Can Transit Agencies Learn to Embrace Car Ownership?

and John A. Charles, Jr.

Most public transit agencies have some bus routes that are very low performing. Generally, these lines serve low-density suburban or rural neighborhoods, where few prospective riders live and service costs are high. The subsidies per ride on such routes are frequently $10 or more.

However, agencies find it difficult to eliminate low-ridership lines for a number of reasons. One is that management may appear ruthless if they appear to leave transit-dependent riders without mobility options. Another is that transit agencies are subsidized by taxpayers, so agencies feel political pressure to provide services to areas where their subsidies are generated through taxation, even if there are few riders there.

The largest transit agency in Oregon is TriMet, serving the Portland metro area. TriMet’s average passenger fare per ride is $0.88, while the average system cost per ride is $3.07. However, more than 20 bus lines have costs above $5.00 per ride, and several are above $10. Clearly taxpayers (who subsidize TriMet with over $200 million annually in payroll taxes) would benefit by eliminating some of these routes so that funds could be reallocated to lines that are overcrowded.

In August 2007, Cascade Policy Institute submitted an innovative proposal to TriMet addressing this problem. Our proposal was to cancel TriMet’s lowest performing bus routes and to use some of the savings to capitalize a loan fund to help finance car ownership for transit-dependent riders displaced by the bus line cancellations.

Why focus on car ownership? Because research shows that having a car dramatically increases the likelihood that someone will find a job, hold onto it, and move up the economic ladder. Most work sites outside downtown Portland are not well served by transit and never will be. Auto ownership would open up a whole new world of employment possibilities to these workers. Car ownership also makes day-to-day living much smoother, especially for parents juggling the logistics of childcare and employment.

Cascade’s proposal suggested that TriMet conduct this plan as a pilot program for a designated period of time. If TriMet eliminated the five worst performing bus lines, they would save roughly $1.1 million per year in operating costs, while displacing only about 265 riders. Some fraction of those riders could become car owners if offered a no-interest or low-interest loan, and the amount of money necessary to finance such loans would be relatively small (perhaps $4,000 per person).

No one knows how many people would be able to take advantage of a loan. Some riders might not have a driver’s license, while others might be incapable of paying off a loan under any terms; but this is part of what we would learn from the pilot program.

If 150 individuals accepted loans in the first year, roughly $600,000 of the $1.1 million in savings would be needed to capitalize the fund. But in the second year, TriMet would continue to save over a million dollars. Most of that would go into the agency’s bottom line because the loan fund would be getting paid back. Over the long term, even assuming an increasing number of loans, TriMet would save many millions of dollars.

Unfortunately, our proposal was rejected. In fact, TriMet did not even read it very closely. The agency’s representative criticized what he believed to be Cascade’s idea of “giving away” cars; our proposal was for a loan program.

TriMet apparently has difficulty understanding how a transit agency can be both pro-car and pro-transit at the same time. But the agency’s own expenditure program shows that transit is dependent on private car ownership. TriMet’s most expensive capital program, building light rail, relies on free park-and-rides for motorists who must first travel in a private auto. In fact, without widespread car ownership, TriMet would have almost no train riders.

This was highlighted in a recent Oregonian story. The writer noted that TriMet operates many parking lots along its light rail lines, and those lots closest to downtown Portland are vastly over-subscribed. A TriMet spokesperson urged people to leave their cars at home, but clearly this is unrealistic.

Some transit agencies do understand the benefits of car ownership. A representative of the Denver transit agency (which also operates light rail lines) told The Oregonian, “Cars are our friend.”

Cancelling five or six bus routes serving fewer than 300 people per week and putting some of the savings into subsidized car ownership would be enormously beneficial to the loan recipients, and still would promote TriMet’s broader mobility goals. In fact, it is possible that some low-income bus riders might be able to find higher-paying work elsewhere if they owned a car and become train riders in the process.

More than 150 private car-ownership programs already exist around the country (including two in Oregon). These programs have demonstrated an extraordinary level of effectiveness at helping people become more self-reliant through increased employment opportunities. Adding another program through TriMet, from a revenue stream that already exists, would benefit everyone.

But TriMet management isn’t interested. They have their clichéd story, and they are sticking with it: “Buses good, cars bad.”

Taxpayers deserve better.

Sreya Sarkar is Director of the Asset Ownership Project and John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research center.