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Rider Paradox: Surge in Mass, Drop in Transit

Uncle Teddy

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Rider Paradox: Surge in Mass, Drop in Transit
http://www.nytimes.com/2009/02/04/us/04transit.html

St. Louis is girding itself for some of the most drastic service cuts in the country.

By MICHAEL COOPER
Published: February 3, 2009
ST. LOUIS — Buses will no longer stop at some 2,300 stops in and around this city at the end of next month because, despite rising ridership, the struggling transit system plans to balance its books with layoffs and drastic service cuts.

Val Butler worries about her commute to the Garden View Care Center in Chesterfield, Mo.
One stop scheduled to be cut is in the western suburb of Chesterfield, Mo., just up the road from a bright, cheerful nursing home called the Garden View Care Center. Without those buses, roughly half of the center’s kitchen staff and half of its housekeeping staff — people like Laura Buxton, a cook known for her fried chicken who comes in from Illinois, and Danette Nacoste, who commutes two hours each way from her home in South St. Louis to her job in the laundry — will not have any other way to get to work.

“They’re going to be stranding a whole lot of people,†said Val Butler, a nurses’ assistant at Garden View, who said that she feared looking for work elsewhere in a tightening economy. “A lot of people are going to lose their jobs. A lot of people.â€

St. Louis may be girding itself for some of the most extreme transit cuts in the nation, but it is hardly alone. Transit systems across the country are raising fares and cutting service even when demand is up with record numbers of riders last year, many of whom fled $4-a-gallon gas prices and stop-and-go traffic for seats on buses and trains.

Their problem is that fare-box revenue accounts for only a fifth to a half of the operating revenue of most transit systems — and the sputtering economy has eroded the state and local tax collections that the systems depend on to keep running. “We’ve termed it the ‘transit paradox,’ †said Clarence W. Marsella, general manager of Denver’s system, which is raising fares and cutting service to make up for the steep drop in local sales tax.

The billions of dollars that Congress plans to spend on mass transit as part of the stimulus bill will also do little to help these systems with their current problems. That is because the new federal money — $12 billion was included in the version passed last week by the House, while the Senate originally proposed less — is devoted to big capital projects, like buying train cars and buses and building or repairing tracks and stations. Money that some lawmakers had proposed to help transit systems pay operating costs, and avoid layoffs and service cuts, was not included in the latest version.

The Washington Metro set a record on Inauguration Day last month when people made 1.5 million trips on it to see the swearing-in of President Obama, but its $176 million budget gap means that it is planning to cut service and eliminate 900 jobs. Chicago had its biggest gain in riders in three decades last year, but was forced to raise fares. Charlotte, N.C., whose new light-rail system is the envy of transit planners around the country, and which is enjoying its biggest ridership levels since “the days of streetcars,†according to Keith Parker, the transit system’s chief executive, will be running its new trains less frequently, raising fares and cutting back on bus service.

In New York City, the Metropolitan Transportation Authority is considering steep fare increases and its deepest service cuts in years to help close a $1.2 billion deficit. In addition to considering a 23 percent increase in fares and tolls, the authority is weighing plans to eliminate more than two dozen city bus routes and two subway lines, reduce off-peak service and even close some subway stations at night.

The nation’s transit woes threaten to deal another blow to the weak economy, keeping some workers from jobs they commute to and forcing some systems to lay off administrators, bus drivers, train operators and mechanics. And while the economic stimulus package being considered on Capitol Hill includes tax cuts intended to put more spending money in people’s pockets, fare increases promise to take a big bite for many commuters.

Big systems in Boston, Atlanta and San Francisco, and smaller ones across the nation, find themselves weighing cuts or fare increases that they fear could erode the gains they have made in attracting new riders. Beverly A. Scott, general manger of Marta, the Atlanta system, said as the sales tax revenue continued to drop, she was weighing everything from fare increases to service cuts to even selling the naming rights to stations — but she still hopes for more state support.

William W. Millar, president of the American Public Transportation Association, an industry group, wrote to the House speaker, Nancy Pelosi, last month urging her to include money for operating costs in the stimulus bill.

“Public transportation ridership is surging across the country,†he wrote, “increasing 6.5 percent in the third quarter of 2008 — the largest quarterly increase in the past 25 years, but transit systems are cutting service, increasing fares and laying off employees as a result of increased transit fuel costs in the past year and declining state and local revenue sources that support transit.â€

So even as the federal government plans to buy new train cars and buses for some transit systems, places like St. Louis find themselves without enough money to pay the bus drivers and light-rail train operators that they have now.

