Could TriMet become a “free” (or nominally-priced) service?

There’s been discussion lately about the fare structure of Portland’s transit agencies–both the Streetcar and TriMet itself. Much focuses on the current disconnect between Streetcar pricing (currently a sweetheart deal, especially for Streetcar users who don’t use TriMet-badged services) and the rest of the system. TriMet’s fares are currently above the national average.

So here’s a hypothetical.

What about making the entire system free–or drastically reducing fares to a nominal level–less than 50c a ride or so (sufficient to discourage camping on busses), with annual passes costing no more than a couple hundred, rather than the $1000 you’ll pay today? TriMet’s farebox recovery ratio is about 25%, so this isn’t quite as far-fetched of an idea as it might seem. It would require other new revenue sources of about $100M/year (minus what passenger revenue remains under the new scheme) to keep service at the same level, but such a gesture might make other monies available.

  • How much would this boost ridership, particularly encouraging a shift from cars? For those who have a car in the garage, it takes about a 15-mile round trip to work and back (not counting tolls and parking, but counting things like fuel and maintenance) for a bus pass to be cheaper than driving; a dirt-cheap service would vastly alter this equation.
  • Would a combination of reduced fares and a higher payroll tax to plug the hole, be a politically saleable proposition?
  • What level of fares should be targeted in such a scenario?
  • How much would this increase demand for new services (crowding on existing routes, calls for new routes)?

Again, this is a hypothetical proposal, but one which seems interesting to discuss.

23 Comments

23 Responses to Could TriMet become a “free” (or nominally-priced) service?

  1. zefwagner
    November 16, 2011 at 1:46 pm Link

    Most studies put the elasticity of demand for transit at about 0.3, which means you would not actually gain a great deal of ridership by dropping fares, and there is no way the increased ridership would pay for itself. There’s also the problem that increased ridership means you need more service, but you’ve just reduced revenue to pay for that service. Studies also find that the price of transit is a very small portion of a person’s decision to use transit or not. Factors like ease of access, time spent waiting, running time, and the prices of gas and parking are much bigger factors in someone’s decision to take the bus rather than driving.

    Making transit free also would cause people to take more frivolous trips, causing overcrowding and hurt those folks who really have to make that trip. We see this already on the streetcar. Free transit could also have the problem where people don’t value it, and therefore don’t respect it. It’s good to give people a personal stake in transit.

    I guess it’s a question of priorities. If you want the most ridership possible but don’t care much about quality, make transit free or really cheap and just subsidize it way more. In this case all your money is going to have to focus on providing more routes and service hours. If you want a higher quality service, keep fares the same and put more money into improving the vehicles, the speed, the frequency, stop access, etc.

    I would prefer the latter at this point. Fares are still pretty cheap in Portland, although people are right to be upset that fares are going up without an increase in service. On the other hand, the fact that they can raise fares and ridership barely drops means that most of us still find the service to be worth that much, so it’s hard to complain.

  2. Chris I
    November 16, 2011 at 1:54 pm Link

    I would prefer that they improve service. More frequent service, more high capacity lines, etc. Other than biking public transit is already the cheapest game in town. I doubt you will induce that much travel.

  3. Ross Williams
    November 16, 2011 at 1:57 pm Link

    This was suggested by Vera Katz when she was mayor. Here are some of the problems:

    1) Increased usage that results will require a larger budget.

    2) A lot of the increased usage would be where the transit replaced a pedestrian trip for very short distances. If you are going to spend more money on transit, would the money be better spent expanding service elsewhere?

    3) Security. Someone thrown off a bus/train could just get right back on the next one.

    This was evaluating a fareless system. But one of the attractions of a fareless system is the reduced cost from not collecting fares. That includes the fare collection mechanism, but also the delay required to collect it.

    I support the idea, but it has been evaluated in the past and rejected at least in part for some of the reasons I listed.

