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TRANSIT RESPONSES TO ECONOMIC HARD TIMES

TRANSIT RESPONSES TO ECONOMIC HARD TIMES. Preserving the American Dream Conference Bellevue, Washington Thomas A. Rubin April 18, 2009. How Has the American Transit Industry Been Responding to Economic Bad Times?. Not Well. This concludes my prepared remarks. Are there any questions?.

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TRANSIT RESPONSES TO ECONOMIC HARD TIMES

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  1. TRANSIT RESPONSES TO ECONOMIC HARD TIMES Preserving the American Dream Conference Bellevue, Washington Thomas A. Rubin April 18, 2009

  2. How Has the American Transit Industry Been Responding toEconomic Bad Times?

  3. Not Well.

  4. This concludes my prepared remarks.Are there any questions?

  5. CHALLENGES • Significantly reduced local tax funding, particularly from sales taxes • Reduced state funding due to state government budget issues • Higher costs: • Fuel • Other, such as wage increases in existing labor agreements and employer-paid medical • Increased ridership due to fuel price increases

  6. “GOOD” NEWS • Fuel prices have dropped very significantly from 3rd quarter CY08 peak • Ridership increases almost certain to convert to downturns due economic conditions – so “reasonable” level of service cuts will not do major harm • Major new Federal transit funding in American Recovery and Reinvestment Act of 2009 (“Stimulus” Act)

  7. BAD NEWS • Stimulus money is capital-only (or is it?) • Local/state money going down even faster than originally believed • When you try to cut costs by cutting service levels and employment, you have to make far larger percentage cuts in service and employment than the cost cut you are shooting for • Transit is a very tempting target to cut, particularly when the other alternatives are schools, police, fire, and health care

  8. FEDERAL FUNDING LEVELS • FY08 “Regular” Transit Budget: $9.09 Billion • FY09 “Regular” Transit Budget: $10.23 Billion • Add ~+20% for “Flexible” Highway Funds • ARRA: • Urban “Formula:” $6.12 Billion • Fixed Guideway Modernization $ .75 Billion • Discretionary $ .75 Billion • Other $ .78 Billion • Total $8.40 Billion

  9. TRANSIT INDUSTRY REACTION • Short-Term: • Service Reductions • Layoffs • Fare Increases • Capital: • Great movement towards major capital projects • Tax increases

  10. Some Specifics: New York City • New York MTA (>1/3 of U.S. Transit): • 20-25% Fare Increases • ~1,500 Employee Layoffs • Eliminate ~80 Bus Lines, Cutbacks Elsewhere • Toll Increases and Tolls on “Free” Bridges • Call for .33% Payroll Tax • Deadlock Over State Funding

  11. Some Specifics II • Chicago Transit Authority: • 15% Fare Increase (Third in Three Years) • Los Angeles County MTA: • 1/2¢ Sales Tax Increase (to 1.75%) – Mainly for Rail Expansion • >30% Fare Increase Planned for 7/1/09 • Significant Service Cuts and Route Eliminations and Reductions Under Consideration

  12. SOME SPECIFICS III • Washington Metropolitan Area Transit Authority: • Cut 891 Positions • Service Reductions and Fare Increases Under Consideration • Tri-Met (Portland) • 5% Service Cut Proposed for Fall 2009 • King County DOT (Seattle): • 25¢ Fare Increase 10/1/08 • Major Service Reductions Likely

  13. STIMULUS BILL LEADING TO POOR TRANSIT INVESMENTS • Emphasis on capital spending – which takes years to get going, directly contrary to desired immediate impact on public sector employment and procurement of goods and service from private sector employers • If Stimulus funds went for transit operations, it is not a question of how long it would take to translate in new jobs, it would be how many layoffs would be eliminated • … and retaining mobility to jobs et al

  14. RACINE TRANSIT I • $2.54 million in ARRA transit funding • $1.04 million for four hybrid small buses – ~ 25-40% more expensive than diesel • Save 20,000 gallons of diesel/year • How many years to save higher purchase cost? • Buses have 5-7 years useful life – batteries unlikely to last that long • In other words, this never pencils out

  15. RACINE TRANSIT II –“Transit Math” Average Annual Miles/Bus 32,752 Divided By: Average MPG 4.3 Average Annual Gallons of Diesel 7,600 Less: Savings Per Bus (5,000) Gallons Used for Hybrid Bus 2,600 Hybrid Average MPG 12.6 Not Bloody Likely

  16. RACINE TRANSIT III • Ridership on lines where these buses would be utilized: 3-4 boardings/hour • Subsidy/Trip: ~$19 • Subsidy/Day: ~$38 • Subsidy/Week: ~$152 • Subsidy/Month: ~$800 • Subsidy/Year: ~$9,700 • Question: What would be the cost to lease a car, plus fuel, maintenance, registration, insurance, and parking for each rider?

  17. RECENTLY, A PROFESSIONAL COLLEAGE OF MINE AND I DECIDED WE NEEDED A TERM TO DESCRIBE THIS TYPE OF DECISION AND CONDITION – WE CAME UP WITH …

  18. GREEN – but not Bright Green

  19. OAKLAND AIRPORT CONNECTOR I • Automated People Mover to Connect Oakland Airport and BART Coliseum Station – ~ 3.5 miles • Replace non-subsidized shuttle bus • “Real” justification – SFO got BART services, so Oakland A/P must also • Original Capital Budget: $188 million • Most Recent Budget: $429 million • Airport Terminal Rehab: $300 million

  20. OAKLAND AIRPORT CONNECTOR II • BART, as project manager, spent years trying to arrange public-private partnership for Design-Build-Operate-Maintain (DBOM) • Could not find suitable partner to engage • MTC (Bay Area MPO) decided to allocate $70 million of Stimulus funds to project • This was instead of allocating funds to the transit operators to hold off service cuts, fare increases, and employee layoffs

  21. HERE, WE DIDN’T NEED A NEW TERM, THERE IS AN OLD ONE THAT WORKS PERFECTLY WELL …

  22. ARE YOU OUT OF YOUR FRIGGING MINDS?

  23. CAN ARRA TRANSIT FUNDS BE UTILIZED FOR OPERATION? • Legally, to a very limited extent only • However, this statutory requirement (49 USC 5307 “preventive maintenance – associated capital maintenance items”) is not enforced; there are several major transit operators who routinely violate it without any problem • Due to sensitive nature, if this is important to your agency, contact me for details

  24. ARRA HIGH SPEED RAIL • In Conference Committee, $8 billion for HSR was added, reportedly at the specific request of President Obama • President Obama has also indicated that he proposed an additional $1 billion per year for HSR for the next several years

  25. ARRA HSR • $8 Billion one-time and $1 Billion a year thereafter would not come close to providing the funding that the California HSR project requires if it got 100% of the Federal HSR funding. • Note what is not on map: Anaheim-Las Vegas Mag Lev, a favorite project of Senate Majority Leader Reid of Nevada

  26. ARRA HSR • What we are likely to see is: • Many existing intercity and potentially even commuter rail operators using HSR funds to upgrade from 79 mph to 110 mph maximum speed • Many of the entities on the map using HSR funding for planning/design – “betting on the come” of far more Federal HSR Money • Some agencies, particularly California HSRA, trying to start spending major funds now

  27. NEVER FORGET THE PASSENGER RAIL CREDO “Let’s start digging the hole; they’ll never tell us to fill it in.” … since Cincinnati in 1922, no one ever has. Be frightened. Be very frightened.

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