COST-REVENUE SQUEEZE IN CONVENTIONAL TRANSIT

Transit ridership is increasing after more than 2 decades of decline. But the share of the travel market held by transit continues to decrease relative to that of the automobile, and the reverse of patronage decline has been achieved at enormous cost. Operating losses have escalated at a rate (more than 30 percent/year) that cannot be sustained. In part, this is due to inflation, the increasing cost of fuel, the aggressive bargaining posture of transit unions, and a policy of fare stabilization. But the more fundamental reasons are (a) the evolution of urbanization and social interaction patterns that are incompatible with the operating regime of conventional transit and (b) the introduction of costly and underused services stimulated by formula subsidy programs based on fair-share politics. The cost of transit deficits is evident in taxes. But there are other, less evident, costs of expecting too much from transit. These include the failure to develop a coherent national policy toward the future of the automobile and the highway system. Paratransit can be a part of the solution if it offers a way of lowering expectations and focusing attention on the cost-effectiveness and market potential of competing alternatives. It can be part of the problem if it creates new expectations that serve to establish the right to service regardless of need. The best possibility for restraining costs and matching services to needs seems to lie in the reform of the subsidy allocation process. If regional planning agencies or general purpose governments could be given greater discretion to allocate federal funds, competitive bidding arrangements could be used to secure quality service from the most efficient vendor. This would entail severing the direct connection from the federal treasury to the transit properties and designating nonoperating agencies as the recipients of federal operating funds. /Author/