Get on the bus, Gus, unless it costs too much

Transit ridership is up, and soon, so will be the cost of riding the bus. The same fuel prices that have put record numbers on the bus are driving transit budgets into the red. But will the fare hikes cover the shortfalls?

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Transit ridership is up, and soon, so will be the cost of riding the bus. The same fuel prices that have put record numbers on the bus are driving transit budgets into the red. But will the fare hikes cover the shortfalls?

Kitsap Transit on the west side of Puget Sound, King County Metro Transit, Community Transit in Snohomish County — are all raising fares or considering it. Kitsap Transit will up fares by 25 cents on August 1, King County Metro is likely considering a 25-cent bump, and Community Transit has proposed increases of 25 to 75 cents to take effect October 1.

Fuel costs aren't the only problem. Statewide, income from sales tax, which makes up more than 80 percent of some transit budgets, is flat or declining for the first time in years.

Community Transit's fare increase will almost cover the $4 million hole caused by fuel costs, but sales tax revenue is $6 million behind what the agency forecast.

In fact, fares collected amount to maybe 20 percent and as little as 3 percent of operating costs for transit systems. State and federal grants are a more significant source of income, behind sales tax. So why bother with raising fares? (Some transit advocates ask why bother with fares at all.)

Most obviously, fare hikes result in an immediate source of income, however small. In urban areas, basic math makes that income more than pocket change — more riders, more fares. Increased ridership alone has generated more revenue all by itself, without fare increases.

For rural transit agencies, fare hikes aren't as useful. Pacific Transit in southwest Washington has seen ridership increase, but the system is small and fares are low – from 35 to 50 cents.

"A certain percentage of the public depends on public transit — seniors, disabled people, people who can't afford a car," Director Tim Russ says. The agency has always wanted to "keep fares as reasonable as possible," he says, "and we intend to keep it that way."

Neither Clallam Transit nor Jefferson Transit, both on the Olympic Peninsula, plans to raise fares at this point. Clallam Transit is actually in good shape on the fuel front, at least in the short term — through next year, the agency has a fixed fuel rate in place, negotiated before prices shot up.

After fare increases, what then? If fares only go so far in paying for transit — and that's not far at all — how else will transit systems plug their budget gaps?

The most typical answer from transit managers is to cut costs. For Kitsap Transit, that means what they call "efficiency service cuts." In addition to their August 1 fare hikes, they'll cancel bus trips that carry fewer riders. Jefferson Transit has laid off two drivers, a dispatcher, and one manager.

Community Transit says they'll try to trim costs without cutting service, which might mean not hiring vacant positions, putting off inessential training, and eliminating advertising — people are riding the bus in record numbers anyway, right?

It turns out that a fare increase figures in the cost-cutting calculus too, but it's tricky. Raise fares by 10 percent, and ridership dips about 3 percent (pdf), according to a common but simplified formula — though no one is sure how that will hold up given record gas prices. So, fewer riders, less strain on the system. But fewer riders can mean less fare income, too.

The majority of transit funding in Washington comes from you and me — from local sales tax and from state and federal monies, much of the latter from gas taxes.

After I-695 passed in 1999 and shredded the revenue going to public transit, agencies scrambled to cover a 40 percent drop in funding. "Over the years we have been able to build back up," says Tim Russ of Pacific Transit, in their case mostly with state and federal grants. Sales tax is now the biggest revenue source for most of the state's transit systems, with the legislature authorizing transit agencies to collect up to 0.9 percent.

Some agencies collect zero percent of that – Pullman Transit and Garfield County Transportation in southeast Washington help pay for their small systems with other local taxes. Other transit agencies hover at 0.2, 0.4, 0.6 percent sales tax. King County Metro and Community Transit are at the 0.9 percent max.

What's a transit agency to do? Raise fares, for one thing, as we're seeing in the urbanized areas. Go after more federal grants, for another, with some agencies winning and others losing, unless the feds increase the pie — the Bush administration's proposed 2009 transportation spending is under fire from the American Public Transportation Association for not meeting spending levels authorized by legislation and for transferring money from mass transit to highways. The Senate — led by Patty Murray (D-WA), Max Baucus, (D-MT), and Charles Grassley (R-IA) — is working on a fix for the latter.

Transit agencies are also putting their state legislative agenda together for the 2009 session, but a $2.4 billion deficit is forecast for the state's next budget cycle.

Terry Weed, general manager of Clallam Transit, admits there's not a lot of energy at the state level to increase transit funding when local systems haven't tapped their full sales tax potential. And increased taxes aren't exactly popular, probably less so in today's economy.

The state's transit agencies are facing "difficult scenarios," Weed says. "Dramatically rising demand, rising fuel costs, a tough tax structure ... it's not going to be easy."


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