Metro Transit Funding Raises Difficult Questions
Saint Louis area officials have long struggled over how to fund the mass transit system. In the November elections, county voters will choose whether to increase the transit sales tax by one-half cent in order to fund Metro. If this measure passes, it will also trigger a one-fourth-cent transit sales tax in Saint Louis city. During the weeks preceding the November elections, voters will hear the arguments both for and against the tax increase. Both sides have merit.
The new tax increase, if it is approved by voters, is expected to generate approximately $87 million in additional funding for Metro, the majority of which would come from Saint Louis County’s higher tax rate and larger base. Saint Louis city’s one-fourth-cent increase would generate approximately $9 million in additional funding. About half of the additional funds raised, around $40 million, would be used to fund the current bus and light-rail system, while the remaining half would be used to fund future MetroLink expansion. Metro officials have stated that without the tax increase, the agency would be forced either to cut back on services or increase fare prices to ensure a balanced budget.
These officials view the prospect of increased fares as harmful, because they fear ridership would fall accordingly. However, this may actually be a better way to raise revenue. In the past, raising fares was a surefire way to decrease Metro patronage, but that assumption might not hold true today. As gasoline prices hover near $4 per gallon, it is plausible that most current Metro riders would rather absorb an increased fare than turn to even greater expenses at the pump. High fuel prices make it unlikely that anything short of a particularly large fare hike would spur a significant decrease in ridership.
To whatever extent possible, those who actually use Metro should be the ones to pay for its services. Therefore, any discussion of additional funding for Metro should include an estimation of the system’s popularity, and, in turn, its cost to taxpayers. For the fiscal year 2008, Metro officials project that the system will carry more than 60 million passengers. MetroBus ridership accounts for 33.5 million of that figure, while MetroLink will transport almost 26 million. Metro has always operated, however, with significant taxpayer cost. According to the agency’s 2007 figures, taxpayers subsidized Metro at a rate of $2.30 per rider, with MetroBus’s $2.61 subsidy average higher than MetroLink’s $1.39. In all, Metro received close to $124 million in taxpayer-funded subsidies during 2007, and although some of this revenue is paid by transit users in addition to their fares, the vast majority comes from non-riders. Higher fares can be seen as a fairer means of raising revenue than increasing the already-sizable tax burden devoted to underwriting Metro.
Conversely, those who ride the Metro regularly are not the only people who benefit from its services. For example, in 2007, Metro carried almost 2 million riders attending special events, which includes sporting events and conventions downtown. If not for Metro, the roads would have been more congested, with more people vying to park — perhaps driving up parking space prices. The reduction in gas usage that Metro facilitated on these occasions, paired with reduced congestion on our roads, are factors that benefit us all — even those who don’t use public transit.
Some of those opposed to the tax increase, however, simply don’t think the money will be spent wisely. Half of the revenue raised from new tax proceeds will fund MetroLink’s expansion, which is an enormously expensive project. For instance, the recent Cross County Extension added eight new miles of track for an estimated cost of $650 million. MetroBus has a much lower operating cost per mile than MetroLink, which means that bus routes can cover more ground at a cheaper rate than rail, while avoiding MetroLink’s large infrastructure requirements. However, it’s likely that increasing gas prices will gradually shrink the margin of efficiency that MetroBus now enjoys.
Metro funding has always been — and probably always will be — a struggle. Yet there is an important role for the government play in public transit provision. How best to provide crucial transit services is debatable. Are widespread taxes fair, or should costs focus on those who actually ride Metro? Those interested in a wider array of possible solutions should delve into the research about public-private partnerships conducted by the Show-Me Institute and the Reason Foundation. Cities like Denver and Las Vegas have already saved millions by allowing private firms to participate in operating mass transit.
Patrick Eckelkamp was a summer 2008 intern at the Show-Me Institute, a Missouri-based think tank. He is currently studying at Saint Louis University’s campus in Spain, pursuing an economics degree.