“I have 165 buses that I’m going to have to put in mothballs,†said Ray Friem, the chief operating officer at Metro, the St. Louis system. “There’s a ton of federal money tied up in those assets.â€

Money is so tight that the agency is not planning to rip out the bus stop signs that dot the roads, though they will soon be misleading. Instead, at the transit system’s headquarters upriver from the Gateway Arch, officials last week put the final touches on a model of a vinyl hood they plan to drape over each sign. “We regret due to a lack of funding, service to this stop is suspended,†the prototype said.

St. Louis is in some respects unique. It was in the minority of transit systems that lost a ballot measure in November seeking more money; voters rejected a proposal to raise the local sales tax to help pay for more public transportation. Transit officials said they believed their efforts had been hurt by lingering public resentment over a light-rail expansion project that was delayed and went over budget, devolving into messy litigation with contractors that ended up costing the transit system even more.

Faced with a yawning shortfall, despite an 8 percent increase in ridership last year, the system reluctantly decided to cut nearly half of its bus service; lay off nearly 600 of its workers, or a quarter of its work force, and reduce service on its red, white and blue MetroLink light-rail cars — the modern successors of the clanging trolleys that Judy Garland sang about in “Meet Me in St. Louis.†Absent a windfall, the cuts are scheduled to take effect at the end of March.

Some people who worked on the failed campaign to raise the sales tax said their efforts were complicated because most local voters do not regularly take public transportation. But in the leafy suburbs west of Interstate 270, which are scheduled to lose almost all of their bus service, many people will soon discover that even if they do not take buses themselves, they rely on them to bring workers to their shopping malls, office parks, hospitals and nursing homes.

The Garden View Care Center, in Chesterfield, is part of a cluster of a dozen facilities sometimes called nursing home row. Rhonda Uhlenbrock, the center’s administrator, has been working with agencies that set up car pools and trying to coordinate with other businesses that will be affected to see if she can find other ways for her employees, many of whom do not have cars, to get to work.

“This place could survive without me,†Ms. Uhlenbrock said in her office recently, where she was assembling a collage to honor employees who have been at the center more than 10 years. “But not without them. They are the people who do the work.â€

Ms. Nacoste, who rises at 3:45 a.m. for her two-hour commute to work in the housekeeping and laundry department, said employers closer to home either paid less or were not hiring. She shook her head at the thought that the weak economy was leading to cuts in bus service.

“They’re going make the economy worse if they cut the bus,†Ms. Nacoste said. “There’s going to be unemployment, people running out of money. What are we going to do?â€
 
Two things from this...


1. It appears the bad economy is not leading to a decrease in ridership at all even down South where the economy is much worse. This means we could expect increasing ridership on TTC and not a massive decline like in the 90's...

2. It shows how vital it is to fund transit now.
 
The sudden drop in gas prices and the huge job losses the US has experienced in the last few months will impact ridership sooner than later.

Exactly. SUV sales are actually going back up in the US. With gas at less than 2 bucks a gallon, transit is less of an attractive option.

Paradoxically, this proves the TTC's strengths. As it relies on the fare box more, it is more resilient to the whims of funding decisions by higher levels of government.

I have always believed that transit O&M should be paid for by the fare box and governments should only be pitching in for capital expenditures. That ensures sustainability even during tough times.
 
I have always believed that transit O&M should be paid for by the fare box and governments should only be pitching in for capital expenditures. That ensures sustainability even during tough times.

Does it?

What if the government, for political reasons, expends on a capital project that forces the service to extend service beyond what the fare box can support.......that is definitely not sustainable!
 
Some want a portion of the gasoline tax go towards public transit. To have a portion of the gasoline tax go towards public transit is wrong. If people drive less, that means less taxes from gasoline. The reason the price of gasoline is going down is because of the recession, less demand for gasoline. In turn, less gasoline means less funds for public transit.
Public transit should be funded by a portion of the sales tax within the city where the purchase is made.
 
Does it?

What if the government, for political reasons, expends on a capital project that forces the service to extend service beyond what the fare box can support.......that is definitely not sustainable!

That only tends to happen when the transit service has to rely far too much on higher levels of government for support. And it tends to happen where the city has no long term transit strategy. Toronto is a lovely example of these issues. Torontonians aren't willing to pay the property taxes that it would take to support the TTC (among other city agencies) effectively (our mill rates are lower than our neighbours). And Toronto has not stuck hard and fast to a long term strategy that prioritizes what they want to build. ie....forget finishing the Sheppard line, it's all about LRT now....

Some want a portion of the gasoline tax go towards public transit. To have a portion of the gasoline tax go towards public transit is wrong. If people drive less, that means less taxes from gasoline. The reason the price of gasoline is going down is because of the recession, less demand for gasoline. In turn, less gasoline means less funds for public transit.
Public transit should be funded by a portion of the sales tax within the city where the purchase is made.

