Just Transit? Transit Dependents, Civil Rights, and Transit Policy

1. Just Transit? Transit Dependents, Civil Rights,and Transit Policy Brian D. Taylor Hiroyuki Iseki UCLA Institute of Transportation Studies October 2001 Lake Arrowhead, California

2. Transit Equity? • In recent years, most equity debates in public transit concerned the “fair” distribution of resources among jurisdictions. • Tendency is toward treating voters equally.

3. Transit Equity? • But the use of transit is very uneven spatially. • The 10 largest U.S. transit systems account for over 60% of all transit trips. • About 1/3 of all U.S. transit trips are taken in metropolitan New York.

4. Transit Equity? • The results are uneven in two ways: • Transit systems in the oldest and largest central cities receive the highest taxpayer subsidies, in absolute terms. • Transit riders on newer, smaller suburban transit systems tend to receive the highest taxpayer subsidies, in relative terms.

5. Transit Equity?

6. Why do we subsidize public transit? • Direct benefits: Provide mobility for those without access to private vehicles, and travel options for those who choose not to drive. • Indirect benefits: Decrease traffic congestion and reduce travel times for all travelers; reduce energy consumption, vehicle emissions, suburban sprawl, amount of land devoted to roads, motor vehicle noise, and accident costs. • Network/Service economies: Subsidies are required to maintain comprehensive transit route networks with sufficient service frequencies to avoid a downward spiral of declining ridership and service.

7. Why do we subsidize public transit? • Compensate for policy bias in favor of private vehicles: Subsidize transit fares to compensate for public policies which do not fully charge drivers for the social costs of auto use. • Equity: Public transit is an indispensable social service that provides access to basic needs for transit dependents.

8. The Truth About Transit:Most Transit Users are Bus Riders,and Most Bus Riders are Poor Source: 1995 Nationwide Personal Transportation Survey. Overall, 1/3 of all transit users come from households with 1995 incomes below $15,000, and 3/5 from households with 1995 incomes below $30,000 (Pucher, 1998).

9. Conflicting Policy Goals Serve low-income transit dependents Expand commuter-oriented services ISTEA and TEA-21 mandates require the expenditure of federal funds for transportation purposes to comply with Title VI of the Civil Rights Act; these have prompted civil rights lawsuits against transit agencies over supposedly discriminatory fare policies and/or expansion of commuter-oriented services.

10. Policy Questions Guiding This Issue • Who “wins” and who “loses” in the subsidy of public transit? • In general, is the subsidy of public transit progressive or regressive with respect to income? • More specifically, how are transit subsidies distributed among various classes of riders?

11. Findings in a Nutshell • Because the tax system is generally progressive, transit subsidies tend to transfer benefits from higher-income people to low-income people.

12. Findings in a Nutshell • Because the tax system is generally progressive, transit subsidies tend to transfer benefits from higher-income people to low-income people. • although low-income non-transit-users are significant losers in this transfer.

13. Findings in a Nutshell • Because the tax system is generally progressive, transit subsidies tend to transfer benefits from higher-income people to low-income people. • although low-income non-transit-users are significant losers in this transfer. • If the goal is simply income redistribution, there are better ways to do it than subsidizing transit.

14. Findings in a Nutshell 2. Among transit users, the distribution of transit subsidies is generally regressive with respect to income. • higher-income transit users tend to be subsidized more than low-income transit users. • Estimating this distribution of transit subsidies among various transit users, however, is a complex endeavor.

15. Analysis Flowchart

16. Data Sources • LA MTA Reports 1. Line Performance Trends Report 2. Consolidated Transit Service Reports (Ridecheck Report) 3. Schedule Quality Report • National Transit Database

17. The Problem of Peaking The marginal cost of transit service is typically highest in the peak period and peak direction. • Lower labor efficiency: • Limits on the use of part-time labor and of split- and spread-time shifts. • Lower equipment utilization efficiency: • Extra vehicles needed to meet peak period demand, • A higher proportion of non-revenue service (extra deadheading and trippers), • Scaling facilities to accommodate peak service levels.

18. Time-of-Day Variation in Service Levels: Los Angeles MTA

19. Comparison of Individual Line Costs Using a Partial Cost Allocation Model

20. Comparison of Estimated Costs between the then-current LA MTA Model and a Full-Cost Allocation Model

21. Peak/Base Ratios of the Twenty-Seven Largest Transit Operators

22. Comparison of Estimated Bus System and Light Rail Costs (Cost per Passenger Capacity Hour) Using MTA Model and Fully-Allocated Model

23. LA MTA Bus Rider Demographics Data source: Service Planning Market Research Program, FY96-97 MTA Bus On-Board Passenger Survey.

24. Per Trip Subsidies for Service Types by Income

25. Per Trip Subsidies for Service Types by Race/Ethnicity

26. Per Trip Subsidies for Service Types by Age Group

27. Per Trip Subsidies for Service Types by Sex

28. Per Trip Subsidies by Time of Day by Income

29. Factors Influencing Demographic Variation in Subsidies • Demographic variation in transit subsidies are due to demographic variation in service consumption. • Most of the differences in subsidy levels by income are due (primarily) to the longer average trip distances of higher-income riders and (secondarily) to their greater use of capital-intensive and commuter-oriented modes.

