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.
I think all Metro needs to do is follow the example of how cell phone companies make money.
We offer multiple plans. Unlimited calling, texting, data plans for $69.99 per month is similar to a 30 day pass for $75. Those that need less calling, texting and data, can pay less per month with a different plan. This is like a weekly or day pass.
And then we also offer pre-pay plans for those that don’t use their cells phones that often and all they do is voice calls. People can top-up any amount of airtime onto their cell phone. If you call for 1 minute, it deducts 1 minute worth of airtime. If you talk for 30 minutes, it deducts 30 minutes worth of airtime. And it does this all the way until it reaches zero when you need to top-up whatever amount you wish again. For those that don’t use cell phones as often and has no need for texting or data plans, this is a far better deal because a top up of $100 can last up to six months or a year depending on their voice call usage.
For those that only use public transit for shorter distances, they can just top up $100 onto the TAP card, and it’ll keep on deducting the amount based on distance traveled. If the commuters’ rides are short, they can probably last $100 for six month or a year so, just like the prepaid plans for cell phones.
With all these different plans from the most heavy user to occasional callers, cell phone companies is able to reach out to diverse markets and users which have different needs. There’s no need to choose one or the other, unlimited ride passes and pay-by-the-distance can co-exist, just like cell phone plans.
And besides, I don’t think it’ll be that hard to do a “what fare plan is more economical for your needs” feature using Google Maps on metro.net.
If your commute mainly involves traveling from the SF Valley to Downtown LA, you might be better off with a $75 monthly pass. But if your commute involves only three stations worth of travel on the Expo Line or just 5 miles on the bus whether or not you have transfers or not, you might be better off with the distance fare plan.
The concept of distance-based fares is an interesting one that has potential to increase the fare-box take. However, there are many known unknowns (to quote a former SecDef), such as:
What is the elasticity of demand when fare is proportional to distance? Or, would Metro gain enough shorter-distance riders to offset the potential loss of longer-distance riders now facing higher fares?
Do busses have the space to accommodate a potentially big increase in short-distance riders? And would increased standing itself be a deterrent to riding?
How would a bus accommodate a cash rider?
Are there economic justice impediments?
How would time-based passes be priced?
How to prevent tap-out fraud? For example: (1) tap-in on a bendy-bus then take a position near a rear door; (2) at the next stop, tap out at the rear door *but do not exit the bus*; (3) continue riding for ten miles; (4) exit the bus without tapping out. Voila! A long-distance ride for a short-distance price.
None of these (or others) may be insurmountable, but I want to suggest that switching to distance-based fares isn’t as easy as snapping your fingers.
J Kim,
Take a look at the pictures of the 720 on this blog a few entries down. Now imagine 4 times as many people on that bus. Even if you strap people to the roof, there is no way you are getting even double the amount of people on that bus. Your solution of begging for more transit money or using longer busses which are illegal and can’t make physically make turns or turning the Orange Line into rail (that costs money) aren’t pracitical if you are keeping costs constant which was my original post.
And LA isn’t Asia. If Metro tried that, they would have Civil Rights lawsuits all over the place. You simply ignore the fact that asian transit agencies can charge more per rider because they are carrying much more than just the poor, which makes up the vast majority of Metro’s customers. Wealthier riders mean more advertising revenue and yes more retail options. What advertiser is going to spend big money advertising on a bus to someone who can barely afford the $1.50 fare and has no disposable income.
While retail may be nice to add on our system, it won’t be the financial panacea that everyone here says it will. I was in Rush at 7th/Metro a few weeks ago during a weekday morning. Beautiful space and I sat there for 20 minutes. Mind you this is in the busiest station Metro has with strong demographics (downtown office workers who have much higher incomes than the typical Metro patron), and no one else came in during the time I was there. People act like Metro can make hundreds of millions from retail. They probably make less than $10 -$15k a year from Rush and it is in a far superior location than pretty much all the Blue/Expo/Green or other Red/Purple Line stations.
“You simply ignore the fact that asian transit agencies can charge more per rider…”
Maybe you need to check your facts on how much transit costs are in Asia under the distance based system because I doubt 68 cents for shorter rides up to $2.00 for longer rides on the Taipei Metro is “expensive.”
They even provide discounts for those with EasyCards and if you are a senior, student, or the disabled.
@MarkB
I’d assume questions and concerns like those have already been answered by transit agencies in Asia. They have years of experience in running public transit in the distance based model. Naturally, they’ve already have the answers to those problems.
It’s just like the question some Metro person made about “how do we do gate locking when there might be people with no hands?”
http://thesource.metro.net/2012/02/23/metro-board-moves-to-lock-gates-at-metro-rail-stations-within-next-six-months/
The answer is always “go ask Japan, Taiwan, Hong Kong, Singapore how they figured out that solution ages ago.”
I mean really, this is what my tax dollars pay for?
“What if [insert question]”
“Go ask Japan, Taiwan, Hong Kong, Singapore…”
“But what if [insert question]”
“Go ask Japan, Taiwan, Hong Kong, Singapore…”
“Yeah, but what if [insert question]”
“Go ask Japan, Taiwan, Hong Kong, Singapore…”
@Matt
I think people are just getting tired of your excuses which are nothing but a good example of being a pro-transit in name only slacktivist.
You offer no real answers other than taxes, taxes, and taxes, because in your short sighted view, that is the easiest answer. Sorry but, taxes aren’t working and seems like more people are getting sick of it.
