OPAL Releases Alternative Proposal for TriMet Budget (Updated)

This post from a couple weeks ago has been updated with some new thoughts regarding the WES commuter rail service.

Only a few days after TriMet released its final budget recommendation, OPAL has released its alternative budget proposal aimed at limiting fare increases and service cuts. OPAL and its allies are adopting a smart strategy here: using clear methodology and TriMet’s own budget data they have crafted a reasonable, pragmatic alternative that the TriMet Board can take seriously as they consider the budget over the next month. While OPAL and many others have called for more sweeping changes in the future to deal with TriMet’s apparent death spiral, in the short term it makes sense to focus on the low-hanging fruit. I will offer commentary on each element of the Budget Alternative below.

Revenue-Generating Measures

$2.25 flat fare, maintain youth and honored citizen fare, 3-hour transfers, and discounted ticketbooks: $0.4 million

This is by far the biggest change, only generating $0.4 million as opposed to $6 million for TriMet’s proposal for a $2.50 flat fare. OPAL is right to focus on the regressive effects of such a large fare increase and way it is structured. The TriMet proposal explicitly puts most of the fare increase on current two-zone riders traveling short distances, riders who are more likely to be low-income and transit-dependent. While I would personally prefer a system that charges based on distance (since that is a true reflection of the cost to the agency), until TriMet moves to an electronic fare system it would be difficult to enforce. If we have to have a flat fare, $2.25 seems like a reasonable compromise precisely halfway between the two fares we have now.

I pretty much agree with the other elements as well. It certainly makes sense to keep youth fares lower since the current high school pass program will most likely expire by next year. I’m not sure the 3-hour transfer is necessary, but on the other hand it is a low-cost way to help out transit-dependent folks who use the bus for shopping or making long journeys. After successfully fighting off the threatened introduction of one-way fares, I’m sure OPAL feels emboldened to continue making the case that transit should be made more useful for daily needs rather than just commuting. Discounted ticketbooks are a no-brainer that should have been implemented long ago. Tickets save time at the farebox and are great for people who can’t afford to buy monthly passes–they should get some kind of incentive to buy them.

It would be interesting to see the economic analysis behind this proposal. At first glance, setting the fare at $2.25, extending transfers, and offering discounted tickets would seem to be revenue-neutral at best. It appears that OPAL is making one or both of two key assumptions. First, that the short-haul riders with a fare hike ($2.10 to $2.25) have relatively inelastic demand for transit. In other words, these riders are more transit-dependent and so ridership will only drop by a small amount and revenue will go up. Second, that the long-haul riders who will see a fare reduction ($2.40 to $2.25) have relatively elastic demand for transit. In other words, these “choice” riders will be lured in by the lower fare and ridership will go up by enough to increase total revenue despite the lower fare per rider.

The first assumption is well-supported by academic studies. If revenue is the goal, rather than ridership, fares can be increased by quite a lot and revenue will still increase because most riders don’t have many other choices and will come up with the additional fare. The second assumption, while it seems to make sense, is most likely incorrect. Choice riders are much more likely to use transit based on factors like access time, waiting time, travel time, the cost of parking, and road congestion, rather than the actual fare. The fare is such a tiny percentage of the actual cost of using transit that people with the means to drive are rarely swayed by a fare reduction. Still, some extra ridership can be expected and an increasing number of transit-dependent people do live on the fringe, so the math may still work out. In any case, it seems reasonable that this modest fare change, along with some added incentives like longer transfer times, could raise a modest amount of additional revenue.

Eliminate Free Rail Zone, but maintain it for riders with proof of same-day fare payment: $2 million

This rather interesting idea would generate $2 million, rather than $2.7 million from simply eliminating the FRZ entirely. The concept here is that as long as someone has contributed to TriMet in some way, they should be able to ride the train downtown as much as they want. Another way to think about it (and TriMet could market it this way) is that a day pass for Downtown-Lloyd Center-Central Eastside trains will cost $2.25, half the price of a full system day pass. That way tourists, visitors, shoppers, etc, can use the system as a Center City Circulator at a low price. Given that trains generally have excess capacity and that the marginal cost of serving one more person on a short trip is essentially zero, it makes sense to charge less. This is a great idea that at least maintains the idea of a downtown circulator system while still raising revenue. Even if Portland Streetcar still decides to go with its (very poor) decision to have a different fare from TriMet, they could still have this $2.25 day pass for MAX only.

