Thursday, January 13, 2011

Stu's proposal for funding transit

Let's come up with a sensible method for funding public transit, shall we?

First, define the box we must think inside of for the time being. Constitutionally, no motor fuel tax can be used for any purpose other than road and bridge work. Financially, the state is broke, and must work to fill a $4 billion deficit projected for FY12. Politically, the incoming administration will hold to a no-new-or-raised-tax-or-fee pledge.

Second, absent any legislation enacted in Spring 2011 to take effect by July 1, Governor Corbett will include some figure for the Mass Transit Line Item in the proposed FY12 state budget, usually unveiled in mid-February. This figure funds the state subsidy for operating funds for the state's 36 public transit companies, big and small. In the case of Port Authority of Allegheny County, this number makes up about 60% of its operating budget. If the MTLI is kept steady or shrunken, PAT faces a major deficit of its own. Arguing over this amount has made headlines in metro Pittsburgh for each of the past almost 50 years. But if the state is broke, chances are excellent that the MTLI will be cut back severely. This could truly mean a death knell for public transit as we know it, under the current structure, resulting in a far greater service cut than the 15% agreed to for March or the 35% proposal that nearly happened in January. If 60% of the funding goes away, 60% of the system goes away, too.

There should be no argument over anything that I have said so far.

We can argue all day over matters of labor, management, productivity, quality of service, broken equipment, stranded riders, tunnel projects, and a myriad of other things. Sorry, but all that is off topic. Closer to the mark, we can further argue over whether transit is even necessary, whether it should be privately run, whether it should entirely pay for itself out of farebox revenue, how fares should be collected, whether there should be two zones, no zones, or 13 zones, and a myriad of other policy matters. True, all of those things are important, a couple of them vital to the topic at hand.

I am going to work from the following assumptions: (a) Yes, transit is necessary. It makes possible the functioning of commerce in a concentrated area, be it a small city like Williamsport, or a large one like Philly or Pgh. These commerce centers in turn enable the state to collect revenue from taxes, instead of that revenue being siphoned off into purely fuel costs that leave the state. (b) Some amount of taxpayer subsidy will be required. Few if any major transit systems in the first world function without some sort of taxpayer subsidy. Like any machine, a little oil here and there keeps everything else from breaking, and some tax money provides that oil to the machine called a city. (c) The fare policy will be changed from what we have now. The current system is unfair and costly, and provides a built-in disincentive to using transit at all. Whether taxpayer funded or entirely private, the current approach to cost recovery is bad for the transit business, and must be changed. (d) There should be a single zone and no cost to transfer. Pay to use the system, not each bus boarded. Make allowances for whole-day passes, and a time limit for the first fare paid, and the fare policy becomes inherently welcoming, thus providing a reasonable alternative to using the private automobile. (e) Whether operated by a government agency or privately run is irrelevant. Transit is necessary, it cannot cost an excessive amount to either its customers or its funders, and its cost to operate cannot exclusively come from the farebox. (f) The state should continue to subsidize transit state-wide, though not to the level as has been demanded or historically provided.

Now to some specifics. I will propose below a method for transit to be funded partially from tax dollars, while allowing elected state leaders to adhere to their campaign pledges. The solution is not to have the state pay for transit entirely, but rather by the political divisions where the services are provided. In short, taxes at the county level.

State lawmakers should pass legislation setting up transit districts. Each district would correspond to a region where transit service is provided. In the case of SW PA, that would be the 10-county region where several transit companies provide service to and through each other's areas. State law currently forces each county to fend for itself, creating arbitrary divisions in business areas. Three examples: Monroeville-Murrysville, Cranberry-Warrendale, and Bridgeville-Canonsburg. Replacing these per-county divisions with a structure that would allow for proper cost recovery without concern over county lines, would give transit a fighting chance to be cost-effective. If GG&C can do a better job in Bridgeville than Port Authority, fine, let them. If PAT can do a better job in Murrysville than WestTran, fine, let them.

