Oregon Taxpayers, Not Riders, Pay Most Costs of Public Transit Operations

By John A. Charles, Jr.

In a recent interview with the Portland Business Journal, Chris Rall of Transportation for America argues for increased state support of public transit service. He says that Oregon only covers three percent of the operating costs of transit, while other (unnamed) states pay for 24 percent.

I don’t know the source of Mr. Rall’s claim, but the audited financial statements for the largest transportation districts in Oregon show a very different picture.

In FY 2016 TriMet had total operations revenue of $542,200,000 but only $118,069,000 came from passenger fares. That means TriMet riders received a 78% subsidy from other sources.

At Lane Transit District in Eugene, passenger fares in 2015 were only $7.2 million, while total operating revenue was $60.9 million. Non-riders paid for 88% of operations.

For Cherriots Salem-Keizer transit, public support totaled 94% of all operating revenue in 2015.

Undoubtedly the largest subsidy goes to the Portland-Eugene passenger rail line operated by ODOT. For every one-way ticket sold in 2015, the public paid $120.

Before state legislators approve any more subsidies to transit, they should require that transit operators recover at least 50% of costs from customers. If riders are only willing to pay 10 percent, why should taxpayers have to pick up the rest of the tab?


John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

WES Is an Energy Hog

By Allison Coleman

In 2009 the regional transit agency, TriMet, opened a commuter rail line running from Wilsonville to Beaverton. The line is known as the Westside Express Service, or WES.

According to transit advocates, commuter rail would help reduce energy consumption in the Portland region because it was assumed that trains moved people more efficiently than private automobiles.

However, the energy efficiency claims about WES turned out to be wrong. WES uses 6,753 BTUs of energy per passenger mile, which is 4,000 more than the national average of all commuter rail lines. WES also uses more than twice the amount of energy as a car to move the same number of passengers. On average, automobiles consume only 3,122 BTUs per passenger mile, and that number has been dropping steadily since 1970.*

Many transit advocates have been so enthused about commuter rail that they have urged lawmakers to fund an expansion of WES to Salem. Not only would this be costly, it would be a step backwards for energy efficiency. Surprising as it may seem, the average automobile is now far more efficient than commuter rail.

*See http://cta.ornl.gov/data/tedb35/Edition35_Chapter02.pdf, page 2-20, table 2.15.


Allison Coleman is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization. 

Portland’s Regional Transit Strategy Is Not Working

By John A. Charles, Jr.

The Portland Auditor released the 2016 Annual Community Survey on November 30. The responses show that the share of all commute trips taken by public transit fell 17% during the past year.

This was part of a longer-term decline in transit use. The transit share of all Portland commute trips peaked in 2008 at 15%. Since then it has hovered near 12%, and now rests at 10%.

Taxpayers should be especially concerned about the negative correlation between passenger rail construction and market share. In 1997, when the region had only one light rail line—the Blue line to Gresham—transit market share was 12%.

After extending the Blue line to Hillsboro and adding four new lines plus the WES commuter rail and the Portland Streetcar, transit market share is only 10%.

Travel Mode Share for Weekday Commuting

Portland citywide, 1997-2016

Mode 1997 2000 2004 2008 2010 2012 2014 2015 2016
                   
SOV 71% 69% 72% 65% 62% 61% 63% 60% 61%
Carpool 9% 9% 8% 8% 7% 6% 6% 5% 6%
Transit 12% 14% 13% 15% 12% 12% 11% 12% 10%
Bike 3% 3% 4% 8% 7% 7% 8% 7% 8%
Walk 5% 5% 3% 4% 6% 7% 8% 9% 9%
Other n/a n/a n/a n/a 7% 6% 6% 7% 7%

      Source: Portland Auditor, Annual Community Survey

The numbers cited above are for citywide travel patterns. When broken out by sector, the Auditor found that just 5% of all commuters in Southwest Portland took transit to work in 2016. Despite this lack of interest by commuters, TriMet and Metro are working to gain approval for another light rail line extension from Portland State University through SW Portland to Bridgeport Village. The likely construction cost will be around $2.4 billion.

