Robert Poole on Mass Transit Financial Stability.

In the latest edition of Reason’s Surface Transportation News (#128), Robert Poole discusses my CityLab post: How to Make Mass Transit Sustainable Once and For All, as well as some other ideas that are also worth a look.

“… CityLab published a comprehensive piece by David Levinson of the University of Minnesota: “How to Make Mass Transit Financially Sustainable Once and for All.” To introduce the subject, he makes a good case that over the last 40 years or so, transit has been in a state of crisis that we have mostly refused to recognize. “Current strategies have not placed transit on a financially sustainable path,” he writes—and he’s correct. As a long-time transportation researcher, Levinson has thought a lot about this problem, concluding that “transit should be successful and cover its costs,” but to do that it needs to be reconceptualized as a kind of public utility. The rest of the piece sets forth and briefly explains seven key aspects of this model:

  1. Reduce costs by competitive tendering of bus service as done in London;
  2. Increase fares, so that the average farebox recovery eventually exceeds 100% of operating costs (with transit vouchers for the poor);
  3. Require the use of a smart card and encourage seasonal passes;
  4. Cancel money-losing routes unless someone is willing to subsidize them;
  5. Recover future capital costs via land value capture (see NCHRP synthesis 459, “Using the Economic Value Created by Transportation to Fund Transportation”);
  6. Raise capital in bond and equity markets, like other utilities do; and,
  7. Fund transit locally, since its benefits are local.

These are very provocative ideas, and I think they are worth serious consideration, as transit faces the likelihood of declining federal support and massive fleet replacement and infrastructure refurbishment costs in coming decades. And I find it encouraging that Levinson’s piece is part of the CityLab “Future of Transportation” series funded by the Rockefeller Foundation.”