Click the play button to hear the audio commentary
by Andrew Hillard
Ending Transit Welfare as We Know It
While some history lectures put people to sleep, TriMet’s past should wake you up.
In 1971, TriMet was subsidized $38 for every Tri-County citizen. Since then, this figure has increased sixfold. In 2009, TriMet received $231 per resident.
Not surprisingly, as subsidies go up, TriMet’s fare revenues have gone down. Last year, customer ticket sales only accounted for 17.8% of TriMet’s operating expenses.
While subsidy dependence is common for public transportation, it’s a mistake to think transit can’t be self-supporting. In Los Angeles, the Antelope Valley Transit Authority charges fares that cover 100% of expenses at 75% capacity. When revenue is down, the company recalculates prices or cuts runs to cover costs. Likewise, New Jersey Transit boasts fare box recovery rates above 100%. Besides start-up costs, these agencies are actually “profitable.”
The success of Antelope Valley and New Jersey is based on a simple concept: Each pays close attention to the consumer’s willingness to pay and matches fares accordingly. While priced higher, passengers still choose transit because it’s cheaper and more convenient than driving.
TriMet’s growing demand for subsidies isn’t a sustainable business model. It’s time the agency moves toward self-sufficiency by improving productivity and matching ticket prices closer to service costs.
Andrew Hillard is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.