February 11, 2008
Come on and take a free ride

2009 Mayoral candidate Kemah Mayor Bill King has a suggestion for Metro: Do away with the fare box.

Today, the Metropolitan Transit Authority reports slightly under 300,000 daily "boardings." Because of transfers, it is a little bit of guesswork to determine how many commuters are actually using transit. But it is probably something in the 120,000-130,000 range. For every commuter we can convince to take a train or bus to work, we get one car off our roads. That means less congestion and fewer emissions and collisions. Clearly a good thing.

Metro has developed a far-ranging, multibillion-dollar plan dubbed Metro Solutions that it hopes will increase transit ridership. Phase 2 of that plan consists of five light rail lines and will cost about $2.2 billion. The ultimate cost will undoubtedly be higher. Metro projects that its Phase 2 lines will have about 140,000 daily boardings. However, these lines will replace existing bus service along the same routes, so not all of the boardings will represent an increase in transit ridership. The net increase on the Main Street line from switching to light rail has been about 19 percent.

If this ratio holds on the Phase 2 lines, we should pick up an increase in daily boardings of about 20,000 to 30,000 or something like 10,000 to 12,000 new transit riders. This is a very small increase compared to well over 1 million daily commuters in Houston.

The traffic models indicate that this relatively small increase will be about offset by the lost street lanes the rail lines will use and the scores of new street level crossings. As a result, there will be no meaningful reduction in traffic congestion from the Phase 2 lines.


Is there another way to increase transit ridership and do it now? I think there may be. Make it free.

Now, before you think I am proposing we give away the store, you need to know that Metro recovers a very small percentage of its costs through fares. In fiscal year 2006, Metro only collected about $54 million in fares compared to $435 million in operating expenses, or only about 12 percent. That is because Metro gets the overwhelming majority of its funds from a 1 percent sales tax. And Metro is currently enjoying a boom in its sales tax revenues. In the past two years, sale tax receipts have increased by approximately $84 million and are on track this year to increase almost another $40 million. Metro currently is sitting on nearly $400 million in cash, receivables and short term investments.

Also, Metro spends about $5 million a year collecting its fares and advertising, expenses that could be dramatically reduced if fares were eliminated. So eliminating fares would probably only cost us around $50 million annually.


If we assume a 50 percent increase in ridership, we would pick up about 50,000-60,000 new transit riders each day. This increase is easily more than four times that projected for Phase 2 and at a fraction of the cost. The operating costs alone for Phase 2 are projected to be $64 million, well above what we would lose from eliminating fares, not to mention repaying the principal and interest on whatever portion of the $2.2 billion construction cost is not covered by the FTA.

More importantly, this could happen immediately. Phase 2, even by Metro's optimistic projections, is four to five years away. If we realized a 50 percent increase in ridership, some other advantages would be:

  • The new Metro commuters would save about $100 million per year in commuting costs. Current Metro customers would save the $50 million they are now paying in fares. That is $150 million annually in the pockets of working families, many of whom have been facing increasingly difficult financial circumstances with rising gas prices.

  • A reduction in carbon dioxide emissions of about 500 million pounds a year with corresponding decreases in nitrogen oxide and volatile organic compounds.

  • A reduction in the traffic congestion for the rest of the folks still on the road. The actual reduction is impossible to predict with any precision and it would vary substantially by roadway.

  • More Metro buses would run on schedule. Metro bus drivers tell me that many of their delays come from fare "hassles" as riders get on the bus, e.g., not having the correct change, not being able to find their wallet, etc.

I'm not sure I agree with King's ridership projections for the expanded rail system. One could argue that they're too low, based on 1) increasing amounts of increasingly dense development near rail lines; 2) a network effect as the system's greater reach draws people who need to make a connection to ride; and 3) the fact that the Main Street Line vastly outperformed its projected ridership numbers. This is all someone's best guess of what will happen, like a Vegas line on a football game. King is betting the under, which may turn out to be correct, but there's no guarantee of it. He could very easily be wrong.

One more point is that it's not just about offering an alternative to one's commute to work. I can't take the Main Street line to work, but I can and do for other purposes, and when I do that's one less car on the streets contributing to congestion and pollution. A more comprehensive light rail network will make it easier for people who live in the suburbs to take commuter buses to work, because they will feel like they can still get places they need to go during the day while their cars are back home. People need alternatives outside of rush hour, too.

