Transit Fair Increase: The Correct Decision

So, the city decided to increase transit fares by $0.25, an increase of about 10%, ostensibly for the purpose of funding future rapid transit purposes.

This has caused some reaction from the Winnipeg blogosphere.

Some of the criticism is valid: for example, the seeming amateurishness of a sudden unstudied rate increase does not look that good and is no way to run a city (but I don't generally expect better of politicians).

On the other hand a lot of the criticism of fare increases reeks of entitlement.

Speaking as someone who buys a pass every month for work and has been using the transit system regularly for almost a decade, it is only right and proper for transit fares to increase significantly; in fact $0.25 is too small an increase, and the increase should not go to rapid transit improvements, but rather to operating costs.

Transit is a very heavily subsidized service for a very small minority people. The Winnipeg 2010 operating budget can be found here.

About 5% of Winnipeg's budget ($43.2M) goes to direct Transit subsidies (p. 9).

In addition, Transit gets a $30.8M direct subsidy from the province (p.20).(This is, of course, subsidizing Winnipeg at the expense of the rest of Manitoba).

Only $69.2M, just under half the operating costs of Transit ($143.2M), comes from fares.

The operating cost to the city in 2010 was $2.43 per a passenger (p. 23), while bus fair was $2.35 ($1.85 reduced), and even less if you bought tickets ($2.05) or passes. The city paid more for passengers bus ride than the passengers themselves did, in many cases by a substantial amount.

On the other hand roadway construction and maintenance, is funded for $43.2M (although, 2010 is significantly lower in spending than previous years due to lower debt charges and increased service revenues) (p.4). Municipal roadway construction and maintenance in 2010, is effectively the same as the transit subsidy.

Snow removal and ice control is another $31.3M (p. 15). Another $11.8M goes to transportation planning (p. 10). (None of these three expenditures gets program-specific, direct provincial funding).

Transit's combined direct provincial and municipal subsidy for Transit was roughly the same as the entirety of the city's funding for road construction, maintenance, and snow control. Given that Transit uses these same roads, this road funding is also an indirect subsidy of Transit.

We see that Transit passengers get an excellent deal, paid for primarily by homeowners and taxpayers.

For those who will then argue about subsidies for vehicle users, the Federal Gas Tax, which is paid for by vehicle users provided $40.5M in revenues for Winnipeg (p.211), about the same as road construction and maintenance costs. The costs of snow removal and transportation planning would then be fully subsidized. Snow removal and transportation planning also directly benefits Transit users, cyclists, and pedestrians, so these subsidies subsidizes them as well. Transit users also enjoy the benefits of roads, but Transit's gas tax costs would be part of the Transit operating expenses, so it's a wash. (Although, I am of the belief that these too should be paid for through fuel consumption taxes rather than through property taxes and general revenues).

Now, let's look at usage figures (p. 9). Transit users make up only 13.5% of work-trip users; vehicle drivers and passengers make up about 78%.

In other words, Transit subsidies which roughly equaled the entirety of roadway spending, are used to support only about one in seven workforce travelers.

In conclusion, a fair bus fare should be about $4.80, double what it is now.

Those complaining for personal/financial reasons about a higher bus fair should realize the amazing deal they're getting on transportation at the expense of everyone else and should not be complaining about a small increase, especially when it is earmarked to benefit them (through rapid transit) rather than making up the operating deficit of the service.

Those who support massive Transit subsidies for ideological or "practical" reasons should consider a few questions:

1) Why should the rest of the population be heavily subsidizing the transportation choices of the small Transit-using minority?

2) Why should those in the rest of Manitoba be subsidizing transportation choices available only to those in Winnipeg?

3) Why should the city be operating and subsidizing a mode of transportation that requires so many resources for so few persons, many of whom would likely not use it were it not so heavily subsidized?

4) For the urbanists, if you desire population density and the renewal of the core, why should the city be heavily subsidizing a service that lowers the cost of commuting, thereby promoting suburban/commuter lifestyles? It seems counter-productive.

5) Would a private and competitive transit system be superior? (Would a competitive transit system even be possible or is transit a natural monopoly-like situation?)

As for myself, I'm not sure what my position is on transit. Basic transport infrastructure is generally best carried out by municipalities, funded by fuel consumption taxes, due to the natural monopoly of roads in a crowded urban environment, but a transit system for Winnipeg seems fairly inefficient given the subsidies necessary to even keep it running. Would a transit system where users paid the full cost of the system through fairs be viable?

Maybe a transit system only open during peak hours would make it more efficient? Maybe Winnipeg is too spread-out to sustain a transit system? Maybe the system is necessary for other reasons? Maybe a redesigned system could be more efficient?

Anyway, that's enough for now. Maybe I'll discuss Transit again another time.