  4. Alexander Craghead
    November 16, 2011 at 2:14 pm Link

    I’m skeptical of our farss being high. National average suggests the comparison is being made to an average that includes the hundreds of LIFT style small town operations with fifty cent and one dollar fares, which are not in any way comparable.

    In my experience of travelling in cities such as Seattle, SF, Dallas, Vancouver BC, and Chicago, TriMet fares were either on par or lower, and levels of RT service lower, and level of bus service higher.

    I’d argue the opposite: we charge too little. We moan and groan about five cente hikes every six months or a year. (What is this, 1955? It’s like arguments about stamp prices.) Fares should be higher, perhaps even charging more for MAX, using it to generate more revenue to support the costlier bus routes. Besides, MAX is a better level of service, and adding capacity is far more difficult, so fare structure would be a good way of managing transportation demand on the rail system.

    Most specifically, I think we need to stop charging so little for long cross town service. TriMet should not be subsidizing those who live in Sherwood and commute to Portland.

    We should also look at better ways of subsidizing equity, like creating a non-profit to subsidize fares for low income people, rather than taking that money straight out of the transit agency’s budget through low fares.

    Regardless of all of the above, if Streetcar becomes fare only, then I think its unfair to ask TriMet to provide MAX free within downtown. It’s time to put the Free Rail Zone out of its misery.

  5. Nick
    November 16, 2011 at 2:18 pm Link

    Seems to me like your idea of throwing out the current fare system is a great idea, but free transit is risky at best on many levels.

    I’m in favor of $0.50 or $1.00 per ride (without any transfer). Paying more to enforce transfers and confusing zones seems like a waste of money. Those commuting in from the suburbs would already pay more just because of the need to transfer more than once and re-pay. Of course, retain all passes (including day passes). I’ve never understood why we have zones.

  6. igor
    November 16, 2011 at 2:29 pm Link

    What if we effectively lowered the cost of a pass by requiring businesses to pay 50% of a transit pass for employees that wanted them.

    That would keep abuse low, since passes would still be expensive, just much cheaper than they are now. The equation for driving would radically change for those who participated. TriMet would stand to increase revenue, since more people would be interested in riding.

    I don’t think fares are out of line with other big cities (NY, Chicago), but I don’t think we’re doing enough to encourage use of transit, especially for commuting.

  7. EngineerScotty
    November 16, 2011 at 2:56 pm Link

    A 40% increase in the payroll tax could make up almost all of the money that would be lost at the farebox. Again, I don’t think that’s politically tractable, at least not without similar reform of how road infrastructure is financed, but 75% of the agency’s operating funds come from sources other than fares and similar revenues. (The FRR includes things like the soon-to-expire PPS student pass; the Fareless Square levy from downtown merchants, and other in-kind payments to the agency in exchange for someone getting to ride for free).

    One wild card in this discussion, is LIFT. It’s by far the most expensive service for TriMet to supply–at about $25 per boarding ride, compared to $3 for a bus ride and $2 for a MAX ride. Demand for LIFT is generally quite inelastic–those who need the service will use it, those who don’t, won’t. TriMet charges $1.85 for a ride on LIFT (compared to $1 for a senior citizen ticket on the MAX or bus).

    Of course, that poses another question–why do young and old riders get cheaper tickets? There are good policy reasons for doing so–I’ve often argued for more family-friendly fare policies, as having kids makes transit far less convenient. On the other hand, there are good arguments that this is unfair, particularly the discount rides for seniors, as there is a tremendous (and growing) wealth gap between old and young. A good argument can be made for means-testing fares, rather that assuming that the old are poor and thus unable to pay a full fare.

  8. JHB
    November 16, 2011 at 3:12 pm Link

    Free fares are a bad idea. If something has no (direct) cost, people will treat it as if it has no value. I would definitely support a $1.00 fair with no transfer and cheaper passes.

    I am against raising payroll tax any further. Oregon needs to get serious about implementing a statewide sales tax. There should be a 1% surcharge in the Trimet service area on top of a statewide sales tax to fund public transport operations.

