In their final report, the Pennsylvania Transportation Funding and Reform Commission wrote:
The Commission concludes that no additional funding should be provided for highways, bridges and transit unless a series of parallel actions are taken to reform funding structure and a number of transportation business practices. [Emphasis added]
Yet Governor Rendell and his budgetary champion in the General Assembly, Rep. Dwight Evans, are demanding that the budget include a dramatic increase in state subsidy for transit agencies—more than double the current taxpayer subsidy. So, where’s the reform?
While the Governor may be ignoring the recommendations of his own commission, here are some suggestions for consideration:
Step One: Require agencies to competitively contract services.
Cities like Los Angeles, San Francisco, Boston, London, Copenhagen, Stockholm, Melbourne, and Tokyo use “competitive contracting” of transit services whereby private operators contract with the government to operate transit services. In addition to bus services, approximately 15% of commuter rail services in the United States are competitively contracted.
Competitive contracting has reduced operating costs 20-51%, with savings of about 35% being the norm. Houston experienced savings of 26%, San Diego by over 30%, and Denver by 46%. Las Vegas, home of the largest fully contracted out U.S. system, has costs approximately 30% below systems of similar size.
Step Two: Increase reliance on local funding and fares.
In order to become efficient, transit agencies must be more dependent on attracting customers and meeting local needs. Currently, agencies’ funding depends on how effective their lobbyists are, not on how well they provide service. In fact, the state increases funding every time agencies claim greater fiscal problems. This, of course, fails to discourage inefficiency. When riders pay for the cost of transit, they will demand better and more efficient services—reducing agency waste and keeping costs down.
Step Three: Subsidize riders, not agencies.
For low-income Pennsylvanians who are dependent on transit, there is a simple solution—offer fare assistance. A means-tested tax credit or voucher would allow low-income families to afford the costs of transportation and target aid to those who need it rather than subsidizing riders who can afford to pay the true cost of their trip.
Step Four: Reduce restrictions on transportation providers.
State regulations require transportation providers (taxis, vans, busses, etc) to apply for a license with the Pennsylvania Utility Commission (PUC). Applicants have to demonstrate safety as well as “a clear transportation need not being met.” Following that, current transportation companies may petition the PUC to deny a certificate from being granted to the applicant. This system protects existing providers from competition—and keeps prices high. Removing restrictions would create increased competition, improve service, and lower prices for riders.
One final idea—if Governor Rendell and legislative supporters of mass transit funding believe that “everyone benefits” from transit (through reduced pollution, congestion, etc.), they should lead by example. The state should not subsidize driving by paying for parking for state workers; instead, it should eliminate all state-owned and leased parking spaces—including those reserved for state lawmakers. Employees should be encouraged to use transit services through tax-free deductions from their paychecks into individual transportation accounts.
Likewise, Governor Rendell’s limousine should have a “share-a-ride” program. Carpooling with the Governor would reduce pollution and congestion, save taxpayers, and, according to reports on the speed of the Rendell-mobile, get carpoolers to work faster. If state legislators and the Governor rely on mass transit, agencies certainly will improve efficiency.
More money won’t solve the problems entrenched in mass transit agencies. But real reform of agencies’ funding, and delivery of services, can save taxpayers money while improving the quality of service.
Nathan A. Benefield is Director of Policy Research with the Commonwealth Foundation (www.CommonwealthFoundation.org), an independent, non-profit public policy research and educational institute located in Harrisburg, PA.