Proposed Fiscal Year 2013 Budget
Here’s the news release from Metro — the most newsworthy item, I think, is that the $4.5-billion budget does not propose raising fares for the 2013 fiscal year:
Metro will conduct a budget workshop and public hearing on a proposed $4.5 billion budget for Fiscal Year 2013 on Wednesday, May 16, at 2:30 p.m. in the third floor Board room at Metro Headquarters, One Gateway Plaza, Cesar Chavez & Vignes, next to Union Station in downtown Los Angeles.
The budget can be viewed online by clicking here. The public can view a copy of the balanced budget proposal at Metro.net. Request copies via e-mail at rmc@metro.net or by calling Charlene Williams in Metro Records Services at 213.922.2342.
Metro’s Board could consider adopting the budget for the fiscal year beginning July 1, 2012 at the board meeting that starts at 9 a.m. on Thursday, May 24, at Metro headquarters.
Metro CEO Art Leahy’s budget proposal, which is balanced with no shortfall, does not propose raising fares, which already rank among the lowest in the nation. Metro’s farebox recovery will stay at 28 percent, again near the bottom of any major operator, and passenger loads also will be low compared to our peers.
The proposed budget includes the following: $1.467 billion for transit operations, $278.5 million for deferred maintenance of Metro’s rolling stock of buses and trains, $1.084 billion for construction of Measure R transit projects, $134.5 million for other capital improvements, such as bus maintenance facilities, $236.5 million for a robust highway program; $339.5 million for debt service obligations and $974.7 million in subsidies distributed by Metro to fund Metrolink, regional operations and transit projects throughout Los Angeles County.
Against the backdrop of high gas prices, Metro will be offering commuters and others viable public transit alternatives with new light rail service on the Expo Line connecting downtown Los Angeles and Culver City and the Metro Orange Line busway extension to the Metrolink/Amtrak station in Chatsworth. Metro also will bolster express bus service on the Harbor Transitway and the I-10 between downtown and El Monte as the ExpressLanes congestion pricing demonstration project debuts
Highway projects include the I-405 Sepulveda Pass Improvements Project, the High Desert Corridor, the SR-710 north gap closure and the widening or other enhancements on various stretches of the I-5, I-605, I-710 south, and SR-138. Efforts will continue to construct sound walls and implement Metro’s freeway beautification program.
Metro CEO Art Leahy stressed a renewed focus on customer service with a strong emphasis on reliability, cleanliness and courtesy. Metro is purchasing hundreds of new buses and rail cars and catching up on years of deferred maintenance for Metro’s rolling stock. Stations will be cleaner, safer, and there will be better signage so that customers who speak a multitude of languages can better navigate the Metro system.
The proposed budget restricts hiring new employees except to fill positions needed to deliver Measure R projects and operate new services. Moreover, Metro has set in motion a program to recruit and train the next generation of managers and operations employees to allow for a smoother generational transition.
Metro funding comes largely from local transportation sales tax revenue along with transit assistance and grants from the state and federal governments, farebox revenue, and other revenue sources such as advertising, land leases and commercial filming.
The FY 13 budget is $337.3 million or 8.1 percent more than the current $4.178 billion Metro budget. This reflects a significant expansion of the Measure R program in the next fiscal year. In the new fiscal year Metro will be spending $1.560 billion on Measure R projects and programs compared to expenditures of $1.278 billion this fiscal year. In addition, Metro will be spending $35.2 million to operate the new Expo light rail line in FY 13.
Thanks to Measure R, the half-cent sales tax approved by voters in 2008, Metro is overseeing the largest public works program America has seen in decades. Projects underway and about to start construction are designed to stabilize and downsize the region’s worst traffic to manageable levels while generating hundreds of thousands of direct and indirect jobs, stimulating the economy, and improving air quality.
However, the reality is that Measure R does not include enough funds to support operations for all the new rail projects in the pipeline. A reduction in state or federal funding, or a dip in the local economy or ridership will endanger the balanced budget presented.
In terms of the proposed budget, Leahy said it’s prudent to flag these risks now so that Metro’s Board can avoid future roadblocks that could detour crucial progress in this decade. In that sense, FY 13 will be a pivotal period for Metro and Los Angeles County in more ways than one.
