Transit agencies face 2023 budget gaps: difficult choices between fare increases and service cuts
U.S. public transit ridership has recovered to 70% of pre-pandemic levels, but some agencies still face a fiscal cliff. In 2023, several agencies may raise fares or cut services while addressing issues such as labor shortages and rising crime. This article reviews the response measures of major agencies and expert opinions.
Passengers are returning to public transit, but the pace is still slow for some agencies that rely heavily on fare revenue to cover operating costs. This could lead to fare increases, service cuts, or both, making 2023 a year of difficult decisions for agency managers.
During the pandemic, stimulus funds kept transit operations running, and some agencies still hold some of those funds. But this month, S&P Global Ratings downgraded its outlook for the public transit industry from stable to negative. The S&P report states: "Once federal aid used to offset reduced passenger fare revenue runs out, some transit operators will face an operating funding cliff—especially if they cannot find new revenue sources or adjust service levels to expected lower ridership." The report also notes that remote work arrangements and concerns about safety, reliability, and service levels are reasons for the slow ridership recovery.
According to data from the American Public Transportation Association, national average ridership has recovered to 70% of pre-pandemic levels. S&P Global Ratings expects ridership to recover to only 80% to 85% of 2019 levels by 2026, noting that national transit ridership was already declining before the pandemic.
In major cities across the country, ridership remains low. On a typical weekday in January 2023, San Francisco Bay Area Rapid Transit ridership was less than 40% of weekday levels in May 2020. The Massachusetts Bay Transportation Authority in Greater Boston reported that average weekday ridership in November 2022 was 59% of the same period in 2019. The Southeastern Pennsylvania Transportation Authority, Washington Metropolitan Area Transit Authority, and Los Angeles County Metropolitan Transportation Authority are all working to recover ridership.
Commuter rail has been especially struggling. Chicago's Metra ridership is only half of what it was. According to data compiled by APTA, Caltrain serving Silicon Valley, Virginia Railway Express, and Southern California's Metrolink have all seen ridership declines of more than 60%.
The nation's largest transit agency, New York's Metropolitan Transportation Authority, has included a 5.5% fare and toll increase in this year's budget and warned that without additional federal, state, or city funding, "service cuts, staff reductions, higher fare increases, capital project cancellations and/or faster depletion of remaining funds" would be unavoidable, the agency said in a December 21, 2022 press release.
Similarly, Chicago's transit system expects a $730 million budget shortfall by 2026. Leanne Redden, executive director of the Regional Transportation Authority of Northern Illinois, acknowledged in December that ridership is unlikely to return to 2019 levels. The Washington Metropolitan Area Transit Authority has proposed raising fares.
However, not all agencies face the same difficulties. In early January, APTA data showed that Seattle's Sound Transit, the Southwest Ohio Regional Transit Authority, the Utah Transit Authority, and Cleveland's METRO Regional Transit Authority all had ridership near or above pre-pandemic levels.
"You could say mobility is a right, and we should start treating it that way."
Alex Rosander
Program Assistant, Shared Mobility Center
Agencies like Dallas Area Rapid Transit, which rely less on fare revenue, are less affected by low ridership. Despite total ridership in 2022 being 39% lower than in 2019, the agency's CEO Nadine Lee said in a November interview: "DART is not in financial trouble."
But transit agencies nationwide have other concerns. Labor shortages are reflected in bus driver signing bonuses. Many agencies are seeking major investments to electrify their bus fleets. To better serve communities, some agencies are redesigning bus networks and experimenting with alternative fare strategies, including fare caps, discounted fares, and free rides.
Alex Rosander, program assistant at the Shared Mobility Center, said in a phone interview that transit is vital for many communities. "You could say mobility is a right, and we should start treating it that way."
Free transit programs, such as the one launched citywide in Kansas City in 2020, aim to boost ridership and improve mobility for low-income communities. When the pandemic hit, other cities saw rear-door boarding as a way to reduce driver-passenger contact, speed up stops, and address inequities for riders who depend on transit.
Happy Route 29 Free Transit Day. Excited to be here to kick off the two-year pilot on three key Boston routes.pic.twitter.com/aW1kMgxyEZ
— Jascha Franklin-Hodge (@jfh) March 1, 2022
After taking office in January 2021, Boston Mayor Michelle Wu immediately requested $8 million from the city council to eliminate fares on three of the city's bus routes. The pilot for one of those routes, Route 28, which primarily serves low-income families, seniors, and people with disabilities, launched in August of that year. A report released in March 2022 showed ridership increased by 38%, returning to near 2019 levels. That month, the free-fare policy for the three routes Wu requested went into effect for at least two years.
Free transit may also bring other benefits. Candace Brakewood, associate professor in the Department of Civil and Environmental Engineering at the University of Tennessee, Knoxville, said in an interview that fare boxes and fare gates are costly, requiring staff to maintain equipment and safely collect cash daily.
On the other hand, Kari Watkins, associate professor in the Department of Civil and Environmental Engineering at the University of California, Davis, said in an interview that with free transit, "anyone can use the service, even if they don't really need to go somewhere, which could make other passengers uncomfortable and reduce usage."
As homelessness increases in many large cities, transit user complaints often focus on homeless individuals sheltering in transit systems. In New York City, Mayor Eric Adams—a former NYPD captain—has turned to enforcement and adopted policies to remove people with mental illness from the transit system. Other agencies, such as SEPTA and LA Metro, have added outreach teams to help homeless individuals access shelters and other services.
According to a 2016 Transit Cooperative Research Program report, consistent and respectful enforcement is crucial to addressing the issue of using transit as shelter, but the report concludes that "enforcement alone is ineffective." Based on a survey of 55 transit agencies, the report found that partnering with social services and nonprofits is essential, and receiving centers at transit stops could be "very effective in persuading homeless individuals to seek and accept help." But the report also warned that homelessness is beyond the capacity of transit agencies to solve.
Cities nationwide have also experienced an increase in crime on public transit vehicles and facilities. According to recent research from the Mineta Transportation Institute, the United States ranks first in criminal assaults on public transit among a group of economically developed countries. According to media reports, crime on New York City subways surged 30% last year. Cities and transit agencies have responded with enforcement and social assistance strategies.
As agencies address homelessness, crime, equity, labor shortages, and persistently low ridership, they still need to find ways to pay their bills and continue serving their communities.
In Chicago, RTA's Redden believes more public funding is needed. In New York, MTA Chair and CEO Janno Lieber is pleading with federal, state, and city governments for more funding to avoid fare increases and service cuts. The MTA is also advancing approval for congestion pricing, which would help fund the agency's capital projects.
Data compiled by the Eno Center for Transportation shows that in 2019, 16 transit agencies relied on fare revenue to cover more than 40% of operating costs. Eno concluded that agencies and policymakers "need to be creative" in finding additional revenue sources and attracting new types of riders.
"At some point, if ridership doesn't return to previous levels, something has to fill that gap," Watkins said. "The difficulty with drastic service cuts is that it's the number one predictor of ridership decline. It's a vicious cycle they don't want to get into."