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US public bus systems face
rising demand and deficits

By Tony Favro, US Editor

20 December 2009: Busses are a common, if unglamorous, feature of US cities. Each day they transport over 3.5 million people from home to work, according to the US Census Bureau. About 20 per cent more people rely on busses for their daily commute than all other forms of mass transit combined, including trains, subways, light rail, and trolleys. Busses are the workhorses of American public transportation, yet they struggle financially. Ninety per cent of the public bus companies in the US reduced service or increased fares in 2009, according to a recent report.

| Trends | Costs | Future |

Changing trends
The service cuts and fare increases come despite rising demand. The US Department of Transportation reports a 3.5 per cent increase in the number of trips on public transportation in 2008 compared to 2007 and a 3.5 per cent decrease in the number of miles traveled by automobiles. Though still relatively small – only 5 per cent of America’s 130 million workers use mass transit – the number of transit riders has been growing since 1995.

The upward trend is expected to continue regardless of fuel prices. According to Census data, the demographic groups most likely to use public busses are projected to increase in size more than any other population cohort between 2010 and 2025. These groups include minorities, recent immigrants, and lower-income residents who need affordable public transportation to get to work, school, and other activities.

Changing lifestyle preferences are also expected to increase bus ridership. Demographers note that a significant number of Americans – frustrated by sprawl-related traffic -- now prefer to live in areas of compact development where housing, shopping, jobs, and public transportation are in close proximity. The US Census Bureau estimates that as much as 30 per cent of the current residential demand is for housing in dense, walkable, mixed-use communities.

Urban mayors and their staffs are tracking the trends and re-examining the way their cities prepare for development. They are integrating comprehensive transportation planning with land use planning and partnering with lenders to offer location efficient mortgages, smart commute mortgages, and other financial products which take into account the impact of transportation costs on a family’s budget.

For years, according to outgoing Mayor Shirley Franklin of Atlanta, “people acted as if the only thing that would be successful in Atlanta would be to build more roads, but we can see from the congestion that you need an integrated transport system.”

Containing costs
At least 25 per cent of all commuters in eleven US cities use public transportation to travel to work – New York, Jersey City, Washington, DC, Boston, San Francisco, Philadelphia, Arlington, Yonkers, Chicago, Newark, and Baltimore – according to the Census Bureau. Commuters in each of these cities experienced service cuts or fare increases in 2009 or will face them in 2010.

Most of the operating funds for public bus systems in the US are provided by the government. Fares from riders pay an average of a third of the operating expenses for the 100 largest transit systems. Federal, state, and local funds make up the balance, and these revenue streams are not steady.

New York State government, for example, reeling from its own fiscal crisis, cut the state’s subsidy to New York City’s Metropolitan Transportation Authority (MTA) by $143 million in late 2009. The MTA, in turn, proposed severe service cuts, including the elimination of several bus routes.

To help close a $15 million budget gap, Reading, Pennsylvania Mayor Tom McMahon raised property taxes and laid off 30 city employees, including police officers. He also eliminated the city’s $120,000 annual allocation to the regional bus operator, which transports 11,000 city residents each day. Mayor McMahon redirected the bus subsidy to police and fire services, saying, “I don’t think it [bus service] is a core service of the city like police, fire, streets, sewer, and water.”

Eighty per cent of the public bus operators in the US report using federal stimulus funds for operating and capital expenses. These funds may prevent deeper cuts in service, but will run out in two years.

To contain costs and boost revenues, many bus operators are implementing advanced performance management, such as Six Sigma. They are adopting sustainable practices, such as recycling materials and fueling with biodiesel. They are focusing on safety and security and boosting the image of buses. And they are improving customer service with easier-to-read schedules, heated bus shelters, instant communications with customers via text-messaging, simplified fare systems, bike racks, “no strand” policies for passengers who miss their last connection, and similar enhancements. 

The reality, however, is that expenses for public bus and transit operators in the US had been rising even before the spike in fuel prices and the global financial crisis. Public mass transit systems are operated by quasi-governmental entities, highly-unionized, and face virtually no private competition. Most operate in low-density areas with average traffic congestion, which makes it difficult to draw people from their cars and nearly impossible to design convenient and viable bus routes and schedules system wide. No US city utilizes congestion charges, which could encourage more people to use mass transit. These factors make it difficult to meaningfully contain costs.

In 2009, New Orleans reached a deal with a private company to operate and maintain its busses for an estimated annual savings of 30 per cent over the next decade. Los Angeles contracts about 10 per cent of its bus routes to a private operator. The potential for private contractors to run transit operations more cheaply and efficiently is attractive to many cities who are exploring this option. However, implementing such arrangements can be a daunting challenge due to existing labor agreements. Financial issues have stymied plans to privatize limited transit operations in Chicago and Miami, as have concerns that a private company could go out of business leaving both riders and city government stranded.

Future bus service
The Obama administration recently announced a $280 million grant program for urban circulator systems and bus projects. Most of the money is earmarked for bus service, and priority will be given to projects that connect destinations and foster the redevelopment of communities into walkable, mixed use, high-density environments.

While this is welcome news to urban mayors and bus operators, it is tempered by the fact that initial drafts of the next federal surface transportation bill – a multi-hundred- billion-dollar behemoth that will shape transportation policy in the US for the next six years – reduces funding for bus transit relative to urban rail.

Currently, 23 US cities have light rail or subway lines, and about 40 more are planning them – while 600 regional transit authorities provide public bus service. Despite the seeming imbalance, urban rail and busses have been considered competitors for passengers and resources for the past two decades or so. Communities frequently are asked to choose between one form of transit or the other. Montgomery County, Maryland, for example, is currently deciding between rapid bus service and a light rail line to Washington, DC. In many cities, transportation planners are debating the merits of building new fixed-route light rail lines versus expanding more-flexible bus service.

The debates often have overtones that go beyond cost and flexibility. Busses lack the sex appeal of light rail, and tend to serve a different clientele. In many cities with both modes of transit, ridership on busses in predominantly minority; most white commuters take the train. In 1996, an organization representing bus riders in Los Angeles, most of whom are minorities, successfully sued the Los Angeles Metropolitan Transportation Authority for violating the civil rights of bus passengers by diverting funds intended for buses to the light rail system.

There is evidence, however, that creative management and marketing can change both the perception and patronage of public busses. As former Mayor Patrick McCrory of Charlotte, North Carolina explains, “Before the rail system [in Charlotte] was built, the only people who rode the bus were people who had to.” Now that light rail is in operation, “our bus ridership is not just people who have to have it, but people who want to ride it. Bus ridership is all races and classes. The bus system is unbelievable now.”

Public city busses are underappreciated in America. To become viable and reach its potential, bus transit in the US will require a new, integrated vision of transportation and land use, supported by flexible and sustainable arrangements for funding and operations.

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