APTA | Passenger Transport
September 22, 2008

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More Riders, Tighter Budgets: How Transit Agencies Are Responding

IHoboken Terminaln the Sept. 8 issue of Passenger Transport, APTA presented the results of a recent survey on the competing challenges agencies are facing across the country due to surging ridership, increases in fuel costs, and dwindling revenues from state and local sources.

But how are individual agencies responding in their local contexts? APTA recently conducted in-depth interviews with 15 member transit agencies, large and small, across the country to find out.

High Demand Creates Capacity Constraints
One thing is clear. Many public transit systems, regardless of size, that are seeing double-digit increases in ridership on their most popular lines are, at the same time, facing huge capacity constraints and large deficits in their Fiscal Year 2009 budgets or are anticipating deficits for 2010. But they have widely different ways to address these challenges. Many systems have found that the most effective response so far has been to take a multi-pronged approach with a combination of service cuts, fare increases, and finding alternative revenue sources.

Service cuts have been, by far, one of the most painful actions for transit systems, which often start by reducing frequency on certain routes but sometimes eliminating them altogether, creating for some systems a vast public outcry.

In Cleveland, more than 2,000 customers recently attended a public meeting on proposed service cuts to express their concern, anger, and desperate need for the routes that would be eliminated. The Lane Transit District in Eugene, OR, is preparing a public consultation process in the face of an anticipated need to cut service by as much as 15 percent; LTD’s ridership increased by 17 percent in the past year.

Other systems are looking at ways to modify their paratransit services or vehicles to ensure maximum cost-efficiency while meeting minimum requirements. For example, Sun Tran in Tucson, AZ, is using its mini-buses that get the best gas mileage on the longest routes to save on fuel.

Some transit agencies are creating extra capacity by increasing their load factors: Dallas Area Rapid Transit (DART) has increased its target load factor on its commuter rail line from .9 to 1.0, and is preparing to add a significant amount of parking at its northernmost light rail station. But, as DART General Manager Gary Thomas pointed out, trying to meet demand is a bit like trying to hit a moving target. “It is anticipated the demand will continue to exceed capacity,” he said.

Public Awareness Campaigns
Many systems are reaching out to the public to help riders deal with overcrowding and to offer alternative routes and off-peak travel suggestions.

The Maryland Transit Administration in Baltimore launched a public awareness campaign to shift riders from overcrowded routes, and the Kansas City Area Transit Authority (KCATA) in Kansas City, MO, issues rider bulletins to help the flow of passengers on its bus systems. KCATA also recommended that passengers buy monthly passes to increase their boarding speed, explaining: “You can just swipe and ride, plus you’ll be saving money all month long.”

The Potomac and Rappahannock Transportation Commission (PRTC), located in the northern Virginia suburbs of Washington, has reached out to riders via the local news media to explain the pressures of increased fuel prices on the system.

Fare Increases: Another Option
Transit systems that recently implemented fare increases have not reported a negative impact on ridership. Those that are looking ahead to future fare increases, however, are considering basing them on a passenger’s ability to pay.

Two transit agencies interviewed, the Greater Cleveland Regional Transit Authority and the Utah Transit Authority in Salt Lake City, have either recently created or are proposing fuel surcharges on their fares based on the national price index that, in turn, is based on the quarterly cost of diesel fuel.

Some systems are looking at incremental fare policies each year as part of a general policy to eliminate lag time in budgeting for and implementing new fare increases. PRTC is contemplating fare indexing: increasing fares every two years at a rate of 10 percent or higher, depending on changes over time in the Washington-Baltimore urban area wage earners’ index and fuel prices.

Additional Approaches Vary
Systems that pre-purchased fuel at a set price have been able to avoid being hit by higher fuel costs so far, as have systems with more vehicles in their fleets powered by alternative fuels. With that in mind, several agencies are looking to replace their diesel buses by hybrids in the near future.

Further, many transit agencies have cut administrative costs through hiring freezes, contract non-renewals, staff cuts, elimination of nearly all travel and training, and spending fewer dollars on advertising and marketing.

Most agencies have found that alternative or guaranteed sources of funding are hard to come by. However, some are generating new revenues in one area: expansion of existing pass programs. This seems to be working well for the Transit Authority of River City (TARC) in Louisville, KY, which is developing new partnership arrangements with local academic, governmental, and business entities. Metro Transit of Madison, WI, is particularly targeting smaller employers that have not historically participated in its pass program.

Beyond that, many agencies are foregoing service improvements to cover operating expenses; deferring capital replacements for the future; and reprogramming capital dollars for service expansion, such as shifting funds for facilities to purchasing new rolling stock to use on high ridership routes. These actions may delay a number of planned projects, such as the Bus Rapid Transit project scheduled for 2012 in Grand Rapids, MI.

Some systems are being helped by contingency funds or reserves of about 5 to 10 percent of operating budget, created specifically to weather downturns in the economy. Others are considering establishing these reserves, even if they have to borrow funds to do so.

Though many transit agencies are just beginning to feel the fiscal impact on their services, one transit CEO aptly described the situation at the moment: “Right now, we are just containing the damage.”

Sufficient Funding Is the Key Issue
Lack of funding is certainly the number one constraint to preserving services for most of the systems interviewed, but other barriers also exist to implementing service improvements quickly, such as the lead time for vehicle procurement, the lack of parking at park-and-ride stations, and the Federal Transit Administration’s new charter rules. In addition, as one transit general manager said: “The need to maintain and improve lines and modes that serve existing riders, many who are transit dependent, is a priority.”

The key short-term issue for a number of transit systems is how they can secure funding for unanticipated and unbudgeted fuel costs because of higher gas prices, or how to find further energy-hedging opportunities. In the long term, the goal is to advocate for local and state funding sources that are more stable than sales, property, or fuel taxes.

One transit general manager described what is needed as a “Marshall Plan” for public transportation, stating that “a major, ambitious community reinvestment plan is needed to redevelop urban infrastructure.”

Many transit CEOs interviewed see the increase in gas prices across the country as a redefining of the transit market, especially for those who are transit dependent. The irony, as stated by TARC General Manager J. Barry Barker, is that, at a time when there is almost universal agreement by community groups in his service area that “there is a need for more public transportation, there is no agreement on how to pay for it.”
The ridership surge and growing funding problems of transit systems will be the subject of two sessions at the APTA Annual Meeting and EXPO in San Diego, titled “The Perfect Storm.” The full report on which this article is based will be made available then.

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