Sell ads on TriMet website and Transit Tracker: $0.3 million

This is identical to TriMet’s proposal and I have nothing to say about it.

Charge a fee for Park and Rides: $0.1 million this year after administrative costs, up to $1 million per year thereafter

Another excellent and long-overdue idea. TriMet floated this in their original budget outreach, but quickly abandoned it, claiming that it needed more study and would cost too much to implement. I suspect it had more to do with their fear of a public backlash from suburban commuters accustomed to getting something for nothing. TriMet has spent a huge amount of money building parking lots and continues to spend money maintaining them, but refuses to charge for this valuable resource. Why? One common claim is that it will reduce ridership. Perhaps at certain low-demand lots it would not make sense to charge a fee, but at high-demand park and rides it makes sense. A park and ride only has a limited number of spaces. If they all fill up at $1 per spot, that is pure revenue gain without any loss of ridership. The price should keep going up as long as the lot is being fully utilized. The other reason given for not charging at park and rides is that people might park in surrounding neighborhoods (the “hide and ride” effect). First of all, most park and rides are nowhere any neighborhoods in walking distance. Second of all, a simple residential permit program can eliminate this issue altogether.

Cost-Saving Measures

Increase contingency fund by 50% ($5 million) rather than TriMet’s proposed 100% ($10 million): $5 million

This was a major catch by OPAL in their careful reading of TriMet’s budget proposal. The contingency fund, which is used to cover budget uncertainties like health care costs or changes in payroll tax revenue, was quietly increased from $10 million to $20 million. TriMet made no mention of this in any public outreach materials and it could have easily slipped by. While it certainly makes sense to increase the contingency this year with all the uncertainty about union arbitration, federal grants, and tax revenue, there is room for debate over whether doubling the fund is necessary. TriMet’s failure to address this is troubling. The agency has publicly stated that the current proposal for $12 million in cuts may have to increase to $17 million in the case of an unfavorable ruling in union arbitration, and yet they have a growing contingency fund meant to deal with just such an outcome. OPAL’s call for a more modest increase in the contingency fund seems reasonable, and hopefully will at least force TriMet to address the issue in public and defend their decision.

Maintain current annual operating subsidy for Portland Streetcar: $3 million

Another case of OPAL catching a detail missed by most of us. While TriMet includes a reduction of $300,000 in the streetcar subsidy as a savings in their budget proposal, OPAL realized this was only a reduction in the planned $3 million increase from the current $6.3 million subsidy. This planned increase is a result of the opening of the Eastside Streetcar later this year. OPAL makes the case that we are already spending enough precious transit dollars operating what even ardent streetcar supporters admit is more about fomenting economic development than providing mobility. I think this is a powerful case and deserves to be a public debate.

The existing streetcar at least connects an existing neighborhood (the NW) to downtown and PSU, so it provided some (extremely slow) mobility in addition to benefiting developers in the Pearl. The Eastside Streetcar, in contrast, serves virtually no useful purpose in the short term other than connecting convention-goers to OMSI. MAX already connects Lloyd Center to downtown, the number 6 bus connects Grand/MLK to downtown, and dozens of buses provide more direct connections across the river. Even when they “close the loop” in several years (still unfunded), it is hard to see the purpose of the Eastside Streetcar other than promoting residential, retail, and office development in the Central Eastside and Lloyd District. Development may be a laudable goal, but that doesn’t mean transportation dollars should be used to subsidize it when we have real mobility goals to deal with. The prime beneficiaries of the streetcar line in the short term will be current landowners along it–they are the ones who should pay for the bulk of its operation for now. Before any more public funds are potentially wasted on this poorly-conceived and badly-designed line, it should have to prove itself through actual ridership.

Internal Efficiencies: $1.2 million

This is identical to TriMet’s proposal, and I’m glad to see that OPAL avoided the temptation to try to squeeze even more savings from this area. While TriMet surely needs to cut management and staff and become more efficient, internal efficiencies can only go so far before they lead to a decline in service quality.

Reconfigure bus routes to reduce overlapping routes and improve efficiency: $0.5 million

OPAL’s proposal for a $0.5 million service cut, down from $1.1 million in the TriMet proposal, is short on details but appears to favor keeping the bus route changes but not going forward with the actual service cuts to specific routes. This is the right approach. As I have written previously, many of the route reorganizations will provide a positive improvement by creating new connections and eliminating wasted redundancies in the system. I also like the mention of efficiency. I know that TriMet planners would love to focus more on equity and efficiency and rely less on service cuts to popular routes, but they are under immense pressure from powerful interests to maintain inefficient service to affluent areas. OPAL and transit riders in general should continue to put pressure on in the opposite direction so we can focus our transit system on the neighborhoods that need it the most. Transit is actually one of the few industries in which efficiency and equity go hand in hand. Routes that connect low-income and minority neighborhoods to jobs and other destinations are consistently the most efficient and productive.