Frank M.,
One last time I will try to explain this. Lets use your car example. Say the car has one passenger paying $1.50 for a trip, but has room for two more passengers. They now drop the price to 25 cents. Say 6 people now want to board. They pick up the other two and leave the other two in the cold. Now they have 3 passengers paying a total of 75 cents and two furious passengers they have left on the side of the road. Before they had one happy passenger with plenty of room paying them double what they are getting now.
In reality it is much worse than this, because our busses and trains are not 3/4 empty. Also, it is doubtful you would suddenly have a flood of passengers just because the fare for a short ride is 25 cents. $1.50 isn’t exactly a lot of money. Back in the 80s, the fare was $1.00 when that $1.00 would really be like $2.00 today and people rode the busses as much if not more than now.
Matt,
There’s no need to explain. Clearly you and I differ on opinion and approach to fares. If your logic makes any sense, then people will be just as fine in paying $5.00 per ride whether or not it’s a mile or 20 miles and assuming that people will continue to ride the bus or train when cheaper options exist now to travel 20 miles now.
I personally do not want Metro to make the same debt ridden mistakes as NYMTA and Boston where fares keep rising, raising taxes, and making service cuts as a means to try to dig themselves out of bigger debt, when all it does is do the opposite approach to dig themselves deeper into debt.
And your example is flawed. Note the term short rides. Stop thinking of longer rides where riders just sit or stand there for 20 miles of transit that there’s no room to add anymore passengers. The first passenger only riding the car for $1.50 will likely ride along the car for longer trips. In the end, the car driver only makes $1.50 from that one person who just sits there for the entire 20 mile length of the trip.
Short rides means higher flow of passengers getting on and off. By going to a cheaper, variable, distance fare model of 10 cents per mile, the car driver gets to pick up a lot more passengers. 30 cents from passenger A going 3 miles + 50 cents from passenger B going 5 miles, $1 from passenger C going 10 miles, $2 from passenger D going 20 miles. And at each stop, there will be more people getting off because cheaper distance based fares encourage shorter trips, to make room for additional passengers who have a variable need of shorter and longer trips. Cheaper fares allow for more quicker, shorter trips to be done which keeps the flow of passengers faster. More passengers, more shorter trips, more quicker flows, more room for passengers.
A flat fare of $1.50, you only have one person sitting there using up space that could be better used for more shorter, quicker trips. It’s not much different from how cars just sit there in the parking lot eating up valuable seat space. If you think about it, it’s a form of congestion pricing for passengers on the bus or train based on travel distance.
You mentioned Metro 720 being so full? Why is that? Maybe because most of the people riding on that bus are using it for longer trips all the way from Santa Monica to the Red Line, which make no room for commuters that want to get on at a mid point like Miracle Mile to the Red Line.
But there has to be Westsiders that go to work or shopping at Miracle Mile too right? So then why is Wilshire still so packed with cars? Maybe because it’s just as that; riding the bus from the Westside to Miracle Mile isn’t worth it as going from Westside to the Red Line stations. It’s still cheaper to drive from Westside to Miracle Mile because why pay $1.50 or $75 per month on the Metro 720 to travel a shorter distance when driving the car from the Westside to the Grove still comes around cheaper than paying $75/month.
I used to ride 320/720 from West LA to Wilshire/Western all the time. Most passengers did not ride this far at all. In fact most sat on for a few miles and got off in places like Beverly Hills and the Miracle Mile. In fact, people were often surprised I would ride all the way to the Purple Line where I continued Downtown.
I know you think that is not possible that people would ride an “expensive: bus for 4-5 miles, but there are plenty of reasons why it is actually cheaper.
1. $1.50 is just not a lot of money except to the very poorest and $75 a month is way cheaper than owning a car unless you go illegal and don’t register and don’t insure it
2. You mention gas as the only variable in the cost of driving a car, which is of course wildly incorrect. You have to account for maintenance for things like tires, brakes, belts, oil changes and so forth which add up, as well as repairs and depreciation on the car. The IRS allows for business reimbursement for car usage at over $.50 a mile.
3. Some people work for employers that simply offer to buy Metro passes for employees.
4. CA law mandates that employers with over 50 employees must provide the cash amount to their employees in lieu of parking. In LA that is often way over $75.
