As regional payroll tax rate goes up, TriMet recommends more free service to affluent downtown MAX riders

I testified at the TriMet (TM) board meeting this morning on the proposal to modify “Fareless Square” (FS). The TriMet management team is proposing to eliminate the free rides for bus passengers but continue them for MAX riders. I urged them to abolish Fareless Square entirely, to stop pretending that transit service is a free good, and to begin collecting the roughly $3 million in lost revenue per year from this silly policy. They took no action but will make a final decision at the next board meeting.

Some background on the FS concept: It was first adopted in 1975, primarily as an air pollution clean-up strategy. Downtown Portland suffered from over 170 violations per year of the newly enacted carbon monoxide standard mandated by the federal Clean Air Act. It was hoped that by giving away free transit in the downtown core, some riders would be induced to leave their cars behind. Although that strategy never really panned out — because most free riders are actually pedestrians resting their feet rather than motorists resting their cars — air pollution in downtown declined substantially by the 1990s, due to improved auto technology and better fuels. Also, regional density actually declined (contrary to state land-use goals) and many jobs left the central city, further lowering downtown emissions.

Nonetheless, TM expanded FS in 2001 to include parts of the Lloyd Center district. As a result, Portland and Multnomah County each pay about $338,000 annually to TM to make up for 1/3 of the lost revenue. That money comes from city-charged parking fees in the Lloyd District and a hotel tax on Lloyd district hotels and motels. The remaining 2/3 of the cost comes from TM payroll tax revenues, imposed on all regional businesses.

In recent years, the Board has become more concerned about the revenue impacts of this policy. No other transit district in the country gives away this much transit, and TM is currently cutting service due to fiscal problems. The agency has also persuaded the legislature to increase the regional payroll tax rate on employers (which generates over $200 million annually for TM’s general fund) twice in the past six years, which is difficult to justify when TM is giving away costly service in Portland.

I pointed out to the Board that the original reason for adopting FS is now moot. We have the best air quality in the history of Portland, and it will only get cleaner due to next-generation auto technology already being implemented in newer cars. In terms of fighting local air pollution, we came, we saw, and we conquered; let’s have a party and move on!

Moreover, either transit service has value to customers or it doesn’t. If it does, then why charge bus passengers (who tend to have lower incomes) while providing free service to upper-income MAX riders? It’s confusing, illogical, and regressive.

Finally, I pointed out that the FS policy causes a large number of commuters to drive to Lloyd Center, park locally, and hop free transit to downtown. This creates a nuisance to local residents and business owners. FS also aggravates the problem of unruly customer behavior, which is especially prominent on MAX. When you give service away for free, you encourage people to disrespect the service and the service workers.

The only TM board member to respond to my comments was Lynn Lehrbach, a Teamsters union negotiator in his day job. He stated that we “can’t buy good behavior” from customers so pricing makes no difference. He also noted that transit creates a wonderful opportunity for rich and poor alike to rub shoulders, and that he would prefer that all transit service be free. He gave no indication of who would actually pay for the “free” service in this fantasy.

In nearly three decades of attending TM board meetings, I’ve never once observed what would be called an interesting policy debate, nor have I ever seen a 4-3 vote. Virtually all discussions are as content-free as the one at today’s meeting. While we can hope for something more spirited next month, I’m not hopeful.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research center.