But you would have the same dilemma with a sales tax. Many cities in the US which rely on sales taxes are suffering worse fates than our municipal governments because the economic downturn has dramatically reduces sales tax revenues. I am willing to wager that the drop in sales tax revenue would be proportionally worse than the drop in gasoline tax revenues. There's only so much you can cut back on driving. But you can cut back a lot on shopping.
 
If gasoline taxes can down in a recession, of course sale taxes would go down as well...
 
KEITHZ:

Paradoxically, this proves the TTC's strengths. As it relies on the fare box more, it is more resilient to the whims of funding decisions by higher levels of government.

I have always believed that transit O&M should be paid for by the fare box and governments should only be pitching in for capital expenditures. That ensures sustainability even during tough times.

The question you should ask is why can the TTC rely on the fare box more - that ability doesn't take place in a vacuum. Don't forget the correlation between cost of fares and desirability of transit use - to blindly rely on the fare box is quite likely to result in the perverse outcome of declining transit use.

That only tends to happen when the transit service has to rely far too much on higher levels of government for support. And it tends to happen where the city has no long term transit strategy. Toronto is a lovely example of these issues. Torontonians aren't willing to pay the property taxes that it would take to support the TTC (among other city agencies) effectively (our mill rates are lower than our neighbours). And Toronto has not stuck hard and fast to a long term strategy that prioritizes what they want to build. ie....forget finishing the Sheppard line, it's all about LRT now....

That's not congruent with reality. Most of the possible capital projects will likely result in a loss in operating costs - and the capital funding is probably reliant to some degree on financing by higher levels of government regardless of the differential in mill rate. The presence or absence of transit plans at the municipal level is probably not going to dictate the priorites of higher levels of government either given the calculus of politics. The point is - transit service has to rely on government support precisely because it's not a money making operation in all but the highest density environments - and that's lacking in most jurisdictions.

AoD
 
At any rate, this hardly applies only to public transit, highway funding in the states is collapsing as well, as revenues from registration of vehicles and tolls fall. It is more likely that the interstate system will be subject to collapse in the next decade or so than public transit, since in the states it is arguably so overbuilt and underused.

Highway_bridge_construction_1981

Feb 5, 2009, By Michael Keating

After three years of steady but modest growth, the U.S. highway and bridge construction market is expected to flatten in 2009, as recent increases in federal highway investment likely will be offset by weakened state and local highway budgets, according to a forecast issued by the American Road & Transportation Builders Association (ARTBA).

Dr. William Buechner, ARTBA vice president of economics and research, projects that the value of construction work put in place on highways and bridges will be $80.2 billion in 2009, a 1.5 percent increase over 2008’s $79 billion.

If construction material costs level off next year – as seems likely following the recent collapse of oil prices and the nation’s economic slowdown – the real volume of construction work should stabilize, and may even improve, after declining about 6 percent in 2008, according to ARTBA.

One factor that could considerably brighten the forecast, Buechner noted, is for Congress and the president to enact an economic stimulus bill that includes transportation investment. Every $1 billion invested in quick-start highway and bridge projects would add about one percentage point to the 2009 forecast.

Even without a stimulus bill, the federal highway program should provide a cushion for highway construction in 2009. The $41.2 billion of highway investment enacted by Congress for fiscal year 2008 – a 5.5 percent increase over fiscal year 2007 – will have its biggest impact during the 2009 construction season as projects started in 2008 ramp up. Another $41.2 billion in the federal highway budget for fiscal year 2009 will help maintain market stability.

“The most critical problem for the highway construction market in 2009 is that state and local governments are facing serious fiscal problems, and some may tap transportation funds or defer transportation investments to meet budgets,†Buechner said. “High gas prices this past summer, combined with a slowing economy, have resulted in a 3.3 percent decline in highway miles driven – thus reducing state gas-tax revenue collections.â€

Buechner noted that slow sales of new cars and trucks have caused a drop in revenues from vehicle registration fees; both (vehicle sales and registration-fee revenues) will impact highway investment.

On the subject of registration fees, some budget-strapped states are contemplating hiking them. Ohio drivers, for instance, will face a variety of fee increases when they go to their local motor vehicle office to register a vehicle. Among the fees that will increase as outlined in Gov. Ted Strickland’s proposed budget are registering a motorcycle or passenger car, charges for temporary tags and ordering someone’s driving history.

At the same time, foreclosures and a decline in home values in many areas of the country are cutting into the property-tax revenues that many local governments apply to their highway construction activities.