  9. Mark
    November 16, 2011 at 3:12 pm Link

    Igor,

    Employers with more than 50 employees are already required to provide a free transit pass to anyone who wants one. I get one every year.

    Mark

  10. Douglas K.
    November 16, 2011 at 4:37 pm Link

    Yeah, I’m with JHB. People don’t value that which is given for free. I suspect that’s why L.A.’s “DASH” buses charge a nominal 50 cent fare rather than being “free.”

    Tri-Met should charge at least a modest fare that is high enough to pay the cost of collecting it and then some. I think that whatever the fare is, it should be a “dollars and quarters” figure, just to make it easier to pay. Having to dig around for nickels and dimes to make exact change is ridiculous. Put the fare at $1, or $1.50, or $2.00.

    I don’t like a “no transfer” system, simply because that’s unfair to people who aren’t fortunate enough to live a one-seat ride from wherever they need to go. The current “fare buys you two hours” system is a pretty good one.

    Overall, I favor lower fares as long as there’s a reasonable proposal to make up the money elsewhere. Going from 25% to 15% fare recovery strikes me as reasonable.

  11. Ross Williams
    November 16, 2011 at 4:46 pm Link

    “If something has no (direct) cost, people will treat it as if it has no value.”

    I’m not sure what this means in the context of transit any more than in the context of sidewalks. A very large number of people get free transit from their employers now and never use it at all. But many people who would not use transit, do use it as a result of those free passes. There are all sorts of public benefits from that.

  12. EngineerScotty
    November 16, 2011 at 5:08 pm Link

    Regarding the comments about price elasticity: I suspect that the study claiming a relatively low elasticity of demand above, was conducted in an environment where the marginal cost of driving was cheaper than the marginal cost of transit use. Discounting fixed costs like insurance, depreciation, and finance charges (those are the biggies), cars cost around 20c a mile to operate, depending on make, model, and driving habits; city driving is a bit more expensive than rural or highway driving. At that price point, only longer trips are cost-effective on transit, particularly for non-passholders; and longer trips on the bus tend to take a long time. The equation changes if you a) don’t have a car, b) have to incur expensive parking charges, or c) have access to efficient rapid transit. (Or d, have non-economic reasons for your mobility choice).

    However–when gas gets about $4 a gallon, transit use increases significantly. Price sensitivity analysis cannot be conducted in a vacuum; it has to be conducted with reference to the competition. And if riding gets CHEAPER than driving for more and more trips; I think that’s a far bigger deal for more people than simply reducing fares by a dime or two.

    Certainly, I’m not proposing the existence of a transit Laffer curve, and suggesting reducing fares will actually increase revenue. (One certainly exists, though I doubt we’re on the far side of it). But I’m certain it would increase ridership, which would advance numerous social and environmental goals. The question is–is the cost worth it?

  13. EngineerScotty
    November 16, 2011 at 5:25 pm Link

    Igor,

    It’s not true that employers w/over 50 people are required to provide free TriMet passes–many do not.

    Portland Afoot has a list of those who do.

  14. zefwagner
    November 16, 2011 at 6:38 pm Link

    It’s true that the elasticity changes with higher marginal costs of driving, but I would still argue that the fare is last on a long list of disincentives to taking transit. Ask anyone why they don’t take the bus, and it is usually some combination of “too slow, too indirect, too much walking, too much waiting, uncomfortable ride, unreliable” etc. It is very rare that someone would consider the fare or cost of a pass to be the main reason not to take it. Again, the main beneficiaries would be people taking very short transit trips when they would normally walk or bike. We already get some of that from the users of unlimited passes, as well as in the Free Zone. I would rather see improvements that benefit everyone, even if they had to raise fares. I don’t think $2.50 would actually be unreasonable if it led to a clear program of systemwide improvements, especially if they had some kind of means-testing for reduced fares. Does TriMet have a system to give away tickets to the poor like Seattle does?

