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Lower Fare Revenue, Higher Costs: Transit Leaders Look Ahead

They have to maintain finances as they try to avoid damaging service cuts and, at the same time, push for new bus and train lines. That will require new ideas, because the old ways aren’t going to work.

An empty Metro-North train platform at Grand Central Terminal during rush hour on March 12, 2020, in New York City. In the years since the pandemic drove passengers away from transit systems, public leaders have been trying new ideas to bring riders back. But most agree that the old business model of moving riders during the rush hour is no longer working.
(Cindy Ord/Getty Images/TNS)
In Brief:
  • The leaders of BART, Sound Transit and the Southwest Ohio Regional Transit Authority discussed the future of public transit in a web panel hosted by TransitCenter. 
  • Among the trends they noted were a shift away from fare-based funding and a need to adjust service to new mobility patterns.
  • The traditional models of funding public transit have left many agencies facing a fiscal cliff that few have figured out how to address.

  • Doom is the mood in public transit these days.

    Since the pandemic began, big-city transit systems have lost riders in untold numbers and have hardly begun to bring them back. Many agencies are facing a fiscal cliff in the next few years, as federal relief funds start to dry up and traditional funding sources like farebox revenue are sure to be much lower for the foreseeable future.

    A sense of danger and dissolution prevails on many subways and buses, pushing away former riders who have the option of choosing other modes of travel, while many former commuters are working from home, probably forever. Bus drivers are in short supply, and those who are on the job face a new set of risky working conditions. Capital costs are way up, causing agencies to cancel long-promised new services. And questions persist about the trajectory of cities themselves, especially the once-vibrant downtowns around which the biggest public transit systems are built. Things are, to put a fine point on it, not looking good.

    So it was refreshing but a little bit disorienting to see a panel discussion last Wednesday afternoon titled “Hope in Trying Times: A Conversation with Transit Industry Leaders.” The panel was hosted by TransitCenter, a New York-based research and advocacy group which believes that “frequent, fast, reliable public transit is essential for cities to thrive.” It featured the heads of Bay Area Rapid Transit in San Francisco, Sound Transit in Seattle and Southwest Ohio Regional Transit Authority in Cincinnati, in conversation with TransitCenter’s acting executive director, Stephanie Lotshaw. Hope was professed, if not entirely validated.

    Fares Won’t Cut It Anymore

    In Fiscal Year 2019, BART carried 118 million riders, who paid a total of $482 million at the farebox, said Robert Powers, the agency’s general manager. By FY 2022, when ridership had already leveled out and started to slowly increase again, those numbers had cratered to 34.5 million riders and $90 million in farebox revenue, according to Powers. “Just a devastating impact on BART’s ridership,” he said.

    BART had previously led the pack on farebox recovery ratio, paying for more of its budget from fares than any other big-city system. Now it’s looking for gap funding from the state while regional planners consider longer-term solutions. The remote-work trend in San Francisco “hasn’t reached equilibrium yet,” Powers said, and in the long run, BART needs to move away from a funding model that’s reliant on fares.

    “It’s not the right model anymore,” he said.

    Julie Timm spent most of the COVID-19 pandemic leading the Greater Richmond Transit Company in Virginia before joining Seattle’s Sound Transit as CEO last summer. In Richmond, the transit agency suspended fares at the beginning of the pandemic and has extended the fare-free trial ever since. It was easier to weather the loss of revenue in a smaller system, she said. And the pandemic also encouraged changes to service patterns focused more on connecting essential workers to their jobs and less on getting commuters to city centers.

    “What we really pivoted around when it came to COVID is the essential workforce, the equity, the connectivity,” Timm said. “It’s not just about getting white-collar commuters to say, ‘This is important.’ It’s about connecting more people to more places for the economic prosperity of our entire regions. When you pivot that way, and you start really leaning into the importance of multimodal transportation ... then it starts becoming a little clearer that we can’t depend on the farebox. The farebox is a barrier to that vision.”

    Service Has to Adapt to New Travel Patterns

    Darryl Haley, the CEO and general manager at Southwest Ohio Regional Transit Authority, said that the authority responded to the pandemic by making service changes to its largely bus-based system. That included maintaining existing service and adding frequency, providing new service on Saturdays and Sundays, and introducing 24-hour service. Those adjustments helped the system keep ridership numbers up. The authority is also planning to launch a mobility-on-demand service in the Cincinnati area this year, Haley said.

    “We’ve added more service, and what we’ve experienced is our ridership has really come back.,” he said. “By the end of the year, we were back to 85 percent of pre-pandemic ridership. And in January and February of this year — and two months does not a trend make — we’re at 100 percent of our pre-pandemic ridership.”

    Transit systems around the country, including Seattle and San Francisco, are considering similar changes to service hours and frequency, recognizing that traditional 9 to 5 commuters will make up a smaller share of transit riders for some time to come. That may also entail changes to how agencies conduct repair and maintenance work, which has traditionally been done on weekends when there are fewer riders. In places like Seattle and other west coast cities where three-day, in-person workweeks are becoming more common, that work could be moved to Mondays and Fridays when ridership is lower, Timm said.

    Unlike some transit agencies that are paring back their plans for capital expansion, like Atlanta and Austin, Sound Transit will “not be changing our plans” for light rail and bus rapid transit (BRT) expansions, Timm said.

    “Our construction is based on very specific voter ballot measures that were approved and funded by our tax base, by our voters, by our riders. And we will not be slowing — well, let me rephrase that, we might slow down a little bit. There is a level setting that we need to do because of workforce shortages and because of supply chain shortages. Those things are realities we have to face, but we are not stopping,” she said.

    New Funding Paradigms Are Needed

    Cincinnati is “full steam ahead” on plans for mobility-on-demand and new BRT lines, Haley said. For BART, however, capital plans are a “variable” that the agency will consider as it tries to sort out its future budgets. Some plans will probably be rethought, Powers said.

    “There’s a lot of gradations between where we are now and stopping,” he said. “But given the financial challenges that we have going on right now, it is absolutely a variable that I need to consider as my responsibility as the general manager.”

    All transit systems are looking for new ways to maintain their finances as they try to avoid damaging service cuts and push for new bus and train lines. In Seattle, Sound Transit is considering a range of fare equity programs, including low-income fares, and Timm said the agency “needs to find other sources” of funding, including potentially leaning on big corporations with local headquarters like Amazon and Microsoft. Transit authorities need to look for new ideas, because the old ways aren’t going to work. And they need to hope for the political stars to align too.

    “I think there’s an opportunity in front of us right now, the collective us, where we fundamentally look at how public transit is funded in the United States,” Powers said. “I just think now is the time to kind of rethink that.”
    Jared Brey is a senior staff writer for Governing. He can be found on Twitter at @jaredbrey.
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