing fares is more likely to increase transit ridership among passengers who would otherwise walk or ride a bike rather than attract passengers who would drive a privately owned vehicle.

There are also justifiable concerns that fare-free transit may attract the wrong kinds of riders while repelling some who would benefit the most. In Austin, Texas, for example, free transit was provided briefly in 1989, but fare collection resumed after city officials found that free rides attracted too many "joy-riding youth and inebriated adults" while driving away other bus riders.

So transit agencies considering doing away with the farebox would be well advised to proceed with caution. But as transportation systems emerge from COVID-19, an inflection point in regional mobility seems inevitable. No one really knows how commuting patterns or ridership might change for the long term, and to some, fare-free transit may seem unsustainable. But the idea should be on the table: A return to stability as the pandemic subsides will surely require big bets and forward-looking strategies.



Governing's opinion columns reflect the views of their authors and not necessarily those of Governing's editors or management.
Thomas Day is a senior consultant with Intueor Consulting and an adjunct lecturer at the University of Chicago. He can be reached at day@intueor.com.
Andy Wakefield is director of Intueor Consulting's Transit Operations Management Consulting practice. He can be reached at wakefield@intueor.com.
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