That said, I think there's merit to his suggestion. Metro doesn't depend on fares for its revenues, so relatively speaking this is a cheap idea. Not having to worry about having the fare, or to mess with the Q Card, will surely make some people give transit a second thought. It probably will speed boarding on buses, as without the need for a fare box you can open the back doors to let people embark as well. It won't cost much of anything to try this, and it won't cost much of anything to reverse course if it doesn't lead to more boardings. I'm willing to give it a shot. What do you think? Greg has more.

UPDATE: Rad Sallee also addresses this. I think his point about jeopardizing federal funds, which Greg also alludes to, is a strong one, one that certainly gives me pause. I still think that a pilot test would be worthwhile, just to test his hypothesis about the benefits, but a systemwide implementation in the event it was found to be worthwhile may require a fair bit of planning.

Posted by Charles Kuffner on February 11, 2008 to Planes, Trains, and Automobiles

Didn't a city in the Northwest - Portland or Seattle - do this within a specific downtown zone?

In economic terms, there's merit to the suggestion; transit systems, as natural monopolies, never can collect enough fare to cover costs; if we're going to recognize them as a public service worth having, it's worthing discussing whether the benefits of fare income are worth the costs of collecting it (including the marginal cost of people choosing not to use the system).

Posted by: John on February 11, 2008 9:25 AM

Austin tried this in the 1980s - the result was even less choice commuter ridership, because the buses became infested with a lot more bums enjoying the free air conditioning.

Posted by: M1EK on February 11, 2008 10:38 AM

At the very least it is a good thing that we have leaders talking about ways to get more people out of their cars and on mass transit. The norm is to rally against mass transit and work to undermine its progress or to just ignore the issue and fail to provide leadership.

Posted by: RKE on February 11, 2008 10:51 AM

Could be an opening Salvo from Mr. King in his run to replace Bill White as Mayor. A suggestion of free ridership would help tone down the typical "heartless GOP" association that would accompany any run by him and endear him to the traditional Democratic inner city demographic that would take advantage of such an offer of free ridership.

Posted by: TAN on February 11, 2008 2:19 PM

If anybody has waited at a Metro Rail station, they would have seen that the vast majority of riders are already riding for free. I would suspect that maybe ten percent of the riders actually purchase a ticket. Nothing scientific about that percentage, just a lot of observation while waiting for the train.

Posted by: RRF on February 11, 2008 7:28 PM

I've lived in both Portland and Seattle for most of my life.

Seattle has no fareless system at all. It's just a traditional urban bus system with a high number of electric articulated "trolley" buses in the more heavily traveled urban core.

Portland has a "fareless" square just in the central downtown district. It's maybe a 20x30 block area in the central business district. On Portland buses you pay when you enter the bus on all inbound buses and you pay when you leave the bus on all outbound buses. So if you happen to board a bus entering the fareless square and get off before you leave it you pay nothing. People use it to scoot around downtown but anyone commuting will do so from further away and they pay.

There is something of a movement to scrap the fareless square (and the honor system for light rail fares) because apparently crime is on the inrease on buses and trains and the thought is that forcing the young hoods to pay fare will weed them out. I have my doubts. Point being though, people aren't exactly enamored with it. Especially with the light rail honor system. You buy a ticket at a ticket kiosk next to the light rail stops and then board. There are fare inspectors who check tickets from time to time and fine people without them. But there aren't enough fare inspectors to really deter all the fare jumpers. Apparently the LA subway has the same problem.

By the way, one of the best ways to encourage transit ridership would be to implement a parking space tax. The city of Houston could tax every non-residential parking space within the urban core. So all those business that subsidize parking for their employees and customers would start paying for that privilege.

Posted by: Kent from Waco on February 11, 2008 7:48 PM

FYI. All of my light rail ridership numbers came directly from Metro. It is my understanding that the increases in the Main Street line over the projections come from more Medical Center workers than anticipated parking at remote lots and riding the train to work. Kuff is right though, the projections are guesswork at best. However, Metro is using one of the FTA approved methodologies.

Bill King

Posted by: Bill King on February 11, 2008 10:48 PM
Post a comment

(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)