With annual subsidies of $50 billion covering 76 percent of its costs, public transit may be the most heavily subsidized consumer-based industry in the country. Since 1970, the industry has received well over $1 trillion (adjusted for inflation) in subsidies, yet the number of transit trips taken by the average urban resident has declined from about 50 per year in 1970 to 39 per year today. Total transit ridership, not just per capita, is declining today, having seen a 4.4 percent drop nationwide from 2014 to 2016 and a 3.0 percent drop in the first seven months of 2017 versus the same months of 2016. ...
Four trends that are likely to become even more pronounced in the future place the entire industry in jeopardy: low energy prices; growing maintenance backlogs, especially for rail transit systems; unfunded pension and health care obligations; and ride-hailing services. The last is the most serious threat, as some predict that within five years those ride-hailing services will begin using driverless cars, which will reduce their fares to rates competitive with transit, but with far more convenient service. This makes it likely that outside of a few very dense areas, such as New York City, transit will be extinct by the year 2030, leaving behind a huge burden of debt and unfunded obligations to former transit employees. ...
"After adjusting for inflation, transit agencies have spent more than $1.6 trillion on operations and improvements since 1970, while collecting less than $500 billion in fares. Per passenger mile, transit is the nation’s most expensive and most heavily subsidized form of travel. In 2015, transit agencies spent an average of $1.14 per passenger mile, while Amtrak costs averaged nearly 60 cents, driving averaged about 26 cents, and flying averaged about 16 cents per passenger mile. Of those costs, transit subsidies averaged 87 cents per passenger mile, compared with about 30 cents for Amtrak and less than 2 cents for flying and driving."O'Toole also mentions the more general problem that over time, jobs and housing have become more spread out across cities and suburbs, which makes it harder for mass transit to function. Indeed, one useful question to ask of any mass transit system is whether people can get just about everywhere they need to go, with relatively little need for a car or a lot of taxi or Uber rides, or whether the transit system mainly helps people from the suburbs get in and out of the city some of the time--while driving the rest of the time.
Some degree of subsidy for mass transit would be all right, if it paid for reductions in pollution and traffic congestion. But even the relatively large subsidies aren't coming close to covering the costs for mass transit. Rail-based mass-transit needs ongoing repairs and maintenance, along with a major rebuilding every 30 years or so. Moreover, a number of transit systems are racking up large unfunded liabilities for future pension and health care payments. When push comes to shove, it often seems politically easier to open a new station or make flashy and visible improvements, rather than doing the nuts and bolts of physical maintenance and updating, or funding future costs to retirees. Here's some detail from O'Toole:
"In 2010, the Federal Transit Administration (FTA) estimated that the nation’s transit industry had a maintenance backlog of $77.7 billion ($87 billion in 2016 dollars). The agency added that the backlog was growing because transit agencies weren’t spending enough on maintenance to keep their systems in their current conditions, much less to reduce the repair backlog. In 2015, the Department of Transportation estimated that the backlog had indeed grown to $89.8 billion ($95 billion in 2016 dollars), which was probably a conservative estimate. To eliminate the backlog in 20 years, the department calculated, 100 percent of funds now being spent on improvements would have to be shifted to maintenance ...
"Rail infrastructure has an expected life of about 30 years and must be thoroughly rebuilt or rehabilitated at the end of that time or risk suffering numerous delays, accidents, and other problems. ... The original lines of the Washington Metrorail system turned 30 in 2006. Soon after that, riders began experiencing episodes of smoke in the tunnels, forcing the agency to stop and evacuate the trains. By 2013, such incidents were happening twice a month, and the agency had discovered they were caused by water in leaky tunnels short-circuiting fiberglass insulators in the third-rail power system, causing them to catch fire. In 2009, a train collision that killed nine people was blamed
on poorly maintained signaling systems. As early as 2002, the Washington Metropolitan Area Transit Authority (WMATA) warned that the agency would need to spend more than $12 billion on maintenance in the next few years to prevent such problems. The system “stands at the precipice of a fiscal and service crisis,” the agency predicted. But neither the federal government, which had paid for most of the costs of building the system, nor local governments, which paid for most of the costs of operating it, stepped up to pay for maintenance. Today, WMATA’s general manager says the system has “$25 billion of unfunded capital needs. ...
"Boston’s Massachusetts Bay Transportation Authority and Sacramento’s Regional Transit District both have unfunded obligations that are more than double their operating budgets. The Maryland Transit Administration, New York’s Metropolitan Transportation Authority, Portland’s Tri-Met, and the Washington Metropolitan Area Transportation Authority all have unfunded obligations larger than their annual operating budgets. The Southeast Pennsylvania Transportation Authority (SEPTA) and Rochester Regional Transit Service (RTS) both have unfunded health care obligations that are nearly as large as their operating budgets and, when pension obligations are added, are likely to be larger. Most of these agencies also have large debts and/or maintenance backlogs.What about mass transit as a way of helping mobility for the poor? Of course, this argument only works if the transit system is sufficiently widespread and reliable. But moreover, O'Toole argues:
"Census data reveal that a higher percentage of people who earn more than $75,000 a year take transit than any other income class. To the extent people believe that low-income people can benefit from transportation assistance, such assistance should be in the form of vouchers (similar to food stamps) that can be used with any transportation provider, from a ride-hailing service to an airline."What does O'Toole's recommend?
"[T]ransit agencies should begin to prepare for an orderly phase-out of publicly funded transit services as affordable, shared driverless cars become available in the next decade. This means the industry should stop building new rail lines; replace most existing rail lines with buses as they wear out; pay down debts and unfunded obligations; and target any further subsidies to low-income people rather than continue a futile crusade to attract higher-income people out of their cars."Even I, gloomster though I am, am not as gloomy about mass transit as O'Toole. But the neglect of physical maintenance, the lack of planning and funds for needed large-scale updating, and the accumulation of unfunded liabilities are real problems. I'm also a much bigger fan of buses than rail for most cities (remembering that buses can run both on dedicated lanes and also on regular streets). Also, I'm not as confident as O'Toole that driverless cars are right around the corner. But a different technological possibility that is very near is a network of ride-sharing vans, perhaps with a capacity of about 10 people each, whose routes would be continually updated, coordinated and optimized. For a study of the possibilities of such a system in the context of New York City, see the article by Javier Alonso-Mora, Samitha Samaranayake, Alex Wallar, Emilio Frazzoli, and Daniela Rus, "On-demand high-capacity ride-sharing via dynamic trip-vehicle assignment," Proceedings of the National Academy of Sciences (2017, 114 (3) 462-467; published ahead of print January 3, 2017).