Full size buses ply many suburban and rural roads around California. These lightly used buses may provide great employment opportunities for drivers – many of whom are unionized – but they’re a bad deal for taxpayers and, in the age of Uber and Lyft, they’re not the best option for riders.

I became interested in this issue when a CPC Facebook follower asked us to look into his local transit system (so please keep those tips coming).  Sure enough, that system – the Livermore Amador Valley Transit Authority (LAVTA) – incurs expenses of over $10 per passenger, recovering only 14% of these costs at the farebox.

Livermore Amador Valley Transit Authority – Selected Statistics from 2015 Financial Statements

Operating Expenses (including Depreciation) $ 17,961,565
Farebox Revenue (including Advertising) $ 2,561,231
Passengers  1,705,729
Operating Expense per Passenger $10.53
Farebox Recovery 14.3%

LAVTA’s numbers are typical of smaller transit authorities across the state.  According to federal Department of Transportation statistics, most of these agencies generate user fees that contribute less than 20% of operating costs. The rest comes from federal and state subsidies as well as local tax revenues and tolls.

20161220-uw-joffeCan bus and light rail compete with ridesharing? Or is that looking backwards?

The Fresno County Rural Transit Agency (FCTRA) collected less than $600,000 in fares while incurring $6.6 million in expenses, resulting in a farebox recovery ratio of less than 9%. That ratio would put FTCRA out of compliance with federal standards, which require farebox revenue equal to at least 10% of expenses. But the federal formula excludes depreciation expenses, so FCTRA barely stays within the letter of the law.

SunLine Transit Agency in Riverside County, fared a little better: generating operating revenues equal to 19% of its expenses. But most of its revenues came from selling Compressed Natural Gas and Hydrogen Fuel, and by licensing local taxis, rather than from bus passengers.  While fuel sales may be a growth opportunity, taxi license fees are on the decline – as Uber and Lyft continue to marginalize the taxi industry.

Like many local bus operators, SunLine is unionized. The agency’s Memorandum of Understanding with Amalgamated Transit Union Local 1277 is quite prescriptive, even specifying the functions of a driver Restroom Committee. Quoting from the MOU:

Semi-annually, ATU Stewards will be relieved from assigned duties to provide SunLine with a list of convenient restroom locations. The locations/businesses will be contacted by SunLine to determine if their restroom facilities can be made available to Operators. A list of convenient restroom facilities will be posted for employee’s use.

Unionized bus drivers at SunLine also participate in a defined benefit pension plan, potentially placing taxpayers on the hook for future benefit payments. SunLine’s plan was 67% funded as of January 1, 2016.

While being expensive to operate, suburban and rural bus services are not so convenient for riders, given the low frequency of departures. For example, if you need to get from the Taco Bell in Kerman, CA to the Greyhound Bus Terminal in neighboring Fresno, there are just two departures daily: 7:46am and 1:01pm.

Ridesharing is a more cost effective alternative than fixed bus routes, especially when those routes serve relatively limited numbers of passengers. But transit advocates would argue that ridesharing is too expensive for many low-income residents in California suburban and rural areas. But assuming we agree that subsidizing mobility for people of modest means is a legitimate function of government, there is a way to do it more cheaply and conveniently:  instead of consigning these individuals to infrequent, fixed route buses, pay a portion of their Lyft or Uber fares.

In fact, LAVTA – the first agency we discussed – is testing this concept in Dublin, CA.  Transit users in that city can get 50% off rideshare fares (up to a $5 discount) for rides within the city, which covers a large area of eastern Alameda County. Ultimately, programs like this will have to be carefully designed to ensure that the subsidies only go to the neediest, otherwise costs could get out of hand. But if can be done, subsidized ridesharing promises to be a great way to promote suburban and rural mobility in the 21st Century.

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Marc Joffe is the director of policy research at the California Policy Center.

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