RALEIGH – Conservatives who question the massive subsidies flowing to transit projects in Charlotte, Raleigh, and other cities do not question the viability of all transit services. Indeed, an end to massive subsidy and government monopolies could well lead to better-targeted, better-run service.
That’s the view of Randal O’Toole, a Cato Institute senior fellow and one of the conservative movement’s go-to experts on transit and land-use issues. His book Gridlock: Why We’re Stuck in Traffic and What to Do about It is highly recommended. And his latest Cato paper, making the case for privatization of existing transit systems, ought to make your reading list, too.
Debates about transit often devolve into fanciful claims, historical revisionism, and bizarre economics. Costs become benefits. Subsidies become redefined out of existence. Consumer preferences are assumed to be a problem, not a guide.
O’Toole is having none of it. Here’s a key passage from the paper:
Today, urban transit is the most expensive way of moving people in the United States. Airlines can transport people at a cost of less than 15 cents per passenger mile, barely a penny of which is subsidized. Driving costs less than 23 cents per passenger mile, which also includes about a penny of subsidy. Socialized Amtrak costs close to 60 cents per passenger mile, about half of which is subsidized. But urban transit costs nearly one dollar per passenger mile, with fares covering only 21 cents per passenger mile and subsidies paying for the rest.
The vast majority of taxpayers get hit coming and going, so to speak. They don’t use transit, or even benefit significantly from lower traffic congestion given their fellow citizens’ low ridership of transit. Plus, the transportation dollars squandered on transit aren’t spent on maintaining and expanding the transportation networks they do use, primarily streets and highways.
O’Toole argues that in addition to the obvious cross-subsidy problem, transit suffers from a productivity crisis. Back in the early 1960s, when most urban transit was still private, there were strong incentives for operators to focus on highly traveled routes and keep operating costs low. Public-sector transit agencies don’t face similar incentives.
As a result, productivity has declined. There were fewer than 30,000 transit trips per operating employee in 2008, down from about 60,000 in the early 1960s. Expressed differently, as the average number of transit trips per resident per year, urban transit usage declined from 275 in the 1940s to 45 in 2008.
And these are figures for the national average. It turns out that the few systems with relatively high usage, such as New York and San Francisco, are major outliers. Most urban transit systems attract fewer than 10 rides per resident per year.
So what’s the best way forward? O’Toole recommends an eight-part plan:
• Require highways to be fully self-supporting. We’re nearly there already, so the slightly higher cost to drivers won’t be much of a burden. Doing so will strengthen the case for the next steps.
• Phase out federal subsidies for transit and all other state and local transportation programs.
• Immediately eliminate all federal transit programs not funded by formula.
• Include user fees in all federal formula funds.
• End state diversion of gas taxes and other highway-user revenue to transit.
• End other direct state subsidies for transit agencies.
• If desired, offer state “mobility assistance” in the form of vouchers to low-income or disabled people who lack automobility. But let them decide how to use it.
• Authorize and pursue privatization of transit operations.
It’s about time the privatization train left the station.
Hood is president of the John Locke Foundation.