What’s Missing?

A few ideas floated by OPAL and others in the past did not make it into this budget alternative. One, to charge premium prices for premium services, is a worthy idea but unlikely to generate much revenue in the case of TriMet. The problem is there is very little in the way of “premium” service! There are only a few express buses left, WES doesn’t go directly downtown, and streetcar is really slow. It is likely that if prices were raised much on these services, ridership would drop enough that revenue would decline.

Another idea floated by many has been to simply cancel WES service entirely, and I completely agree. It is one of the worst boondoggles in Portland’s history and deserves to be scrapped at the earliest opportunity. TriMet likes to trumpet double-digit ridership growth, but it is easy to have double-digit growth when absolute number is so low to begin with. Just to offer up a few numbers courtesy of Portland Afoot and TriMet: As of September 2011 WES served about 900 people per day and seat occupancy ranged from 27% to 44%. It costs about $6 million per year to operate and costs $15.44 per boarding ride (those are one-way trips, remember) compared to $2.33 for frequent bus service and $1.66 for MAX. So we are spending over $30 per person per day on those 900 people while we have full buses all over the Portland metro that don’t have enough frequency. That said, TriMet has agreed to operate WES until at least March of 2013, so this year’s budget would be mostly unaffected. I sincerely hope this stays on the radar, though, so that next year’s budget can include permanent savings of $6 million from ceasing WES service or transferring operations to Washington County.

UPDATE:

Commenter Alexander Craghead helpfully points out a major reason why it might not make sense to cancel WES now, even if it was a mistake to build it in the first place. You see, the Federal Transit Administration (FTA) contributed $58.7 million toward the $160 million capital costs for WES. The big string attached to that federal money was a requirement that TriMet operate the service for 20 years, otherwise the entire amount would have to be repaid. Given this fact, it probably makes sense to keep operating the service, even with such a high operating loss.

However, much could be done to improve the service and make it more cost-effective, especially charging higher fares during the few trips each day with high demand. Average occupancy per train on WES varies dramatically, from about 60 people on the first couple trips in the morning and afternoon to as low as 20 for later trips during each peak period. Charging a higher price for the higher-demand trips (similar to what I advocate for the TriMet system in general below) would not only raise revenue but would also help spread out demand, filling up empty trains and reducing the need to purchase more trailer cars or convert to double-deckers in the future. (By the way, increasing frequency at the peak is not an option, since the signal system was apparently built to only accommodate 30-minute headways). Unfortunately for common sense, TriMet has an agreement with Washington County to not charge premium fares on WES, but this provision could be renegotiated in the future.

One final idea that I think is worth pushing at some point is the idea of charging a higher fare during peak morning and afternoon travel periods. This is done in Seattle, where it costs 25 cents more during peak periods. This would have several benefits. First, it would encourage people with the ability to travel during non-peak times to do so, spreading out demand and reducing the need for TriMet to run so many peak-only buses. This would save money on both operations (less need for extra part-time drivers) and capital expenses (fewer extra buses needed just to handle the peak). Second, the burden of the fare increase would mostly fall on commuters who at least have a source of income. Low-income riders are less likely to work 9-5 jobs in the first place and are more likely to take off-peak trips for other purposes. Third, it would charge more to the people who most directly benefit from TriMet’s many peak-only services, which are often the most expensive bus routes to operate due to one-way demand and low densities. The downside is that it would make fares more complicated. Again, electronic fare payment would make this very easy to implement and hopefully this idea can be on the table in the future if not right now.

Conclusion

Well, there you have it. A strong counter-proposal from OPAL that purports to save the same $12 million as the TriMet proposal. Will the Board listen? Will TriMet be willing to change direction after all these months of process? Can OPAL continue assembling a broad coalition to push these ideas? Will our elected officials get involved? Only time will tell, but one thing I do know is that this is an important moment for public transit in Portland. We need to have a very loud and public debate over its present and future, otherwise it will slowly wither away instead of thriving as it should.

Zef Wagner is pursuing a Master of Urban and Regional Planning degree at Portland State University with a specialization in transportation planning.

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