The solution isn't across-the-board hikes but fares based on hours and distance traveled.
THE LOS ANGELES County Metropolitan Transportation Authority needs more money to cover its operating costs. But its proposal to raise fares — more than doubling the cost of monthly passes by 2009 — isn't the best way to get needed funds.
The MTA is not immune to economic realities, which dictate that as fares go up, ridership falls. National research has shown that, on average, for every 10% increase in a mass-transit fare, ridership drops 3%. So an across-the-board fare hike, in addition to hitting the poorest riders hardest, likely won't bring in all the money the MTA needs.
Surprisingly, those most likely to stop using mass transit when fares rise are the wealthiest riders, who have an alternative — almost all of them have cars. And many poor people, who don't have cars, will take fewer trips to save money.
There is an alternative strategy used by other cities around the world, including San Francisco and Washington. Variable pricing — where fares vary by time of day and length of the trip — is better for the poor and for mass-transit revenue.
Under such a system, longer trips simply cost more, and fares are lower for shorter trips that are cheaper to provide. Fares would also rise during rush hour but drop at times when many seats are empty. Transit passes, like basic fares, could have different prices and be used for trips in different zones and times.
Low-income people would be most likely to adjust their travel times to take advantage of lower fares. And by shifting passengers to off-peak periods, the MTA would reduce its need to buy more buses and hire more drivers to deal with rush-hour surges. Less-crowded buses also would be more appealing to new riders.
A revised fare structure could encourage people who now walk or drive when they travel only a few blocks to take a bus. Payment of more, but lower, fares would increase the MTA's revenue without raising all types of fares.
The MTA certainly needs more revenue. The agency has raised fares only once since 1994 because of the consent decree with the Bus Riders Union. That group sued the MTA alleging that fare increases proposed in the early 1990s would hurt the poor in order to increase services that disproportionately benefited people with high incomes — a concern that remains valid.
The MTA receives money primarily in two ways. It receives subsidies, generally from gasoline and sales taxes. And it collects fares paid by riders. Riders, especially poor ones, believe that more of the costs of the MTA should be borne by taxes, allowing fares to remain low. Taxpayers, especially those who rarely use mass transit, believe that more of the costs should be paid by riders.
A more varied fare structure was proposed in the 1980s and again during the court hearings that resulted in the consent decree. Each time the MTA responded that the fare structure had to be kept simple to be understood by riders. Yet fares varying by time of day or distance traveled are understood quite well by mass-transit passengers in cities around the world. Commonly available technology — smart cards or magnetic strip cards — could easily calculate and charge variable fares as riders board.
Variable pricing would require the MTA to invest in new fare boxes, and passengers would have to learn a more complicated fee structure. But the result would be a more rational payment system that likely would be considered fairer by both those riding buses and those paying taxes.
MARTIN WACHS is director of transportation, space and technology at Rand Corp.
This commentary originally appeared in Los Angeles Times on May 7, 2007. Commentary gives RAND researchers a platform to convey insights based on their professional expertise and often on their peer-reviewed research and analysis.