Metro Transit Shortfall

The Fall 2008 report from my King County Councilmember Bob Ferguson mentions a proposed $0.50 fare increase that County Executive Ron Sims has put on the table for the budget discussions. We had an increase of 25 cents last year. Costs are going up. Way up. I'd like to talk about the numbers we are talking about.

The question I want to ask in reply to this quarterly update was this:

Has anyone done a calculation to show people how the current fare balances tax revenue and the rider fares? I think it would be interesting to see, and to show the voters in King County, what the fare would be if the system were exclusively paid for by riders, as well as what the taxes would need to be to be able to reduce the fare to zero. Knowing that we are maintaining a balance between these two extremes might go a long way to calming people's anxiety about how much the service costs and just how much it is worth. I currently pay for a $1.75 bus pass on a monthly basis, costing me $63.

I'm sure that someone has done this before, but insomnia gave me the motivation to try and figure it out for myself. The King County Metro Transit, 2007 Annual Management Report gave me the numbers that I'm working with here.

Here's a table of expenses over the last few years.

	2007	2006	2005	2004	2003
Passenger Boardings	117,492,162	109,388,007	104,461,689	101,915,208	99,325,901
Operating Expense	$461,870,312	$433,108,247	$403,402,962	$383,899,455	$365,822,697
Bus Operating Cost per Boarding	$3.65	$3.66	$3.54	$3.45	$3.38
Bus Operations Revenue per Boarding	$0.79	$0.81	$0.81	$0.80	$0.78
Expense per Boarding	$3.93	$3.96	$3.86	$3.77	$3.68

I'm not sure where the exact numbers for "Bus Operating Cost per Boarding" come from, because the Expense / Boardings ratio is the actual math. But what it shows is the amount of money that would be required by people getting on the bus to pay for the operations of the system. This does not include Capital costs, like building the Transit Centers, Bus Barns and Maintenance Yards. I ride the bus, and of course I'd rather pay the $1.75 or even lower, but it's useful to see that increasing the fare to $2.25 would not match the nearly $4 cost to Metro of providing me the service. By the way, $1.75 to $2.25 is a 28.57% increase. Hold that thought.

Let's look at the other side of the coin. Here are some more numbers from the 2007 Operating Report.

Operating Revenue	$95,375,482
Non Operating Revenue	$580,272,272
Sales Taxes	$429,262,198
Total Revenue	$675,647,754

Operating Revenue includes the fares, passes and other things. Sales Taxes are only part of the Non Operating Revenue, although they are the largest part by far. I think we have enough numbers now to play "What If".

If we were going to increase fares so that the 117,492,162 riders covered the entire revenue of $675.6 Million, each person would have to pay $5.75. Per trip. Considering that the calculation they give for how much people actually pay for a ride, $0.81, that's off the charts.

If we were to increase Sales Taxes to cover the entire revenue, we would need a 57.4% increase in that portion of the tax.

My momentum on looking at numbers is running out, after a few hours of looking things up and trying to understand what I'm looking at. So I'm going to finish this by talking about principles. Our revenue sources for transportation are unbalanced in my opinion. Sales taxes are used for Transportation,

The background information about the 2008 fare increase, available here, gives us this paragraph:

Additional revenue would increase financial stability

Sales tax revenues – the bulk of Metro’s funding – can vary dramatically with changes in the economy. By increasing the percentage of its funding that comes from fares, Metro would have a more stable, predictable revenue source.

I don't see that. If we want a "stable, predictable revenue source", we should not be depending on any one source, or even two sources. Sales Taxes do depend on the economy, certainly. But ridership and fare revenue also depend on the economy. People take transit to go back and forth to work, as well as shopping and "touristy" stuff like going downtown for dinner and a movie, or seeing friends. In economic slumps, the number of these trips can vary wildly. Even property tax revenue isn't constant year after year, and while I would personally advocate for putting some of the cost of our transit options beyond just the roads on property tax bills, I don't think it's a 100% solution any more than anything else. What we need is a balance between all of the various revenue sources that provides us with the resources we need to provide the services that we want. I need to repeat that number of 117.5 Million people using the bus again here because those people obviously want Metro service. The only other revenue source that I have not mentioned so far is Income taxes.

Barack Obama wants to give an Income Tax break to 95% of us, with the lower incomes getting more than the higher incomes. John McCain wants to give a tax break to everyone, with the higher incomes getting the most. How much of what we pay in Income Taxes in Washington come back to us to help pay for things like Transit? Not much. Because all of that revenue is collected by the Federal Government and used for the Federal Budget. The State doesn't have an Income Tax. King County can't asses one, even though we have quite a few very wealthy individuals, many of whom WANT their income tax dollars helping to pay for things like transit so their employees can get to work here in Washington State instead of paying for pork projects in other states. But do we have a real proposal about Income Taxes in Washington? Is anyone willing to look at the numbers and discuss how we balance our revenue sources so Metro doesn't get hit with a $70 Million shortfall this year? Anyone? Governor? Media?

Nah... It might make Tim Eyman come up with another hair-brained idea.