5. Some places do not provide parking at all for their employees (i.e. most of Downtown).
Reducing the base fare below $1.50 would destroy a lot of Metro’s revenue and result in lower farebox recovery and a bankrupt system, which is why systems throughout the US, even those that use distanced based fares, actually have base fares around this level or even higher.
One problem with distanced based fares on busses that I don’t see addressed here is how would you handle cash paying passengers on the busses? Drivers don’t have time to deal with selling TAP cards. That is a real problem, especially for visitors and occassional users who don’t want to have to use a TAP card. Even if they could sell TAP cards, how much would you make a passenger load up onto it? Say they just wanted to go a few blocks and pay 25 cents. How does the driver know how far they really intend to go?
Matt,
$1.50 is expensive on the eyes of the beholder depending on distance traveled. Paying $1.50 for a mile worth of ride is dumb if there are cheaper alternatives like walking, biking, using a Segway, using a kickboard, a skateboard, a moped, and even driving a car.
What you’re saying is essentially this: pay $1.50 for an M&M, it could be anything from a single M&M to a jar full of M&M. Who’s going to pay $1.50 for a single M&M? If it’s going to cost the same $1.50, most people are just going to buy a jar full of it. Duh, and the person selling the M&Ms goes broke because he expected people would also pay $1.50 for single M&M as well.
“One problem with distanced based fares on busses that I don’t see addressed here is how would you handle cash paying passengers on the busses?”
I thought you were an expert in mass transit in Asia and are for distance based fares. Oops, looks like you don’t know anything then. If so, you wouldn’t be asking this question and instead would actually give out examples how Asian transit agencies do distance based fares on their buses. Don’t you think this question would’ve been answered by them if they run distance based fares on their buses?
For starters, why don’t you use Google to see how Asia figured out how to do distance based fares work in Asia on buses?
Frank,
Most people in LA use passes. Are you going to eliminate monthly, weekly and day passes since they are flat fares? If not, won’t people still ride the long distances you are trying to discourage so you can open up room for people just going a stop or two?
Matt,
Here are my rebuttals as a short distance rider:
1. You just compare mass transit with car ownership. I, along with increasing number of Angelinos do not own a car and are not reliant on public transit for shorter rides. How do I get to work? With a Vespa. Did that alternative ever cross your mind?
2. If I only end up driving a short distance, my cost of maintenance and upkeep of my Vespa is low as well. So is my gas. Did I mention my Vespa gets 100 MPG?
3. And a lot of employers don’t either.
4. Yes, but that law only applies to employers who uses leased parking spaces. And a large amount of businesses in LA don’t subsidize parking spaces. I work at the mall at the Beverly Center. They give me free parking because Beverly Center owns the mall. Do I get a parking cost reimburse should I decide I don’t need it? No, they just make my space available for mall patrons.
5. Not everyone works Downtown. Downtown is not the only place where people work. People work at supermarkets, pharmacies, shopping malls, movie theaters, factories, gas stations, hotels, airports, hospitals, etc. etc. Expecting everyone that works in LA has a white collar office job in an high rise in Downtown LA and everyone else who doesn’t is out of the picture is nothing but elitist. People who work in Downtown LA only make a small minority in a big cityscape full of businesses all over the LA Basin.
“Reducing the base fare below $1.50 would destroy a lot of Metro’s revenue…”
The Culver City Bus and the Santa Monica Big Blue buses runs perfectly fine with a flat rate fare of $1.00 which is cheaper than $1.50 that Metro charges. How can they do that? Maybe its because they run shorter distances. Shorter distance, cheaper price.
Matt,
I suggest you read this. It’s a legislative analysis paper from Hong Kong that was done back in 1996. Don’t worry, it’s in English.
Especially of key note interest is pages 8-10 as it provides all the logic of distance based fares over flat rate fares.
http://www.legco.gov.hk/yr97-98/english/sec/library/956rp14.pdf
Hong Kong, Singapore, London gets 100% of their operating costs funded solely through fares. Not a single penny of government funds went to their operating costs.
Tokyo and Osaka, less than 10% of government funds were used to keep their transit systems running. Majority of their operating costs came from fares and commercial venues.