  15. (Arcto)Eric
    November 16, 2011 at 6:55 pm Link

    I’d really like to argue in favor of simplicity. I can’t count the number of times I’ve stepped up to assist a visitor who’s struggling their way through: Is this ride free, or zone one, or zone two, or …? Can I ride all day (streetcar ticket) or just one (transfer) or two (TriMet ticket) hours? And how often do folks either risk taking their ride without paying, or more likely skip riding altogether (as I did when I was new to Portland), to avoid the confusion?

    My recommendation has two parts:
    1) Every ride costs one dollar. No transfers. No zones. No confusion.
    2) Put a “support green transportation” donation box on all MAX trains and streetcars. I can’t promise that those extra donations will pay for running the entire system, but they sure won’t hurt!

    ps: And while we’re discussing confusion (and lost fares), MAX tickets must be validated before entering the train (often at carefully hidden machines — check out Hollywood for a good example), while streetcar tickets are validated on board. Madness!

  16. was carless
    November 16, 2011 at 9:27 pm Link

    And the streetcar ticket machines never work, or don’t work fast enough for a crowd of people to buy tickets before they all deboard at Powell’s books.

  17. Phil
    November 16, 2011 at 9:44 pm Link

    1. I think 50cents would be too low. A dollar would be about right. Yes, current fares do seem too high, especially for the working poor.
    2. Why raise the payroll tax to fund this? Wouldn’t it be better to add a TriCounty gas tax? Afterall, we’re trying to get people out of their cars. Lower the fares while raising the cost of gas helps achieve this.

  18. Douglas K.
    November 17, 2011 at 9:08 am Link

    Phil –

    Gas tax won’t work, because the Oregon constitution requires all gas taxes be used for roads.

  19. AL M
    November 17, 2011 at 4:05 pm Link

    Ross Williams Says:

    ~~~>Where have I heard that name?

  20. AL M
    November 17, 2011 at 4:14 pm Link

    In case you haven’t noticed, TRIMET is running at pretty high capacity right now, with the existing unfair fare system.

    The commute buses/TRAINS are PACKED SOLID.

    If they made it free or nominal it would overwhelm the capacity.

  21. hrodberacht
    November 19, 2011 at 9:00 pm Link

    In South Korea, where I have been living off and on for the last three years, I have never paid more than $1 boarding a city bus. By and large, they have more routes, more frequent service, and nicer buses. Pay in cash and you’ll actually get change back. Best of all, buy an inexpensive, rechargeable RFID card available from vending machines and convenience stores, pre-pay whatever you like on it, and not only will your fare be discounted, but transfers will either be free or further discounted.

    In the hyper-corporate fantasyland that is Seoul, where trips on public transit around the city might take you on eight different companies’ buses and trains, somehow they still make a single card work for everything. A 40-min express bus in from the suburbs, plus a few subway transfers, still only adds up to a few dollars.

    We can do so much better than we are.

  22. Carsharing Dave
    November 24, 2011 at 8:37 am Link

    I’d much rather TriMet and Streetcar:
    1) lowered the cost of monthly/annual passes (so they were a clear winner rather than an almost break-even (so more people would have them in their pockets when they might be tempted)
    2) started al Neighborhood Pass program similar to the employer pass program (I nominate Sullivan’s Gulch to test it)
    3) upgraded the fare collection system and get rid of those TERRIBLE ticket machines
    4) added more zones and priced with clear differentiation based on distance (especially on MAX)
    5) tell people to exit from the rear of the bus (how hard is that?)

  23. Aaron G
    November 24, 2011 at 12:05 pm Link

    1) lowered the cost of monthly/annual passes (so they were a clear winner rather than an almost break-even (so more people would have them in their pockets when they might be tempted)
    2) started al Neighborhood Pass program similar to the employer pass program (I nominate Sullivan’s Gulch to test it)

    Totally agree. I think TriMet’s marketing sucks and I’m shocked there’s never any real deals on quantity or time commitments. I don’t know if there’s any private (or public) transit agencies they could look to for ideas, but they might simply look at things like ZipCar.

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