Unfortunately, there is no empirical basis for thinking that cannibalizing current bus service with costly new trains would have any measurable effect on transit use.

Transit advocates like to claim that we simply need to spend more money to boost ridership, but we’ve already tried that. TriMet’s annual operating budget went up from $212.2 million in 1998 to $542.2 million in 2016. After adjusting for inflation, that’s an increase of 72%. Those increases were on top of construction costs for rail, which cumulatively exceeded $3.6 billion during that era.

It’s time to stop the myth-making and start holding public officials accountable for a plan that isn’t working.


John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

Policy Picnic – October 26, 2016

Please join us for our monthly Policy Picnic led by

Cascade’s President and CEO, John A. Charles, Jr.


Watch Your Wallet November 8! Why You Should Vote No on Tigard Light Rail and Metro’s Open Space Levy

Metro is asking for a new tax levy despite the fact that it already has sufficient funds to operate all its parks. Since 1995, Metro has spent hundreds of millions of tax dollars buying up large tracts of lands far from where most people live. The Metro Council doesn’t want you (or your dog) to use most of these lands, but they do want you to pay for them. Metro’s Five-Year Operating Levy (Measure 26-178) is one more wallet-grab.

The proposed Tigard-Tualatin light rail project (Measure 34-255 in Tigard) would cost at least $240 million per mile to construct — the most expensive transit project in state history. Tigard will be required to fund part of that price tag, and increased taxes will be the result. This is what happened to the City of Milwaukie and Clackamas County when Metro forced through the Orange line.

John Charles will give you the inside story on these two ballot initiatives and tell you what their proponents don’t want you to know. He’ll explain what these measures really do and what they mean for you, your family, or your business. Bring your friends and coworkers!

Admission is free, but reservations are required due to space limitations. You are welcome to bring your own lunch; light refreshments will be served.

 

Cascade’s Policy Picnics are generously sponsored

by Dumas Law Group, LLC. 

Dumas Law Group
800px-WES_train

MAX at 30: Portland Transit Needs a New Plan

September 5 marked the official 30th anniversary of the opening of TriMet’s light rail system. Like many Portland residents, I took a free ride that day and felt that this was a big step forward for transit service.

Unfortunately, actual performance never lived up to the hype. My hopes for “high-speed” transit were dashed when I discovered how many stops there were. The average train speed today is only 18 MPH.

My expectation that MAX would include five or six train cars was also incorrect. There are only two cars per train on MAX, and there will never be more than two cars because Portland has 200-foot blocks in downtown. Longer trains would block busy intersections.

The cost of construction also spiraled out of control. The Orange line to Milwaukie cost $210 million per mile, making it hundreds of times more costly than simple bus improvements.

In short, MAX is a low-speed, low-capacity, high-cost system, when what we really need is just the opposite—a higher-speed, higher-capacity, low-cost system.

Regional leaders should pull the plug on any more rail and start focusing on the future of transit, which will feature driverless vehicles, door-to-door delivery, and private car-sharing services such as Uber Technologies.

The passenger rail era died a hundred years ago. It’s time for Portland to get into the 21st century.

New Report: Transportation Funding Should Be a State and Local Responsibility

Study Finds That Transportation Funding Should Be a State and Local Responsibility

May 4, 2016 

FOR IMMEDIATE RELEASE

Media Contact:
John A. Charles, Jr.

503-242-0900

john@cascadepolicy.org

PORTLAND, Ore. –  In a study released today by Cascade Policy Institute, economist Randall Pozdena recommends that transportation regulation and finance devolve from the federal government to state and local governments. In addition, the study recommends that most transportation taxes be replaced with targeted user fees, to ensure that those who pay for services receive benefits commensurate with those payments.

