Free Public Transit - Is It Worth It?

Free public transit has been a hot topic recently in many U.S. cities. Some advocates say it will promote switching from personal vehicles to transit, others say it will help those already taking transit who cannot afford its costs, and some cite the potential for increased ridership’s effects on congestion and the environment. The notion of making public transit truly “public” by removing fares (such as how public parks and libraries are free) may be beneficial for social inclusion, the environment, the economy (more commuters taking transit means less time spent driving and more time spent being productive), and the transit system itself (such as less time idling waiting for passengers to pay fares, reduced maintenance costs, etc…); but it may have strong negative impacts on the transit system, also.

One study whose results were published by the Transportation Research Record states that certain eligible Californian employees would be able to trade in their parking passes for a free 12-week transit pass which would then turn into a reduced fare pass. The experiment found that, in the long run, drivers were interested in switching to transit given the conditions that fuel costs were relatively high and that the time differential between driving and riding was low (Sun, Zhang). These findings provide a solid foundation for claims that fare-free public transit will be beneficial in terms of roadway congestion and environmental externalities, allowing the focus of the argument to turn towards execution of a fare-free system.

Why a transit authority might shy away from removing their fare collection systems is obvious - fares are how they operate. A case study out of North Carolina has more insight into this topic. Chapel Hill Transit noticed in the early 2000s that it had a low farebox recovery rate - around 10%. What this means is that about 10% of all operating costs actually came from riders’ fares. Why go through all the hassle of collecting fares, enforcing rules, and providing discounts and passes to eligible citizens when it will all only contribute about 10% to your budget? Well, you don’t have to (Jaffe, 2013).

Chapel Hill Transit partnered with UNC Chapel Hill as well as local taxpayers to receive what the agency would expect in fares each year and did away with fare collection. Now, the university essentially pre-pays for its students, staff, and faculty to be able to ride the transit system and taxpayers are pre-paying for themselves, their families, and their neighbors to get on the bus with no fare. Although there is no fare, these changes come at a cost, now it’s just paid before riding (Jaffe, 2013).

Chapel Hill Transit also no longer has to incur the costs of purchasing, installing, and maintaining its fareboxes, advertise their pass program, or wait for every rider to scan their card before boarding the bus. The agency also expanded service by 20% (Jaffe, 2013). Clearly there are benefits for the agency as well as the riders, making this a potentially attractive offer to other cities. Yet there are larger cities over the United States with plenty of companies and schools to offset farebox recovery rates, but why do people in those cities still have to pay? Well, let’s look at two examples; New York City’s MTA (excluding its LIRR commuter lines) and Boston’s MBTA.

In 2015, when New Jersey Transit was looking to raise fares by 9%, NJ Transit researched farebox recovery rates nationwide and found the top agencies that rely the most on its riders fares (NJ came in at #9 around 40%). New York City’s MTA was #8 at 41%, the LIRR was #3 at 48%, and the NY Metro-North Commuter Railroad was #2 at 55% (Rinde, 2015). With such high reliance on the fares coming in from riders, switching to a funding-based program like Chapel Hill would be extremely difficult (also considering New York’s high cost of living, raising taxes to supplement these funds could be too burdensome on taxpayers). It is possible for the city to see whether large companies headquartered there would be willing to pay some of the price and if taxpayers and commuters would be willing to pay the remainder, but such a high percentage of the agency's budget is too large burden to bear by a fare-free system.

Boston, on the other hand, was not mentioned on the NJ Transit list meaning that the often criticized MBTA’s farebox recovery is below 40%, although this might have changed since 2015 (Rinde, 2015). The issue with moving to a fare-free MBTA is incentivizing companies, colleges, and taxpayers to pay a little more to the city each year. In order for these businesses and taxpayers on tight budgets to be willing to pay these costs, they need to be able to rely on the system in which they are investing. While the agency is currently working on a multi-billion dollar project to improve the MBTA’s service, the agency will need to prove itself to potential investors, as well as maintain a high level of service before asking for large sums of money to replace customer fares.

All in all, fare-free transit can work and it can provide major benefits to the regions it serves, as well as the environment, but the local agency needs to first understand just how heavily they rely on fares before considering asking for businesses and people to pay the fares for their employees, themselves, and others.

Works Cited

Jaffe, E. (6 Mar, 2013). How free transit works in the United States. Retrieved from: https://www.citylab.com/transportation/2013/03/how-free-transit-works-united-states/4887/

Rinde, M. (6 July, 2015). The list: The 10 U.S. transit agencies that rely most on fare revenues. Retrieved from: https://www.njspotlight.com/2015/07/15-07-05-the-list-the-10-u-s-transit-agencies-that-rely-most-on-fare-revenues/

Sun, Y., Zhang, L. Microeconomic model for designing public transit incentive programs. Transportation Research Record. 2672(4), 77-89.