Transit fare increase needed to help maintain service

Three years ago, the price of gasoline in Minnesota hit $2 a gallon for the first time – and most of us were shocked.  Now we long for the good old days when gasoline was just two bucks a gallon.

The skyrocketing cost of oil has been a mixed blessing for transit. On the positive side of the ledger, it has helped boost Metro Transit ridership to the highest levels in more than 25 years. In 2007, Metro Transit provided 77 million rides, up 4.7 percent over 2006. Through the first five months of his year, ridership is up another 8.6 percent over last year.

However, the fuel costs of Metro Transit and suburban providers in this region have more than doubled since 2005, the last time transit fares were increased.  And we buy a lot of fuel.  Metro Transit, which provides about 85 percent of the region’s transit service, uses nearly 8 million gallons of diesel fuel per year.

Labor represents 77 percent of our operating budget, and fuel consumes another 9 percent. This doesn’t leave a lot of places to cut as we attempt to erase a projected $15 million budget shortfall for 2009. That’s one reason the Metropolitan Council is considering a proposed fare increase.

The proposal calls for a 25-cent increase beginning Oct. 1 on all regular-route service, and a 50-cent increase on Metro Mobility service for people with disabilities. In addition, the morning rush-hour, and rush-hour fares, would be extended by one-half hour and start at 5:30 a.m. instead of 6 a.m.

If approved, new cash fares would be $1.75, $2.25 or $3 depending on the type of service and time of day. New Metro Mobility fares would be $4 during weekday rush hours and $3 at other times.

A possible second fare increase in 2009, at a date to be determined, could add up to an additional 50 cents to the cost of a bus, train or Metro Mobility ride, depending on the cost of fuel and other economic factors.

The initial fare increase – which would generate about $7 million a year – won’t solve all of transit’s budgetary challenges. Looking out the next several years, we could face a revenue shortfall of $30 million to $40 million a year in 2010 and 2011.

The primary reason is that revenues from the Motor Vehicle Sales Tax (MVST) – one of the major funding sources for transit – continue to fall short of projections. For understandable economic reasons, many people simply aren’t buying cars.

In 2001, the Minnesota Legislature eliminated the regional property tax levy for transit and substituted MVST.  And in 2006, the voters approved a constitutional change that – when fully implemented – guarantees transit a larger percentage of MVST revenues.

So far, however, this has proven to be a larger slice of a diminishing pie.  Next year, regional transit will receive a projected $124 million in MVST revenues, $2 million less than we received in 2002, even though our percentage of MVST revenues is growing.

The Metropolitan Council does not want to cut transit service.  Indeed, our long-range transit vision calls for expanding service and doubling ridership by 2030.  We are off to a good start with the opening of our first light-rail transit (LRT) line in the Hiawatha corridor, the construction of our first commuter rail line in the Northstar corridor and the planning for our second LRT line in the Central corridor.

Even with our proposed fare increase, riders will pay only about 30 percent of transit operating costs. The other 70 percent will come from the taxpayers – in the form of MVST revenues and the legislative appropriations from the state’s general fund.

Over the last four years, the taxpayers have contributed additional public resources to help fund transit service.  So it seems reasonable to ask transit users to pay a little more as well.

Peter Bell

July 2008