For over 30 years, the federal government has assumed a disproportionately large role in the regulation and subsidization of transportation services. Yet, most travel is local. For instance, the Cascade research paper found: 

  • More than 50% of all household trips, by all modes, are less than five miles long
  • More than 90% are less than 20 miles
  • 92% of freight shipments are less than 500 miles, by weight

Despite the dominance of local travel, 32% of all transportation funding flows through federal processes.

Of the various transport modes, private freight, airline travel, and pipeline shipments are the least regulated and least subsidized. These modes benefit from high levels of private ownership and capital investment, subject to normal market discipline.

Highway travel and transit suffer from the most distortions and cross-subsidies through federal intervention. As a result, most urban areas face growing levels of traffic congestion, and large urban transit systems are seriously (and often tragically) under-maintained.

The transit industry, which has steadily become a government-sponsored enterprise since passage of the Urban Mass Transit Act of 1964, is the sector most in need of a new business model. According to Dr. Pozdena,

“By definition, transit trips are extremely short and not important parts of larger networks. Federal and state governments should be out of the transit sector altogether, and rely on fare box revenue to ensure that the cost of the service is worthwhile to the user.”

For comparison purposes, Dr. Pozdena calculates that it costs roughly $60,000 to recruit one new additional transit rider in Oregon, which is 10 times the cost of providing new highway capacity for one additional auto commuter.

The Portland region in particular suffers from a mode imbalance in which vast sums of federal and state dollars have been spent on lightly-used passenger rail lines, while new highways and bridges have been canceled or delayed. This problem can be solved by inviting private investors to build needed new facilities through toll-based payments, and implementing time-of-day pricing schemes to ensure free-flow travel conditions on the regional highway system.

Last week the Oregon legislature announced the formation of an 18-person task force to study transportation funding for the 2017 legislative session. According to John A. Charles, Jr., CEO of Cascade Policy Institute,

“The Oregon Legislature has struggled unsuccessfully for decades to devise a sustainable transportation funding system. As yet another task force prepares to scale the fortress wall with the same weapons used in previous assaults, members should consider a new approach including targeted user fees rather than broad-based taxes, electronic tolling and variable pricing, elimination of political mandates prohibiting new highway facilities, and market-based reforms including privatization.

“These principles work everywhere else in the economy; they would work in the transportation sector as well, if we allowed them.”

The full report, Devolution of Transportation: Reducing Big Government Involvement in Transportation Decision-Making, can be downloaded here.


Founded in 1991, Cascade Policy Institute is Oregon’s premier policy research center. Cascade’s mission is to explore and promote public policy alternatives that foster individual liberty, personal responsibility, and economic opportunity. To that end, the Institute publishes policy studies, provides public speakers, organizes community forums, and sponsors educational programs. Cascade Policy Institute is a tax-exempt educational organization as defined under IRS code 501(c)(3). Cascade neither solicits nor accepts government funding and is supported by individual, foundation, and business contributions. The views expressed in Cascade’s reports are the authors’ own.

 

TriMet’s Edifice Complex

Recently TriMet announced that after two years of planning for an expensive new “bus rapid transit” line from Gresham to Portland, the new service would actually take 8-11 minutes longer than current buses.

Over in Southwest Portland, TriMet is planning a $2 billion light rail line to Bridgeport Village near Tualatin, a suburban shopping mall.

Agency planners are fascinated with shiny new objects, but most riders don’t benefit. For example, between 2000 and 2015, TriMet opened five new rail lines, but the total vehicle-miles of daily transit service actually dropped by 5%.

It’s time to admit that TriMet’s basic business model is becoming obsolete. The agency is a sluggish monopoly that takes years to bring new service to market, while customers live in a smartphone world where they have millions of choices and same-day delivery.

In particular, the coming era of driverless vehicles will create entirely new businesses that will free riders from the tyranny of fixed-route transit service. Legacy systems such as TriMet will be stuck with a vast network of aging infrastructure that will be too expensive to maintain.

