Fourth in series

THIS ISSUE BRIEF is part of a series examining a variety of controversial local and national issues, focusing on specific policy proposals that are under active consideration. The premise of these essays, as outlined here and here, is that many important public policy issues are more complicated than the most fervent adherents to either side usually acknowledge, a dynamic that often hinders our ability to engage in thoughtful debate. (Read the earlier issue brief on free community college here.) 

For each proposal in the series, I will provide some basic background, with a high-level framing of the disagreement and the polarized “bumper sticker” arguments on both sides. I’ll then present what I believe to be the most reasonable evidence-based cases, pro and con. Each issue brief will conclude with reflections on possible avenues for finding common ground or higher ground and some basic data points, with links to useful resources, to help facilitate a rational and civil dialogue, ideally leading to agreement or at least understanding, if not in the halls of power, then maybe just around the dinner table. 

The Proposal: 

Eliminate fares on all MBTA subways, trolleys and buses.

Background:

In March 2022, the City of Boston, working in partnership with the MBTA and using $8 million in COVID-related federal funds, eliminated fares on three T bus lines in Boston, which run through parts of Roxbury, Mattapan, and Dorchester. This targeted fare-free program is an extension of a pilot that began with one of these lines in 2021. No fares will be collected on the three routes through February 2024. The program is intended to help determine whether fare-free transit should become more widely available, based on an evaluation report that is scheduled for June 2024. Similar pilots are being implemented by several of the 15 regional transit agencies, which provide bus service in other areas across the state.

Sticking Points and Bumper Stickers:

Advocates on this issue tend to be either firmly pro-transit or pro-car, often seeing their opponents as having dangerous hidden agendas (i.e., mass transit as a path to socialism or cars as vehicles of live-free-or-die white flight).

Free Transit is Economic and Environmental Justice!: Advocates for eliminating public transit fares argue that America’s love affair with automobiles is destroying the environment and distorting the economy, spewing pollution and CO2 into the air, enabling inequitable suburban sprawl, and disadvantaging low-income workers who lack access to affordable and reliable transportation.

Mass Transit is a Money Pit!: Opponents of free mass transit claim that further subsidization will only lead to more waste and inefficiency, driven by a bigger bureaucracy, higher salaries and benefits for unionized transit workers, and unnecessary expansions to satisfy outdated urban planning visions.

EVIDENCE-BASED CASE IN FAVOR:

Mass transit is the lifeblood of all great cities and a critical support to workers and businesses, while providing an essential service for low-income individuals and communities. It also plays a major role in combating climate change. Unfortunately, the MBTA is struggling to fulfill its mission and potential due to a seemingly never-ending backlog of deferred maintenance, service interruptions, and declining ridership.

Fixing the T, or at least accelerating its improvement, will require expanded investment across the board, from daily operations to routine maintenance and major capital projects. At the same time, meaningful steps need to be taken to restore and increase ridership, post-COVID, in order to improve asset utilization and address long-standing challenges of equity and the environment.

Relying on flexible federal funds during the pandemic, dozens of cities and transit agencies across the country have begun implementing fare-free programs, similar to the limited pilot being run on three bus lines in Boston. In most, if not all cases, these initiatives are having a significant positive impact on ridership. The two Boston bus lines that became free in 2022 saw the number of trips increase by over 20 percentage points in the first year, about three times the increase across all of the bus lines in the system.

Although there are many factors affecting mass transit utilization, ridership is price sensitive, and its fluctuations are highly correlated with movements in the price of gasoline. Getting more people out of their cars and onto subway trains and buses requires a clearer and stronger price signal that won’t be affected by marginal changes in the cost of driving. Eliminating fares will get people’s attention and affect behavior.

An added benefit of eliminating fares is reducing the hassle and cost of fare collection. The process of collecting fares slows down the on-boarding process, leading to unpredictability in travel times and reducing customer satisfaction. It also costs money, requiring ongoing investment in technology, maintenance, and staffing, including security systems and personnel to combat fare evasion. 

