Getting More out of Public Transit Spending

An important part of the transportation infrastructure crisis is the state of public transportation systems in America. Many public transit systems are having difficulty covering the cost of maintenance. Tracks are deteriorating, stations need to be refurbished and outdated equipment is not being replaced quickly enough, which makes it difficult to attract riders. Governments struggle to find the money to pay for these expenses. Meanwhile, governments spend billions on new rail systems and bus rapid transit systems and propose further transit expansions in the future.

Advocates of transit emphasize that by expanding transit systems and enticing riders to use transit instead of driving, highway congestion can be reduced. Yet many recent transit expansions have not been cost effective. Much of the money spent on expanding transit would be better spent improving existing transit service in corridors where there is sufficient demand or on improving highways.

Transit ridership has declined in many US metropolitan areas due to deteriorating quality of transit service along with the growth of ride sharing. Yet many people still depend on transit to get to work.

If more people used transit instead of private automobiles, fewer freeway lanes and parking lots would be needed and cities could be more walkable.The benefits of living in walkable neighborhoods in densely populated communities include better fitness, more visually appealing streetscapes, and more opportunities to interact with neighbors than in typical car dependent suburbs. But for a variety of reasons, most US metropolitan areas are not densely populated. Transit, especially fixed route transit, whether rail or bus rapid transit, does not attract nearly enough riders to cover its costs except in relatively dense corridors connected to urban centers with substantial employment concentrated in a relatively small area.

Auto-oriented development has come to dominate newer US cities as well as suburbs of US and European cities. A growing share of jobs and businesses are decentralized throughout metropolitan areas. For most of those who commute to jobs located where there is not a high concentration of jobs in a relatively small area, the most cost effective and least time-consuming way to commute to work is by automobile. But in large metropolitan areas this requires extensive systems of freeways, arterial roads and parking facilities.

Because it would be far too costly to provide transit service connecting all parts of a metropolitan area, transit expansions that do occur only benefit a limited number of residents. Those who live in areas served by high quality transit often pay more to live close to transit stops or stations. But without sufficient density, too few people use transit so that fares do not cover a major share of the operating cost and capital costs of high quality service, particularly if it involves a fixed guideway.

Unfortunately, political incentives often result in cities building expensive new rail transit lines in areas without sufficient density to utilize close to the capacity of the trains, buses and fixed guideways. According to Cervero, out of 54 rail transit investments that occurred since the 1970s, only 23 have combined net operating and capital costs (what is left over after fare revenue) less than $0.85 per passenger mile. If we assume average fare revenue of 50 cents per mile, that is equivalent to total operating costs of less than $1.35 per mile, which is the estimated marginal cost of commuting by automobile during peak periods.

Transit proponents argue that new rail transit systems have contributed substantially to reduced congestion and that the benefits from reduced congestion are large enough to cover the cost of transit subsidies. Although good public transit service has reduced traffic congestion substantially in a few cities, reductions in congestion from most recent transit expansions are small, for several reasons. First of all, when cities expand rail transit, many of the new users are former bus riders, so not many cars are taken off the road. Another problem is that as former drivers switch to transit, the reduced traffic on urban expressways makes it easier for people to commute a longer distance to work so that there is an offsetting increase in expressway traffic.

Some transit proponents argue for expanding transit systems into less densely populated areas and then encouraging transit-oriented development (TOD)– dense mixed-use development of apartments, offices, and retail near transit stations. Residents in many suburbs resist the increased density required for TOD to be successful. They express their political power through zoning that limits density.

Even in suburbs were transit-oriented development is permitted, many residents are affluent enough to own cars and rely on those cars for most non-work trips as well as many work trips. Although the resulting dense neighborhoods may attract residents whose jobs are accessible by transit, if families have two or more workers, many of those additional workers will find a job that is not accessible by transit.

The further suburbs are from the central city the less dense they are, which means highway lanes cost less to build and transit is less likely to attract enough passengers to come close to covering its costs. Thus, if governments spend scarce transportation funds investing in rail transit or bus rapid transit, the money should be spent in urban centers or first ring suburbs that are dense enough so the system can generate enough fare revenue to cover a substantial share of capital and operating costs. In many cases, rather than spending to expand transit, cities should spend more to maintain the systems they already have or improve the quality of service in corridors where transit is already heavily used.