State lawmakers should allow counties to set up a Vehicle Miles Traveled tax. While the PA Constitution, Article 8, Section 11A, forbids motor fuels taxes from being used to fund transit, this becomes a problem as more cars operate on something other than motor fuels, such as electricity, yet create just as much traffic and wear and tear on the roads as a petroleum powered car. Collect this tax, to be levied by counties, as part of the state vehicle inspection program, which requires annual odometer readings. Then send it back to the counties in proportion to the number of revenue vehicle hours of transit service provided in each county. More specifically, send it to the transit companies which provide the RevVHs in each county. If, say, Westmoreland Transit provided some of the service on US30 into eastern Allegheny County, then WestTran would get a proportional amount of that money. Note that this is self-correcting. As auto traffic increases in an area, it helps underwrite the cost of starting and operating an alternative to that traffic.

One good thing of Act 44 was to require transit agencies to operate more cost effective routes than in the past, and to be more transparent with the reporting of that cost-effectiveness. Keep this; improve on it if possible. Make this information more easily available. This will help to defray criticisms of tax money going to unproductive purposes. Whether publicly or privately run, taxpayers need to know their money is being used for a good purpose. Haters gonna hate, but this is less important than the truth.

In terms of level of taxation, I suggest one-third of transit's cost come from the farebox, one-third from county taxes, and one-third from the state. Compare this with PAT's roughly 25-15-60 shares at the moment.

So, there you have it. With these changes, GOP lawmakers can claim to have solved the funding problem without raising state taxes. Transit can operate in a more cost-effective manner, without regard to who runs it or in what county. In all cases, the consumer benefits. Fees are collected; services are provided. Counties that do not want to participate are not required to. Taxpayers in Galeton will not feel put upon to fund big-city transit. The state constitution is adhered to. Long-term funding problems are fixed, and a future problem (electric cars using the roads for free) is avoided.

OK, Harrisburg, go to it.

Stuart Strickland


  1. Interesting ideas, but I have to point out 1 disagreement and 1 potential flaw.

    Disagreement: Flat rate - no zones and no transfers? That is only a benefit for people who travel the furthest. It's by definition punitive to people who only go a mile or 2 and would discourage people from taking frequent short trips on transit.

    Potential flaw:
    What about all the people who commute by car from outlying counties to downtown - most of their wear and tear is on Allegheny County roads, but none of their tax dollars would go towards Allegheny County transit, which once again puts Allegheny County transit at a loss.

  2. As to the disagreement, the problem of traveling farthest is lessened by the need of many people who need to make more than one transfer. As an example, from my house to Robert Morris Univ requires a triple transfer: 9 to 13X to G1 to 25. Cash fare or tickets, this costs $8.50 each way, $17 for the day. It doesn't take that long to make the trip, but the fare system is inherently unfair.

    I expounded upon this in two rather long blogs from a while back: Jan 2007's "Why I favor the flat-rate fare hike proposal", and last spring, "My proposal for a new fare-payment policy"

    As to the flaw, you do have a point, but in the final accounting, it might not matter much. Example: Someone living in Cranberry, let's say, commutes into Oakland, about 25 miles. About 2 of that is in Butler County, 23 in Allegheny. The car being registered in Butler, Butler would get the bulk of that VMT revenue, so your concern is valid. OTOH, there are still a good many people living on the outskirts of Allegheny County trying to make the same trip.

    The bigger problem is that it simply does not pay to have a transit trip into the city from so far out. Transit would simply not be provided in that case. The 13K, for example, always runs packed to the gills, but is being eliminated in March, because it is not cost-effective.

    Bottom line, some of these cuts are good, getting rid of routes that don't work (like the one that runs right past my house). But the bigger problem is Harrisburg not wanting to fund *anything*. THAT we have to fix.

    Thank you for your insightful comments.

  3. I would suggest two changes to your proposals.

    1. Instead of a VMT tax, transit should be funded via a sales or income tax. They would be easier to administer. A maximum annual subsidy should be decided any any surplus tax revenue should be put into a rainy day fund.

    2. Raise fares on long distance commuter service so that the maximum subsidy would be some arbitrary amount... let's say $2.00. So, if the per rider cost was $6.00. The fare should be $4.00. That may cause some routes ridership to drop too low. Those routes should be abandoned and the limited subsidy dollars spent on more efficient routes.

  4. What about the money the economy gains for every transit rider. Fewer auto collisions. Less traffic congestion. Better access of small business to customers and workers. Fewer parking problems. Less work for police. These kinds of things need to be quantified and added to the calculus.