Bond turmoil could lead to state cutbacks

The recent turmoil in financial markets may affect the ability of some state and local governments to use bond financing for transportation projects, which typically provides about 5 to 10 percent of project funding each year. Bond markets were inoperative in September, and interest rates on tax-exempt bonds soared. Since then, rates have eased, but are still above last year’s level, which may temporarily affect plans to issue transportation-related bonds.

According to the ARTBA forecast, some states already have announced cutbacks in highway and bridge projects in response to budget shortfalls. Maryland will delay at least $1.1 billion of scheduled highway construction projects during the next six years. North Carolina anticipates having to cut $200 million from its highway program by June. New York State plans to eliminate 10 percent of its projects because of budget difficulties. Other state and local governments are making similar adjustments to the revenue shortfall.

Nationwide, the impact is showing up in new contracts awarded for highway and bridge construction projects, which were down $1.7 billion, or 3.7 percent, through November 2008.

Reauthorization of the federal highway and transit programs before Sept. 30 – the earlier in the year the better – also has market implications, according to ARTBA, since lack of clarity on future federal funding beyond that date could cause some state and local highway agencies to go slow in committing federal funds for new projects.

Bright spots include public transit

Looking on the bright side, several transportation tax issues got the thumbs up in elections this past November. Voters in Alaska, California and Rhode Island approved new bond issues for transportation improvements, as did voters in various counties in Colorado, North Carolina, Oregon, Texas and Virginia.

Public transit is one transportation mode that showed growth last year, ARTBA reported. The value of construction work on subway and light-rail projects hit $4.3 billion in 2008, up 20 percent from $3.6 billion in 2007. The growth should continue into 2009 and beyond, driven in part by $1.5 billion of contracts awarded late last year for New York’s 2nd Avenue subway line, according to Buechner.

Big contract awards in 2008 and 2007 for projects in Colorado, Oregon, Nevada and Utah also should help boost the transit construction market for the next few years.

Spend infrastructure dollars carefully

Pete Ruane, president and CEO of ARTBA, told GovPro.com that the infrastructure stimulus package needs to be well-planned.


Pete Ruane, president and CEO of ARTBA
“While investing in highway and transit projects is a road to economic recovery, and should be a key part of any stimulus package, simply throwing transportation dollars at the current crisis – unless done right – would be a critical mistake,†Ruane said. “Every transportation dollar included in the stimulus package should be subjected to a strict review process by both the Government Accountability Office (GAO) and U.S. Department of Transportation inspector general. This will ensure timely, independent review and appropriate utilization. These safeguards will ensure transparency and demonstrate social utility. And, most importantly, the inclusion of these measures will ensure that funds go to needed projects that will put thousands of employees on job sites nationwide helping to build a modern, efficient transportation infrastructure network.â€

Washington, D.C.-based ARTBA represents more than 5,000 public- and private-sector members of the U.S. transportation design and construction industry before Congress, the White House, federal agencies, news media and the general public.
 
Highways

At any rate, this hardly applies only to public transit, highway funding in the states is collapsing as well, as revenues from registration of vehicles and tolls fall. It is more likely that the interstate system will be subject to collapse in the next decade or so than public transit, since in the states it is arguably so overbuilt and underused.

Bumpy forecast for highway and bridge construction
Feb 5, 2009, By Michael Keating

After three years of steady but modest growth, the U.S. highway and bridge construction market is expected to flatten in 2009, as recent increases in federal highway investment likely will be offset by weakened state and local highway budgets, according to a forecast issued by the American Road & Transportation Builders Association (ARTBA).

Dr. William Buechner, ARTBA vice president of economics and research, projects that the value of construction work put in place on highways and bridges will be $80.2 billion in 2009, a 1.5 percent increase over 2008’s $79 billion.

If construction material costs level off next year – as seems likely following the recent collapse of oil prices and the nation’s economic slowdown – the real volume of construction work should stabilize, and may even improve, after declining about 6 percent in 2008, according to ARTBA.

One factor that could considerably brighten the forecast, Buechner noted, is for Congress and the president to enact an economic stimulus bill that includes transportation investment. Every $1 billion invested in quick-start highway and bridge projects would add about one percentage point to the 2009 forecast.

Even without a stimulus bill, the federal highway program should provide a cushion for highway construction in 2009. The $41.2 billion of highway investment enacted by Congress for fiscal year 2008 – a 5.5 percent increase over fiscal year 2007 – will have its biggest impact during the 2009 construction season as projects started in 2008 ramp up. Another $41.2 billion in the federal highway budget for fiscal year 2009 will help maintain market stability.

