Fare assessment: Ridership down, revenues up

The Capital Times, October 9, 2009
By KRISTIN CZUBKOWSKI kristinc@madison.com

Nearly six months after Madison Metro's bus fare increase took effect, the ridership numbers admittedly do not look good.

Through April 2009, when the increase that raised cash fares 50 cents and other fares proportionally took place, Metro ridership was up 6.4 percent from 2008. But in every month since, ridership has decreased, ranging from a 1.32 percent drop in May to, more recently, decreases of 5.4 percent in July and 4.3 percent in August.

For opponents of the bus fare increase, the numbers are a clear case of "I told you so," but supporters of the increase and Metro staff say that bus ridership is down across the country because of low gas prices and the sluggish economy, and that the fare increase is bringing in additional revenue during otherwise lean times.

"I think you can't say that the drop in ridership is due to anything else (other than the fare increase) because it's so obvious that there were still the gains (in ridership) in January, February, March, and then the fare increase came," says bus advocate Tim Wong. "May and June were down a little bit, and then July and August were what I would presume the trend is going to be."

But those who supported the increase point out that June, July and August of 2008 were when gas prices peaked at more than $4 per gallon, pushing more people to the bus than ever before. As gas prices hover around a more familiar $2.40 per gallon, some riders naturally drift back to their cars.

"Especially in a city like Madison where our employment is pretty high, the biggest factor has got to be gas prices," says Ald. Jed Sanborn, a member of the city's Transit and Parking Commission, who supported the fare increase.

Metro manager Chuck Kamp adds that the economy has also played a role in decreasing transit ridership across the country. While Madison is better off than most cities economically, it remains an important factor, Kamp says.

"That not only applies to places like Janesville that have a much higher unemployment rate than we have, but it applies to us because we have state employees on furloughs and we have people who have lost their jobs, so our unemployment rate has gone up and so not as many people are riding to and from work, and that's affecting us," he said.

According to numbers from the American Public Transportation Association, bus ridership in Madison-sized cities was down 4.7 percent in the second quarter of 2009, and 2.4 percent for the year - not far off from Metro's own numbers.

Kamp says that revenues for Metro have increased considerably despite declining ridership in recent months - fare box revenues are up $317,000, and total revenues $609,000. While neither of those numbers come close to matching budget predictions for the fare increase, Kamp says he has been able to minimize the effect of Metro reserves through salary savings and fuel savings - allowing Metro to keep the positive effects of the fare increase, including increased service, transfer point security and a marketing position to promote unlimited ride passes to employers.

For his part, Madison Mayor Dave Cieslewicz is standing firm on his decision to raise fares despite the ridership numbers, saying that the long-term trend is for gas prices to rise and people to again turn to transit.

"Fare box revenues are up considerably, although not as much as we hoped. If gas prices go up, we could see revenues go up," he says. "It had to be done. It was a lot of pain for a lot of gain."

A key factor that each side of the debate would like to pinpoint is one that can't be calculated - what would have happened to revenues and ridership had the bus fare increase never taken place.

Bus advocates who argued against the fare increase point to continually increasing ridership - up 5 to 6 percent through 2008 and even the first months of 2009 before the fare increase - as one factor that could have also increased revenues.

"It was an incremental downward jump, and it will recover, but it's only speculative at this point how much more growth we would have seen in ridership if we didn't have to recover from a downward jolt," says Carl Durocher, a former Transit and Parking Commission member who voted against the fare increase. "What the proponents of the fare increase failed to really want to factor in was that the ridership growth itself generates more revenue without excluding a lot of people who for economic reasons decided not to use the bus."

But there was writing on the wall even in early 2009 of ridership beginning to see potential effects of dwindling gas prices and a lackluster economy. Fares from cash, day passes, and multi-ride tickets were down 5.8 and 1.2 percent in January and February of 2009, a decrease that was masked by increased ridership from unlimited ride passes, EZ Rider passes and on free UW routes.

If ridership had continued to decline this year even with a fare increase, says Ald. Jed Sanborn, Metro could be facing an even worse financial situation.

"Critics would, of course, say 'Look at how much ridership has gone down,' but … if we control for gas prices and lower ridership, total revenue could be way down because we hadn't raised fares," he says.
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