The MBTA is in the midst of a multi-year “fare transformation” project, to enable faster and more flexible collections. The most recent estimates are that the full implementation will cost $600 million, with ongoing costs of $33 million per year. Eliminating fares would allow the T to reduce capital costs and realize permanent savings on its operating budget, and since fare collections represent less than 20 percent of the MBTA’s annual budget, the net financial loss of eliminating fares will be relatively small.

Importantly, the positive environmental impact of a sustained increase in MBTA ridership will have a significant contribution to the broader goal of making Boston and Massachusetts carbon neutral by 2050. Transportation is the largest single source of greenhouse gas emissions in Massachusetts, and personal automobiles are one of the leading offenders.

According to the US Department of Energy, buses with an occupancy of 40 passengers are three times more efficient than cars with an average occupancy of 1.5 passengers. A train with 100 passengers is about 14 times more efficient. The higher the mass transit utilization rates the greater the impact on greenhouse gas emissions.

Perhaps even more important is the disproportionate positive impact eliminating fares from all subways, trolleys. and buses will have on addressing the persistent challenge of income inequality across lines of race and ethnicity in Greater Boston. According to a recent MBTA survey, 58 percent of T riders in 2022 were non-white, up from 34 percent just five years earlier,  and almost 50 percent of riders had household income below $56,000, up from 35 percent. The annual cost of just one “link pass” Charlie Card for both buses and subways costs $1,080, which is close to a monthly grocery bill for a family of four.

An added benefit is providing assured and affordable transportation for essential workers, many of whom are employed in lower-wage jobs. As became clear during the pandemic, our social and economic fabric depends on thousands of people who keep our basic services and core infrastructure up and running, day in and day out, especially during emergencies. Eliminating fares would have a disproportionate positive impact on these unsung heroes.

Even though fare free transit by itself won’t solve these problems, it would be a meaningful and affordable step in the right direction.

EVIDENCE-BASED CASE OPPOSED:

The MBTA is already one of the most heavily subsidized mass transit systems in the country, with state and local contributions amounting to almost 80 percent of FY24 budgeted revenue, resulting in average fares that are quite reasonable and somewhat cheaper than other major transit systems. 

One-way subway fare is $2.40, while a one-way bus fare is $1.70. The subway fare was last increased in 2019, while the bus fare has been the same since 2016. By way of comparison, a one-way subway or bus ride in New York City costs $2.90. In Chicago, the standard one-way fare is $2.50 for the L and $2.25 for a bus.

Notwithstanding the historic capital investments over the past decade in the country’s oldest transit system, the MBTA’s infrastructure and capital equipment remain outdated and in disrepair, with performance that’s uneven and unreliable, at best. The most recent estimate for the investment required to bring the system fully up to a “state of good repair” is almost $25 billion. From one perspective, this figure is an unrealistically high best-case scenario; from another it understates the backlog, given the additional projected costs associated with improving resiliency in the face of climate change.

The bottom line is the MBTA has a revenue and service problem. Anything that reduces its resources can only deepen the challenge and slow the path to better performance. 

The T projects almost $420 million in total fare revenue this fiscal year, down over 35 percent since FY19, before COVID caused ridership and revenue to plummet. Historically, MBTA subways, trolleys, and buses have comprised over half of total fare revenue (53 percent in FY19, pre-COVID), with the rest coming from the commuter rail and a variety of other sources. So, eliminating subway, trolley and bus fares would take away over $200 million in revenue from the current yearly budget.

Supporters of fare-free service claim that it will increase ridership, and results so far from the current bus pilot in Boston suggest that’s true. But the early impact may be misleading, since existing riders, as opposed to new riders, may be taking more trips or just switching from other lines that still charge fares. Based on a 2022 survey, only 2 percent of riders on the free routes report taking a trip they would not otherwise have taken.

Even if the bus pilot shows promise from a cost-benefit perspective, that doesn’t mean we can assume the same will hold true for other modes of transit, which have different operating models and cost structures, serving different kinds of riders and communities that may respond differently to the elimination of fares.