“The most critical problem for the highway construction market in 2009 is that state and local governments are facing serious fiscal problems, and some may tap transportation funds or defer transportation investments to meet budgets,†Buechner said. “High gas prices this past summer, combined with a slowing economy, have resulted in a 3.3 percent decline in highway miles driven – thus reducing state gas-tax revenue collections.â€

Buechner noted that slow sales of new cars and trucks have caused a drop in revenues from vehicle registration fees; both (vehicle sales and registration-fee revenues) will impact highway investment.

On the subject of registration fees, some budget-strapped states are contemplating hiking them. Ohio drivers, for instance, will face a variety of fee increases when they go to their local motor vehicle office to register a vehicle. Among the fees that will increase as outlined in Gov. Ted Strickland’s proposed budget are registering a motorcycle or passenger car, charges for temporary tags and ordering someone’s driving history.

At the same time, foreclosures and a decline in home values in many areas of the country are cutting into the property-tax revenues that many local governments apply to their highway construction activities.

Bond turmoil could lead to state cutbacks

The recent turmoil in financial markets may affect the ability of some state and local governments to use bond financing for transportation projects, which typically provides about 5 to 10 percent of project funding each year. Bond markets were inoperative in September, and interest rates on tax-exempt bonds soared. Since then, rates have eased, but are still above last year’s level, which may temporarily affect plans to issue transportation-related bonds.

According to the ARTBA forecast, some states already have announced cutbacks in highway and bridge projects in response to budget shortfalls. Maryland will delay at least $1.1 billion of scheduled highway construction projects during the next six years. North Carolina anticipates having to cut $200 million from its highway program by June. New York State plans to eliminate 10 percent of its projects because of budget difficulties. Other state and local governments are making similar adjustments to the revenue shortfall.

Nationwide, the impact is showing up in new contracts awarded for highway and bridge construction projects, which were down $1.7 billion, or 3.7 percent, through November 2008.

Reauthorization of the federal highway and transit programs before Sept. 30 – the earlier in the year the better – also has market implications, according to ARTBA, since lack of clarity on future federal funding beyond that date could cause some state and local highway agencies to go slow in committing federal funds for new projects.

Bright spots include public transit

Looking on the bright side, several transportation tax issues got the thumbs up in elections this past November. Voters in Alaska, California and Rhode Island approved new bond issues for transportation improvements, as did voters in various counties in Colorado, North Carolina, Oregon, Texas and Virginia.

Public transit is one transportation mode that showed growth last year, ARTBA reported. The value of construction work on subway and light-rail projects hit $4.3 billion in 2008, up 20 percent from $3.6 billion in 2007. The growth should continue into 2009 and beyond, driven in part by $1.5 billion of contracts awarded late last year for New York’s 2nd Avenue subway line, according to Buechner.

Big contract awards in 2008 and 2007 for projects in Colorado, Oregon, Nevada and Utah also should help boost the transit construction market for the next few years.

Spend infrastructure dollars carefully

Pete Ruane, president and CEO of ARTBA, told GovPro.com that the infrastructure stimulus package needs to be well-planned.

“While investing in highway and transit projects is a road to economic recovery, and should be a key part of any stimulus package, simply throwing transportation dollars at the current crisis – unless done right – would be a critical mistake,†Ruane said. “Every transportation dollar included in the stimulus package should be subjected to a strict review process by both the Government Accountability Office (GAO) and U.S. Department of Transportation inspector general. This will ensure timely, independent review and appropriate utilization. These safeguards will ensure transparency and demonstrate social utility. And, most importantly, the inclusion of these measures will ensure that funds go to needed projects that will put thousands of employees on job sites nationwide helping to build a modern, efficient transportation infrastructure network.â€

Washington, D.C.-based ARTBA represents more than 5,000 public- and private-sector members of the U.S. transportation design and construction industry before Congress, the White House, federal agencies, news media and the general public.
 
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There's a huge divide between states in terms of maintenance. The New York State Thruway is in great shape, though that likely has to do with the tolls, while highways in Michigan are death traps. I nearly bottomed out once on I-94, and recently on the same road I nearly slid off the road because they didn't seem to salt at all. In Mississippi, the interstate was old concrete that had cracked, so about three times a second the car would go thud. Imagine that for several hundred miles.
 
The New York State Thruway is in great shape, though that likely has to do with the tolls ...
Every time I drive it, I wonder why it's so crowded, and only has 2 lanes (in each direction) west of the Hudson. I'd have thought a third lane would have been added years ago - at least as far north as Albany.
 
I-87 is crowded, but I-90 sure isn't. I've gone two minutes (I kept track...it's a pretty boring drive) without seeing another car in either direction.
 

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