Debate on Transit Subsidies Prompts More Agreement than Expected

October 5, 2018

New technologies are emerging that have the potential to change Americans’ travel patterns. On October 2, the Cato institute hosted transit network design expert Jarrett Walker, of Jarrett Walker + Associates and Cato’s own transportation thinker, Randall O’Toole. The two discussed the past, present, and future of public transportation in the United States, agreeing on many issues such as the importance of freedom of mobility, benefits of private investment, and the disparity between transit needs in urban, suburban, and rural areas. While O’Toole focused on national ridership trends and connections between land use and transportation, Walker denounced the usefulness of nationally aggregated transit data and focused on the importance of local context.

The effect of land use on transportation (and vice versa) is long studied and as suburban centers have sprung up in the second half of the twentieth century creating multiple nuclei structures, commute, shopping, and other travel patterns have become ore complex than simple in and out of a central downtown area. Public transit ridership has steadily dropped in most major US cities over the last few years as transit agencies aim to provide service with adequate coverage and compete with new mobility options like transportation network companies (TNCs).

The goals that transit agencies set reflect on their priorities. Public transit agencies often work towards providing access within a region to all people, sometimes focusing more on non-vehicles owners, and sometimes focusing on getting people out of their cars and onto transit. Private providers may also have the goal of making money. As Walker noted at the beginning of his presentation, no transit agency has the sole goal of increasing ridership, and the goals of each agency depend on the local political, economic, and social fabric.

While both speakers emphasized the importance of providing freedom of mobility, neither used the term “equity” during the entire presentation or following Q & A. Walker stressed the importance of coverage in low ridership areas, a provision often associated with meeting equity goals, while O’Toole saw low-demand routes as an indication that the service did not provide enough benefit to be worth the cost. Allowing the market to determine service availability and prices without accountability could exclude users based on location or wealth level, though may maximize fiscal returns.

To some degree, one’s choice in commuting mode can be a result of one’s choice in land use – or vice versa. Dense cities like New York and San Francisco show the desirability for dense, mononucleic urban structure, while expanding suburbs and exurbs show the desire for affordable private land ownership. The speakers each interpreted the market differently, Walker pulling for a focus on urban growth and form to support land use compatible with traditional bus and rail service, and O’Toole painting an ideal of suburban quilting across the country with private automated vehicles filling additional mobility needs.

A break-even or profitable business model is necessary in the case of non-subsidized service. While both Walker and O’Toole agreed that private companies could provide quality service, history shows that privately operated transit systems usually needed operating subsidies from somewhere (not from government, necessarily, but as a loss leader from some other private enterprise). The robust privately-owned streetcar systems of the 1930s and 40s were largely subsidized by electric utilities or suburban real estate developers, but when the electric grid was fully connected and the new suburbs fully developed, the subsidies stopped, to be replaced by the taxpayer-funded agencies running buses and trains today. Experiments with microtransit and the high level of venture capital subsidizing TNC rides suggest that even in the twenty first century, money-making public transportation applications are few and far between.

The full discussion can be viewed as a video or downloaded as a podcast here.

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