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Responding to Transit Funding Criticism

My recent column, "Evaluating Public Transit Funding Options," described various ways to finance public transit improvements. Such funding is sometimes criticized. This column examines and responds to common criticisms.
Todd Litman | May 29, 2014, 4am PDT
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My recent column, Evaluating Public Transit Funding Options, described and compared various possible ways to finance public transportation improvements. Such funding is sometimes criticized. This column examines and responds to common criticisms.

Many jurisdictions devote 10-30% of their transportation budgets to public transit although it only serves 1-3% of total regional travel. Critics argue that this is excessive and unfair to motorists who pay road user taxes that are “diverted” to public transit. Let’s consider some of the factors that may justify devoting a relatively large portion of transportation funding to public transit.

Travel demands are changing. Automobile travel grew rapidly during most of the last century so it made sense to devote significant resources to expanding roads and parking facilities, but automobile travel is now peaking while public transit demand is increasing due to demographic and economic trends including ageing population, rising fuel prices, increased urbanization, changing consumer preferences and increased health and environmental concerns. It therefore makes sense to invest more in public transit now to prepare for future demands.

In fact, to some degree past growth in automobile travel and declines in transit travel result from self-fulfilling prophecies: past planning practices tended to undervalue public transit and therefore underinvest in transit. There is significant latent demand for public transit and transit-oriented development: where service quality is improved transit ridership tends to increase. Increased transit investments are justified to catch up due to past underinvestments.

It is important to understand the diverse roles that public transit plays in an efficient and equitable transportation system:

  • It provides affordable, basic mobility for non-drivers. This requires providing transit services at times and places where demand is low.
  • It provides efficient transportation on major urban corridors, reducing traffic and parking congestion.
  • It provides a catalyst for more compact, multi-modal development, which allows households to reduce their vehicle ownership, providing substantial savings.

Critics often consider just one of these at a time, for example, criticising equity-justified services such as suburban buses for being inefficient, although it is generally cheaper than the alternative, which is a taxi or chauffeured automobile trip; and criticizing high-quality, grade-separated rail and bus services on major urban corridors for being unfair, although it is generally cheaper than accommodating additional automobile trips on the same corridors.

Transit systems include vehicles, operations, terminals and sometimes rail lines or bus lanes, with just roadway costs. It is therefore inappropriate to compare transit system investments with just roadway costs; comparisons should also include the costs of owning, operating and parking automobiles. Described differently, high quality public transit not only reduces traffic congestion and therefore roadway expansion costs, it also reduces vehicle ownership and fuel costs to households, parking costs to households and businesses, plus accidents and pollution emissions. All of these benefits should be considered when evaluating public transit investments

From an individual household’s perspective, public transit investments are often very cost effective. According to analysis described in our study, Raise My Taxes, Please! Evaluating Household Savings From High Quality Public Transit Service, providing high quality public transit service typically requires about $268 in annual subsidies and $108 in additional fares per capita, but reduces vehicle, parking and road costs an average of $1,040 per capita. This is more than a 300% annual financial return on investment, in addition to other benefits including congestion reductions, reduced traffic accidents, pollution emission reductions, improved mobility for non-drivers, and improved public fitness and health. Physically and economically disadvantaged people tend to enjoy particularly large savings and benefits since they rely on alternative modes and are price sensitive.

Critics often claim that investments in alternative modes are unfair to motorists, based on the assumption they finance the road system through user fees. This is incorrect. Currently, only about half of all U.S. roadway expenditures are financed by user fees, the remaining funds are general tax funds, averaging about $212 per capita in 2012 ($67 billion divided by 313 million residents), which residents pay regardless of how much they drive. As a result, people who drive less than average subsidize their neighbors who drive more than average. Public transit investments insure that non-drivers receive a fair share of transportation expenditures. In most communities 20-40% of residents cannot drive or have limited access to cars due to age, disability or poverty and so benefit from efficient transit service, and motorists benefit indirectly from reduced traffic and parking congestion, reduced accident risk, reduced chauffeuring burdens, reduced pollution, and from having alternatives available if their ability to drive is ever curtailed.

Travel activity can be measured in various ways which give very different conclusions about the importance of public transit and the return on transit investments. Transit is typically just 1-3% of total regional mode share, but represents a larger portion of urban commuting (typically 5-10%), and a much larger share (typically 10-50%) of travel to major commercial centers, as illustrated in the following graph.

Regional, Central City and CBC Mode Shares

Although public transit only serves a minor portion of total regional travel, it tends to serve a much larger share of commute trips to central cities and business districts (CBDs), and so can provide proportionately large reductions in traffic congestion and parking costs.