We don’t need another light rail line to Bridgeport, or a bus rapid transit line to Gresham. What we need is new vision of mobility in Portland.

(revised 4/6/16)

Broken Promises: The Real Trends in TriMet’s Transit Performance (2004-2015)

TriMet’s ridership is declining and its level of fixed-route service is lower today than it was in 2004. According to mainstream transit advocates, the solution is to spend more public money.

The problem is we’ve already tried that, and it’s not working. TriMet has been imposing a regional payroll tax on most employers since 1972. The rate was initially 0.30%, then grew to 0.60% by 1979. During the 2003 legislative session, TriMet sought approval to raise it by another tenth of a percent. According to TriMet General Manager Fred Hansen, “TriMet’s proposed payroll tax increase will be used exclusively to provide new or enhanced transit service. This will include assisting in the operation of Washington County Commuter Rail, Clackamas County light rail, Lake Oswego Streetcar, increasing Frequent Service routes, and enhanced local service connections to these lines.”

The rate increase was approved, and was phased in over a 10-year period, beginning January 2005.

During the 2009 legislative session, TriMet lobbied for another rate increase, phased in over 10 years. The new rate of 0.7337% went into effect on January 1, 2016.

Now that we have more than a decade of experience with payroll tax rate increases, it is informative to compare revenue trends with service trends. The results show that there is no correlation between revenue and service.

 

 

TriMet Financial Resource Trends for Operations

2004-2015

 (000s) 

2004 2006 2008 2010 2012 2014 2015 % change
Passenger fares $55,665 $68,464 $80,818 $93,729 $102,240 $114,618 $116,734 +110%
Tax revenue $155,705 $192,450 $215,133 $208,933 $248,384 $275,357 $292,077 +88%
Total operations $290,513 $342,274 $404,481 $433,609 $488,360 $522,155 $493,572* +70%

 

*Grant revenue in 2015 dropped by $41,876 due to timing of receipt; those funds will appear in TriMet’s 2016 income statement.

 

VIEW TABLE IN PDF HERE

 

In fact, there is negative correlation – as TriMet’s revenue went up over the course of a decade, actual service went down. 

 

Annual Fixed Route Service and Ridership Trends for TriMet

2004-2015 

2004 2006 2008 2010 2012 2014 2015 % change
 
Hours of service 1,698,492 1,653,180 1,712,724 1,682,180 1,561,242 1,608,090 1,676,826 -1.3%
Miles of service 27,548,927 26,830,124 26,448,873 25,781,480 23,625,960 23,763,420 24,248,910 -12%
Originating rides 71,284,800 74,947,200 77,582,400 77,769,119 80,042,810 75,779,560 77,260,430 +8.4

 

Source: TriMet, http://www.trimet.org/pdfs/publications/trimetridership.pdf 

VIEW TABLE IN PDF HERE

 

There is a slight correlation between revenue and transit use, as total originating rides went up 8% while operating revenue went up 70%. However, ridership peaked in 2012 and has dropped by 3.5% since then.

It is also interesting to compare revenue trends with TriMet’s share of commute trips. The Portland Auditor has conducted an annual “community survey” since 1997, and those surveys measure travel choices by Portland residents. The results show that TriMet’s market share of commuting has remained exactly the same since 1997, despite (or because of) massive expenditures on rail transit during that period. 

 

Travel Mode Share for Weekday Commuting

Portland citywide, 1997-2015 

Mode 1997 2000 2004 2008 2010 2012 2013 2014 2015
                   
SOV 71% 69% 72% 65% 62% 61% 64% 63% 60%
Carpool 9% 9% 8% 8% 7% 6% 6% 6% 5%
Transit 12% 14% 13% 15% 12% 12% 10% 11% 12%
Bike 3% 3% 4% 8% 7% 7% 7% 8% 9%
Walk 5% 5% 3% 4% 6% 7% 7% 8% 8%
Other n/a n/a n/a n/a 7% 6% 6% 6% 7%

VIEW TABLE IN PDF HERE

Notwithstanding the obvious drop in service, TriMet claims that the legislative promise was met because new rail lines were opened. But to the 66% of TriMet riders who saw their bus service drop by 12%, shiny new rail lines were of little consolation.