30. Factors Influencing Demographic Variation in Subsidies • Subsidies by time of day vary little after controlling for trip distance and travel mode. • The higher unit costs of service supplied during peak periods are mitigated by higher levels of peak-period utilization in the case of the LA MTA. • This would likely change, however, should the MTA expand peak-period service in an effort to reduce standees.

31. Comparison of Estimated Bus System and Light Rail Costs (Cost per Seat Hour) Using MTA Model and Fully-Allocated Model

32. Two Caveats... • The results presented here are preliminary. • While the data are from Los Angeles, our focus is not on the MTA per se. • Given both the diversity of MTA riders and the low levels of peaking on MTA buses and trains, • the MTA probably has less demographic variation in subsidies than at most other transit operators nationwide.

33. Conclusions Because the subsidy of a transit trip is a function of the variable cost of that trip minus the fare paid by a traveler, the key to equalizing subsidies is a fare policy.

34. Conclusions • Transit managers should have a clear sense of the variability of service production costs. • As a general principle, fares should be set to vary in rough proportion with costs. • The adoption of such a marginal, cost-based fare structure can simultaneously increase both efficiency and equity in the use and subsidy of transit service

35. Conclusions Linking fares to costs… • Efficiency would increase by: • Encouraging passengers to consume more inexpensive-to-provide transit service (short, off-peak bus trips); • Encouraging passengers to be more judicious in their consumption of expensive-to-provide transit service (long, peak trips on capital intensive modes). In concert, these two factors would work to decrease overall subsidies per rider.

36. Conclusions Linking fares to costs… Equity would increase by: • Lowering (in relative terms) the price of transit services disproportionately consumed by low-income passengers; and • Increasing (relatively) the price of transit services disproportionately consumed by higher-income passengers. In concert, these two factors would work to eliminate the regressivity of current transit subsidies.

37. Just Transit? Transit Dependents, Civil Rights,and Transit Policy Brian D. Taylor Hiroyuki Iseki UCLA Institute of Transportation Studies October 2001 Lake Arrowhead, California

39. Conclusions • Transit managers should have a clear sense of the variability of service productions costs. • As a general principle, fares should be set to vary in rough proportion with costs. • The adoption of such a marginal cost-based fare structure can simultaneously increase both efficiency and equity in the use and subsidy of transit service

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41. Purpose of This Study • Develop a cost estimation method that, in contrast to typical cost allocation models: 1. is more sensitive to cost variation by time of day, 2. takes into account vehicle and non-vehicle capital costs, 3. takes into account the passenger capacity of vehicles in various transit modes.

42. Data Sources • LA MTA Reports 1. Line Performance Trends Report 2. Consolidated Transit Service Reports (Ridecheck Report) 3. Schedule Quality Report • National Transit Database

43. Transit Cost Allocation Models • Service costs are a function of service outputs. • Service outputs are most commonly measured in terms of: vehicle-hours, vehicle miles, and peak vehicles.

44. Partially- and Fully-Allocated Models • Partially-allocated model includes only variable costs and some semi-fixed costs to reflect the marginal costs of incremental service modifications. • Fully-allocated model includes most or all fixed costs for the use of comparing performance between modes or systems.

45. Average Cost Approach to Allocating Costs by Service Levels a, b: the number of required buses CP, CB :vehicle hour-related costs of the Peak and Base service U :unit cost of service output S :the ratio of peak costs to base costs Source: Adapted from Cervero (1980)

46. The General Form of a Cost Allocation Model C :estimated costs i :a particular measurable service output which represents the scale of operations n :number of service outputs included in the model Ui:unit cost of service output i Xi:quantity or value of service output i in the analysis

47. Labor Utilization Factor for Vehicle Hour Unit Cost • LUFi:Labor Utilization Factor for period i • PHi :pay hours for period i • VHi :vehicle hours for period i • n : relative labor productivity (= (PHP/ VHP) / (PHB /VHB) = 1.302) • s : vehicle hour coefficient (= VHP / VHB) • PHP or B : pay hours for peak or base period • VHP or B : vehicle hours for peak or base period Source: Adapted from Yu (1986) and Cherwony and Mundle (1978, 1980)

48. Accounting for Vehicle Utilization • Vehicle Utilization: Lower during peak periods • To account for the variability in deadheading and inter-lining between time periods, expenses were allocated to each period on the basis of total (or “scheduled”) vehicle miles, but costs were calculated on the basis of revenue (or “in-service”) vehicle miles and hours. Period Rev VM Tot VM Cost per revenue VM . Peak 30 miles 60 miles ==> $ 600 $600 / 30 miles = $20.00 per revenue VM Off-peak 30 miles 40 miles ==> $ 400 $400 / 30 miles = $13.33 per revenue VM Daily Total Cost $1,000 Daily $1000 / 100 = $10 per SVM Peak 60 / 30 = 2.000 $10 * 2.000 = $20.00 Off-peak 40 / 30 = 1.333 $10 * 1.333 = $13.33

49. Including Semi-Fixed and Vehicle Capital Costs C1 :The cost assigned to the base period C2 :The costs of the additional peak service Cp :The costs in the Peak period (2t2) U :unit cost of service output in each period Source: Adapted from Levinson (1978) and Cervero (1980)

50. Marginal Cost Approach to Allocating Vehicle Capital Costs Cost/Hr $188 $10,402 $1,318 $4,004 $1,082 $227 Assumption: All buses in service during base periods are available for use during peak periods.