Public Transportation ROI Continues to Decline

In many instances, public transportation is presented as a panacea to reduce road traffic congestion. But is that an accurate proposition, and does the empirical evidence point to increasing use of public transportation accompanied by a corresponding decrease in traffic congestion? Another key question is whether public transportation is financially sustainable. On both counts, the data is clear: public transportation ridership has been consistently declining since 2008 (with one major exception in New York City), and the taxpayer subsidies necessary to cover the operation of public transportation systems is consistently increasing.

The graph above provides a stark picture of the decrease in ridership (green bars), despite increases in service (measured as vehicle revenue miles). Locally, Atlanta has actually reduced service by 1.7%, but saw a 5% reduction in ridership.

How are some public transportation systems seeking to stem the reduction in ridership? Well, in Worcester, MA, they are considering eliminating transit fares. Currently, the Worcester Regional Transit Authority subsidizes 86% of the agency’s operating costs. Under their proposal, fares would not exist and taxpayers would cover the full burden of operating costs. This doesn’t even begin to consider the capital costs associated with running a transportation system.

New York City’s Metropolitan Transit Authority (MTA) represents the high mark of fare recovery where 52% of operating costs are sourced from riders’ fares.

The transit industry ignores fare recovery as a performance metric, just as it has begun to turn away from ridership as a measure of success. Instead, new measures are being touted such as the number of community based organization events are sponsored/attended by transit staff, and the number of new housing units located within 1/2 mile or a transit station. None of these measures speak to the economic viability and return on taxpayer investment.

It is informative to consider the source of public transportation investment and expansion programs. Dig deeply enough and you’ll realize that developers and politicians feature prominently (and interestingly enough, not so prominently behind vaguely named organizations). When faced with a choice regarding public transportation expansion, be sure to closely examine the return on investment, and question whether you’re being asked to fund a long-term financial drain in order to benefit those positioned to gain on that back of that investment.

Ed Thompson1 Comment