In contrast, NY which runs on a flat rate system, and supposedly the best system in the US, back then still had to rely close to a 1/3 of their operating costs on government subsidies and taxes.
And I’m sure if you’ve been to Asia, how our transit systems are way better than any transit system in the US, including NY, right?
“Are you going to eliminate monthly, weekly and day passes since they are flat fares?”
Cities that use distance based fares also offer unlimited ride passes as well.
Former HK resident,
Once again, I am not opposed to distance based fares. There would be a lot of implementation problems with it if adopted, but they could be overcome, although the ones on the bus would be more difficult.
You make the assumption that the reason these systems achieve higher farebox recovery simply because they have distanced based fares, but that is simply not true. In London for examply, using the Tube is simply much more expensive than here (a very short Tube ride costs something like the equivalent of $2.50). Of course, it is in a city where parking is severly limited, gas costs nearly $10 a gallon, and you get charged a toll for going into the center of the city. If LA charged Tube prices, a lot of people would simply say it is easier for me to drive. In London that is not the case, because of those factors.
Look at the US, Chicago and NY achieve around a 55% farebox recovery ratio with flat fares and DC and SF achieve slightly better with distanced based fares. Their ratios are higher than here, because they charge more. A 22 mile trip on the Blue Line that costs $1.50 might cost $4 in DC or SF and it might cost something like $6 in London.
People here think distance based fares are some sort of magical elixir that means that Metro would charge 50 cents for a short trip and $1.50 for a longer trip or something along those lines and suddenly make a bunch more money. Not realistic. The numbers don’t work. Those type of numbers don’t work in London or anywhere in the US either.
Here’s the thing. I ride my bike to work.
I don’t do it because it’s chic or hipster thing to be on the bicycle. Nope, I do it because paying for the bus isn’t worth it for 2 miles. Metro lost my business to the bicycle with their fare policies.
Matt, if Metro decides to move to distance based fares one day, would you want to ride the bus or train that started off at $1.50 when all you want to go is one or two miles, or the next station over? I bet you do not. You will, just like me, opt to ride a bicycle instead. Starting off at $1.50 is not cost effective way to attract new riders from the short distance market.
You may think it’s “only $1.50,” and that lowering it any further for shorter distances only hurts Metro. I say it’s the exact opposite; the existing policies are the primary cause that’s hurting Metro today. I’m the living example of that right here. I don’t ride Metro, I refuse to pay $1.50 for a short 2 mile ride to work, hence I’d rather ride the bicycle. Therefore, Metro gets absolutely no ridership nor revenues from me.
For those that have shorter commutes, a $1.50 per ride on a short distance translates to $3.00 per day. That’s $15 per week on a 5-weekday work schedule, or added up over the year, would equate to about $780 per year. Doesn’t sound so cheap now does it? Or what, am I going to pay $75 per month, or $900 a year for a monthly pass (that’s $120 more!) just for the sake of commuting a measly 2 miles? Forget it.
Can I afford $3 per day? Of course. But would I want to pay $3 for a short 2 mile commute in each direction when I can just as easily bike that 2 miles? Who in their right mind would want to do that? Just like Frank M said, anyone can afford $1.50 because “it’s only $1.50,” but no one is stupid enough to pay $1.50 for a single M&M either. If you think otherwise, you clearly underestimate the ability for Americans to do simple math.
When looking at saving out $780 a year for a short commute, the bus and train isn’t worth it. I’d be better off just bicycling that one or two miles to save $780 a year and use that money to buy a new iPad instead. What Metro ends up is getting nothing from me because they expect that I will pay a rip-off price of $780 a year for one or two mile commute.
Now if Metro institutes a distance fare plan that starts off with 50 cents for the first mile and 10 cents every mile after that, at least they would get $0.60 from me for the two miles of commute. Add the roundtrip cost over the entire year, Metro would be earning $312 from me on a cheaper distance fare plan instead of nothing from a $1.50 flat rate plan.
Sorry, their poor fare policies only pushed me away from using public transit to the bicycle. And I’m sure there are a lot more people who feel the same way as I do. Cheaper options exists for short distance commuters that only end up making Metro not even gain ridership or revenues from us.