King County Metro has a revenue crisis. They are currently facing a $75 million annual shortfall, and without a new source of revenue, they will be forced to institute a 17% cut in service hours.
Most of Metro’s money comes from taxes and fares. So if Metro needs new revenue, then it’s only logical to look to these sources. King County is actively working on a plan to raise the sales tax and the vehicle license fee (paid annually on vehicle registration renewal) to address this shortfall, as well as providing some additional money for local road maintenance. I strongly support their efforts, and will enthusiastically vote for the measure when it hits my ballot.
However, there’s something that’s always bugged me about Metro’s fare structure. If Alice rides the bus for two stops, and Bob rides for 15 miles, they both pay the same $2.25 fare. (And if Bob has a monthly pass, he may end up paying less than Alice on a per-trip basis.) No other transportation service works like this. Taxi fares are based on distance and time. Toll roads cost more the further you drive. Airlines set fares based on costs and demand. Long-distance trains and buses, commuter rail… the list goes on. Only local transit networks have flat fares.
I’m not the only person who finds this worrying. Steven Farber, a researcher at the University of Utah, has found that flat fares seem to negatively impact low-income populations, who tend to make shorter trips than people with higher incomes. His research was conducted on behalf of the Utah Transit Authority (UTA), which is exploring a move to distance-based pricing, as a way of improving equity and financial stability.
Does the UTA have the right idea? Should Metro be looking at implementing distance-based pricing?
In 2013, King County Metro spent $640 million to operate its bus network,while Metro’s fare revenue was about $146 million. In addition, we know that Metro is facing a $75 million shortfall. Therefore, a distance-based fare system would need to raise about $221 million to solve Metro’s revenue problem.
In 2001 (the most recent data I can find), Metro provided 547 million passenger-miles of service. Let’s assume that this increased 10% since then, and so Metro currently provides 600 million passenger-miles of service. This yields a pretty straightforward figure: Metro must collect about 37 cents per passenger-mile.
The first complication is that a pure distance-based scheme neglects the fixed costs associated with picking up and dropping off a rider. Every time the bus stops, the vehicle is delayed a bit. The bus must slow down, exit traffic, open the door, wait for passengers to exit and enter, then finally reenter traffic and resume speed. As an extreme example, imagine a full bus, where every single rider exits, and a new set of riders reenters, at every single stop. It’s for this reason that taxi meters have a “drop”, and that a flight from Boston to New York isn’t half the price of a flight from Boston to Washington. So it would make sense for a distance-based fare system to have a minimum, too.
Suppose that we set a minimum fare of $1, which includes the first mile. The average end-to-end trip length (again, from 2001) is 8 miles. If an 8-mile trip needs to bring in about $3 in revenue, and if the first mile costs $1, then the remaining miles can cost about 28 cents each. We’ll round off and call it a quarter.
Here’s a sample of what some one-way trips would cost:
- Downtown (3rd and Pike) to Southcenter Mall: $3.75
- Downtown to Harborview Medical Center: $1
- Downtown to the University District (45th/University Way): $1.75
- Ballard to West Seattle: $3.50
- U-District to Bellevue: $3.25
- Northgate to Downtown: $2.75
- Downtown to Black Diamond: $9
There are some implementation challenges with distance-based fares. The main issue is that you need a way of knowing where people end their journey. The simplest way to implement this would be by installing rear-door ORCA readers. Riders would tap their card both when they enter and exit the bus. In 2010, Metro estimated that installing rear-door ORCA readers on all buses would cost $5.5 million. There are other costs, such as training drivers, updating the ORCA programming, etc. (Luckily, we know that ORCA supports distance-based fares, since it is used this way for Link.) In total, let’s assume that this project would cost about $10 million in today’s dollars.
Still, if this system would allow Metro to eliminate its operating deficit, while simultaneously improving equity, it seems like something that we should consider.
This post originally appeared on Medium.