The chief enablers of TriMet’s tax addiction have been Portland-area business associations, including Portland Business Alliance, Westside Economic Alliance, Oregon Business Association, and the Central Eastside Industrial Council. Those groups repeatedly embraced higher taxes for their members on the premise that more transit revenue equaled more transit service. That premise is clearly false.

When the TriMet Board meets to increase the tax rate again in September, Portland business groups should reconsider their automatic support. Unless and until TriMet service levels reach those of 2004, there is no reason to continue “throwing money” at an underperforming monopoly.


John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

Failed Promises: Why the Legislature Should Reject TriMet’s Request for New Spending Authority

TriMet is currently seeking new spending authority in SB 1510 to help finance regional “multi-modal” transportation projects. Legislators should deny this request based on previous experience with TriMet commitments.

To refresh the memory: during the 2003 session, TriMet sought approval to increase the payroll tax rate by one-tenth of a percent. According to TriMet’s then-General Manager,

“TriMet’s proposed payroll tax increase will be used exclusively to provide new or enhanced transit service. This will include assisting in the operation of Washington County Commuter Rail, Clackamas County light rail, Lake Oswego Streetcar, a substantial increase in Frequent Service routes, and enhanced local connections to these lines.”[1]

The rate increase was approved, and was phased in over a 10-year period.

During the 2009 legislative session, TriMet sought an additional rate increase. The legislature again approved the request. The TriMet board approved the first of 10 planned rate increases last September, and the new rate of 0.7337% went into effect on January 1, 2016.

Let’s look at the results. After a decade of tax increases, it’s clear that there is no correlation between increased TriMet revenue and actual levels of service: 

TriMet Financial Resource Trends for Operations, 2004-2015

 (000s)

CLICK HERE TO VIEW TABLE IN PDF 

2004 2006 2008 2010 2012 2014 2015 % change
Passenger fares $55,665 $68,464 $80,818 $93,729 $102,240 $114,618 $116,734 +110%
Tax revenue $155,705 $192,450 $215,133 $208,933 $248,384 $275,357 $292,077 +88%
Total operations $290,513 $342,274 $404,481 $433,609 $488,360 $522,155 $493,572 +70%

 

In fact, there is negative correlation – as TriMet’s revenue went up over the course of a decade, actual service went down: 

Annual Fixed Route Service and Ridership Trends for TriMet

2004-2015

CLICK HERE TO VIEW TABLE IN PDF 

2004 2006 2008 2010 2012 2014 2015 % change
 
Hours of service 1,698,492 1,653,180 1,712,724 1,682,180 1,561,242 1,608,090 1,676,826 -1.3%
Miles of service 27,548,927 26,830,124 26,448,873 25,781,480 23,625,960 23,763,420 24,248,910 -12%
Originating rides 71,284,800 74,947,200 77,582,400 77,769,119 80,042,810 75,779,560 77,260,430 +8.4%

 Note: The term “originating rides” excludes transfers.

Source: TriMet, http://www.trimet.org/pdfs/publications/trimetridership.pdf 

There is a slight correlation between revenue and transit use, as total originating rides went up 8% while operating revenue went up 70%. However, ridership peaked in 2012 and has dropped by 3.5% since then.

TriMet claims that the 2003 promise of “enhanced service” was met because many new rail lines were built. But to the 66% of TriMet riders who travel by bus and saw their service drop by 12%, shiny new rail lines were of little consolation.

TriMet now wants to expand its reach through SB 1510 so as to spend new funds for “multi-modal” projects. We suggest a simple response: unless and until TriMet transit service returns to at least 2004 levels, no additional spending authority should be granted.