Since these commercial centers are where traffic and parking congestion problems tend to be most severe and where the costs of expanding infrastructure are greatest, transit can provide much greater congestion reductions and cost savings than indicated by its regional mode share. For example, although Los Angeles has only 11% transit commute mode share, one study found that transit services there reduce regional congestion by 11% to 38%, as indicated by the 47% increase in highway delays that occurred during the 2003 transit labor strike. As a result, considering all impacts, public transit improvements are often the most cost effective way to improve urban transportation.

When evaluating public transit investments it is important to understand the leverage effects that transit improvements can have on total vehicle travel, and therefore total transportation costs. High quality transit allows households to reduce their vehicle ownership, and provides a catalyst for transit-oriented development, creating communities where residents can reduce their vehicle ownership and rely more on walking and cycling, as well as public transit. As a result, each additional transit passenger-mile on high quality transit systems tends to reduce 2 to 10 automobile vehicle-miles, and leverages significant financial savings. This explains, for example, why residents of neighborhoods with high quality public transit spend 10-30% less on transportation than residents of more automobile-dependent communities.

Major U.S. City Commute Patterns 2008

As public transit mode share increases, automobile mode share declines even more, reflecting the leverage effect that high quality transit tends to have on total motor vehicle travel.

Critics often claim that transit projects are consistently over budget and fail to achieve ridership targets, citing decades-old studies. More recent data shows more positive results; according to a paper recently published by the Transportation Research Board, Comparative Examination of New Start Light Rail Transit, Light Railway, and Bus Rapid Transit Services Opened from 2000, during the last decade most New Starts transit projects have been completed within their budgets and are on track to exceed their ridership projections. This partly reflects improved understanding of the factors that help make transit successful. For example, transit projects become more successful if implemented with supportive land use development policies and commute trip reduction programs.

Another source of criticism is the claim that in the near future, autonomous (self-driving) cars will provide basic mobility and reduce traffic and parking congestion, eliminating the need for public transit. Such claims are probably exaggerations; during most of lifetimes, autonomous vehicles are unlikely to substitute for most transit services since they are likely to have significant costs as well as benefits, and will probably take decades to penetrate the vehicle fleet. A realistic estimate is that it will be the 2030-40s before most middle-income households own such vehicles and 2050-70s before they are common and cheap enough to provide basic mobility for low-income consumers and significantly reduce traffic and parking problems; under most scenarios, public transit will continue to play important roles in an efficient and equitable transportation system for the foreseeable future.

These are complex issues which can be challenging to communicate. Planners and economists need to develop tools for comprehensive evaluation which considers various planning objectives (improving basic mobility for non-drivers, reducing traffic and parking congestion, increasing transportation affordability, reducing pollution emissions, increasing roadway safety, improving public fitness, more efficient land use development, etc.), and monetizes impacts to the degree possible for benefit/cost analysis. A more qualitative approach is to have stakeholders describe the type of community they want in the future and identify the transportation system changes needed to create that type of community. Very likely the more ideal future will include better transportation options – better walking, cycling and public transit – which will require more public transit funding.

Information Resources

APTA (2013), The Role of Transit in Support of High Growth Business Clusters in the U.S., American Public Transportation Association.

CUTA (2010), The Economic Impact of Transit Investment: A National Survey, Canadian Urban Transportation.

EDRG (2014), Economic Impact of Public Transportation Investment, American Public Transportation Association.

EMBARQ (2013),Social, Environmental And Economic Impacts Of BRT Systems: Bus Rapid Transit Case Studies from Around the World, EMBARQ.

ICF (2010), Current Practices in Greenhouse Gas Emissions Savings from Transit: A Synthesis of Transit Practice, TCRP 84, Transportation Research Board.

Todd Litman (2010), Raise My Taxes, Please! Evaluating Household Savings From High Quality Public Transit Service, Victoria Transport Policy Institute..

Todd Litman (2013), Evaluating Public Transit Benefits and Costs, Victoria Transport Policy Institute.

Todd Litman (2014), “Evaluating Public Transportation Local Funding Options,”Journal of Public Transportation, Vol. 17, No. 1, pp. 43-74.

NCTR (2011), Exploration of Transit's Sustainability Competitiveness, National Center for Transit Research at the University of South Florida.

Ian Wallis. A. Lawrence and Neil Douglas (2013), Economic Appraisal Of Public Transport Service Enhancements, Report 533, New Zealand Transport Agency.

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