Let’s try this
Oh no that’s a dumb idea because [insert excuse]
Then let’s do this
That’s dumb too because [insert excuse]
How about this
That’s stupid because [insert excuse]
Then what’s your answer to solve Metro’s transit funding problems?
More taxes.
Pfft.
“And LA isn’t Asia”
And LA isn’t NY, Boston, Washington DC, San Francisco, Amsterdam, Paris, and London either. So what’s your point?
Besides, isn’t what people like you want? You naysayers all say that you want LA to become like a transit oriented city like them. Yet once you dissect them, that also involves making many changes that you may not like either.
Becoming a transit oriented city isn’t just spending tax dollars on transit projects. It also involves things like locking the gates, moving to distance based fares, and making better use of stations. Some how you guys don’t want that and you step back and say “LA isn’t like _______” How convenient.
“Some how you guys don’t want that and you step back and say “LA isn’t like _______” How convenient.”
I think this summarizes it best. LA will never have a world class transit system without making big changes and reform to the way it handles public transit. The only problem is, how many people will be willing to accept such changes even though it means changing how Metro operates its business. Seems like there’s a big split in differences here.
In many ways this is a reflection of the political climate of the US today; one side of pro-transit supporters wishes to maintain the status quo as it is today who are fine with keeping Metro dependent on taxpayers, versus another side of pro-transit supporters who wish to do something different who want Metro to seek alternatives means to raise their own revenues instead. They both want the same thing; for LA to become a world class transit city. Their approaches however, differs significantly.
LAX Traveler, yes take home income in Taipei is roughly 60-65% lower than in LA so a $2.00 fare there is more like a $5 fare here.
Frank M, actually I am in favor of distance based fares, which would mean higher fares for longer trips while keeping a base fare of $1.50. This would reduce tax subsidies necessary and result in a higher fare box recovery similar to DC or SF. Where have I said I am for more tax subsidies?
I am realistic and did pay attention in my college Econ classes. Pounding the table and saying I want lower fares and lower taxes going to transit doesn’t mean any old proposal is a solution just the same as other people say I want lower gas taxes and better maintained roads and more freeways so why don’t we just have vendors and shopping malls at rest stops.
Mark B. has an excellent post and now Steve H. has addressed the topic as well.
Matt,
“I am in favor of distance based fares, which would mean higher fares for longer trips while keeping a base fare of $1.50.”
I don’t think having the fare start off at $1.50 is a good idea. There’s no real solid justification that people should start off at $1.50 when riding the bus even if it’s a short distance.
Take for example Metro’s suggestion for my commute from Inglewood to Culver City. They suggest I first ride on Metro Bus 110 for 2 miles, then take Metro Bus 439 for 4 miles, and use the Expo Line for 1 station. The total cost ends up being $4.50 one-way, which means I’m supposedly better off with getting a 30 day pass for $75.
But in the end, I take a step back and realize that I’ll have to pay $75/month for about than 10 miles of one way commuting which isn’t much of a deal, moreso true when it’ll take me close to an hour just to travel that 10 mile distance.
And no, it’s not that I can’t afford $75/month, it’s that at such a short distance there are cheaper alternatives that I can get by with which in the end, probably steals my ridership and potential revenues away from Metro. If I can get by with something cheaper which allows me to put that extra savings into something else like my kid’s education or for a dream family vacation to Hawaii, that’s what I’m going to end up doing.
What’s stopping me from carpooling? Nothing. What’s stopping me from bicycling? Nothing. What’s stopping me from trading in one my older cars for an all-electric Nissan Leaf? Nothing. What’s stopping me from selling one of my cars and getting a 45 MPG Harley Davidson? Nothing.
And if I buy a Nissan Leaf or a Harley, my commute even cuts back to being about 5 miles one way because I don’t have to make weird transfers on a set bus route, which adds even more to fuel savings. Heck considering that, I can take just as easily trade my older car for a much fuel efficient 30 MPG Honda Civic whose daily fuel consumption cost comes out cheaper than starting off the fares at $1.50.
Bottom line really, is really all about money and how much I can save with the many choices that I have as a commuter. Bluntly speaking, Metro still doesn’t gain any ridership from a market base like me because there are still plenty of alternatives that are cheaper and faster.
The only way for Metro to gain any ridership from a market base such as myself is to set the fares lower. Being said that, starting off a ride with $1.50, isn’t a good way to gain ridership from a short distance commuter.
I think at this point, it’s fair to say Metro’s existing fare policies are good for longer commuters, but isn’t as great for shorter commuters, and that maybe one of the reasons why their farebox recovery ratios are so low.
Of course there maybe other factors, but it does seem like Metro needs to do a better job in finding a better fare structure to persuade more short distance commuters to take public transit. As Eduardo A. said, there are still so many alternatives that are cheaper, faster, and more efficient than public transit for shorter trips.
Maybe a flat rate policy works in smaller, denser cities like New York or Boston where businesses are primarily located downtown and residences are farther away. But LA is not like that. We are big, spread out, with a mix of businesses and residential areas. Naturally, there’s going to be those that commute long distances and there will be those who have commutes that are shorter. It’s futile to expect a one-size-fits-all $1.50 flat rate / $5.00 day pass / $15.00 weekly pass / $75 30 day pass solution would be sufficient for transit needs for Angelinos.
And as Cell Phone Seller mentioned, Metro could keep the passes for longer commuters to co-exist with a “distance fare plan” that is more likely to be a preferred choice to pay for shorter commuters.