[1] Fred Hansen, testimony before the Senate Revenue Committee on SB 549, March 11, 2003, p. 3.


John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization. 

TriMet’s 7-Year-Old WES Line: Still a Project in Search of a Purpose

February marks the seven-year anniversary of the Westside Express Service (WES), the 14.7-mile commuter rail line that runs from Wilsonville to Beaverton. While the train’s owner, TriMet, has emphasized the steady growth in ridership over time, the truth is that WES has been a failure. Daily boardings are still far below the opening-year forecast, and taxpayers subsidize each rider by nearly $35 per round trip.

Although WES was 15 years in the making, it was always a project in search of a purpose. At various times the train was promoted as: (1) a congestion relief tool for HWY 217; (2) a catalyst for so-called “Transit-Oriented Development;” or (3) a way of providing “another option” for travelers. None of these arguments holds up to scrutiny.

During legislative hearings in Salem, representatives from Washington County claimed that WES would take 5,000 motor vehicles per day off of nearby highways. But WES is not even capable of doing that because it only runs 8 times (each direction) in the morning, and 8 more times in the afternoon. And unlike traditional commuter trains pulling eight or nine passenger cars, WES travels only in one-car or two-car configurations.

During its best hours of performance, the total number of passengers traveling on WES is less than 0.5% the number of motorists traveling on HWY 217/I-5 at those same hours. WES crosses more than 18 east-west arterials four times each hour. On busy commuter routes, such as HW 10 or Scholls Ferry Road, each train crossing delays dozens of vehicles for 40 seconds or more.

Since the train itself typically only carries 50-70 passengers per run, this means that WES actually has made Washington County congestion worse than it was before the train opened.

WES also will not be a catalyst for “transit-oriented development,” because the train stations are a nuisance, not an amenity. The noise associated with train arrivals was always underestimated and has proven to be a significant problem for nearby businesses and residents.

As for the hope that WES would provide “another transit option,” there were already two TriMet bus lines providing over 4,000 boardings per day in parallel routes prior to the opening of WES. Commuter rail simply replaced inexpensive bus service with a massively subsidized train.

Several key statistics summarize the problems with the train:

  • WES was originally projected to cost $65 million and open in 2000. It actually cost $161.2 million and opened in 2009.
  • TriMet projected an average daily ridership of 2,400 weekday boardings in the first year; actual weekday ridership was 1,156. It grew over time to 1,964 in 2014, but dropped to 1,771 last year. Since each rider typically boards twice daily, only about 900 people actually use WES regularly.
  • The WES operating cost/ride in January 2016 was $15.95, roughly five times the cost of bus service.

Ridership and Cost Trends for WES

2009-2015

(in 2015 $)

 

2009 2010 2011 2012 2013 2014 2015 % change
 
Avg. daily boardings 1,156 1,313 1,571 1,700 1,876 1,964 1,771 +53%
Operating cost per ride $27.41 $24.46 $20.43 $18.39 $18.98 $15.85 $18.60 -32%
Cost/train-mile    $54.70 $54.12 $53.30 $53.79 $56.82 $51.12 $55.01 +1%
Cost/train hour $1,180 $1,166 $1,171 $1,180 $1,501 $1,109 $1,203 +2%
Average subsidy/ride $26.18 $23.00 $19.01 $17.64 $17.19 $14.36 $17.10 -35%

 

 


Ridership has certainly improved since 2009, but still remains far below the rosy projections made by TriMet for the opening year of operation. There is little reason to think that ridership will grow significantly, given that the train runs exclusively through four suburban communities with no major job centers within walking distance of train stations.

WES is destined to be a one-hit wonder―an expensive monument to the egos of TriMet leaders and Westside politicians. Taxpayers would be better served if we simply canceled WES, repaid grant funds to the federal government, and moved the few WES customers back to buses.


John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

 

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