To the extent lost revenue hinders efforts to improve service, initial ridership gains may be short-lived. Many factors other than cost affect demand and utilization. Riders and potential riders also make transportation choices based on considerations and perceptions of reliability, frequency, logistical convenience, comfort, and safety. In addition, alternative modes of urban transit are playing an increasingly important role in the competitive landscape, including ride-hailing services, bikes, and even scooters. Not to mention the long-term impact on ridership of the rise of remote work in the aftermath of COVID.

Of course, if fare-free policies are successful in substantially increasing ridership, they will put new pressure on the system to expand service, taxing already overstretched capital and operating budgets and exacerbating quality and performance challenges.

From an environmental perspective, eliminating fares for intra-city transit will likely have little or no impact on commuters who are currently driving cars into Boston from the suburbs, based on the experience of other cities in the US and Europe, which have tried to use free transit to get people out of their cars. The initiative could, of course, be extended to include the commuter rail, but then its economic benefits would accrue to many higher income individuals, thereby undermining the program’s focus on equity.

A final concern is the negative effect eliminating fares may have on the general public’s attitude towards funding mass transit. In particular, it’s likely that eliminating fares entirely on the T may be seen as unfair by Massachusetts taxpayers and voters who do not live in the Boston metropolitan area and do not use or have access to public transportation.

In the end, eliminating fares is a largely symbolic policy that threatens the financial stability of the MBTA and undermines ongoing efforts to improve quality, without providing significant or lasting benefits with regard to the local economy, equity, or the environment.

POTENTIAL FOR COMMON GROUND OR HIGHER GROUND:

Notwithstanding the polarized arguments over fare-free public transit, the large majority of people are interested in having mass transit systems that are clean, safe, reliable, efficient, and affordable.  A 2020 national opinion survey found that over 75 percent of Americans “strongly” or “somewhat” support improving and expanding public transit. So, the question for most people isn’t necessarily whether to spend money on public transportation, but how much to spend and how to get the best return on the investment.

Obviously, the fare-free bus pilot that is currently underway in Boston should be carefully and objectively evaluated to understand its costs and benefits. Similar studies should be done on the impact of free regional transit authority bus service. Importantly, researchers and policy makers need to look closely at how the effects of eliminating fares may differ across transit modes. 

To make public transit more affordable, variable and discounted fare strategies could be considered, including the potential of the T’s planned “fare transformation project” to enable targeted approaches to improving affordability and increasing ridership. 

By way of example, a recent study by an MIT researcher found that a 50 percent fare reduction for low-income T riders in Boston increased their number of transit trips by 30 percent, which is equal to or greater than what’s been observed in the fare-free bus pilot.

Other strategic discount strategies, up to and including free fares, could be considered that might not only increase ridership in the short-term, but also help build a larger customer base over the long-run, such as special youth or student passes.

Other non-fare initiatives to increase ridership through schedule and route changes, targeted promotions, and other improvements to the user experience could also be developed, piloted and evaluated across all transit systems, including commuter rail.

Data:

MBTA Statistics

  • Annual Operating Budget, including debt service (FY24): $2.7 billion (+33 percent over FY19)
  • 5-Year Capital Budget Plan (FY24-28): $9.7 billion (+18 percent over FY20-24 plan)
  • FY24 Projected Fare Revenue (all modes): $418.5 million (-38 percent compared to FY19)
  • FY24 Projected Fare Recovery Ratio (all modes): 18.9 percent of total operating budget (down from 42.7 percent in FY2019)
  • Monthly Bus Pass: $55
  • Monthly Subway/Bus Pass:  $90
  • Weekly Ridership, all modes (November 2023):  5.2 million trips (-2.1 million since January  2020)

Sources & Resources:

Monthly US Transit Statistics from US Department of Transportation, Bureau of Transportation Statistics (https://data.bts.gov/stories/s/m9eb-yevh)

State Transportation Statistics from US Department of Transportation, Bureau of Transportation Statistics (https://www.bts.gov/product/state-transportation-statistics)

MBTA Budgets and Financials (https://www.mbta.com/financials)

American Public Transportation Association Ridership Trends (https://transitapp.com/APTA)