Mass Transit

Los Angeles' Financially Strained Transit Agency Considers Eliminating Fares on Buses and Trains

Abolishing fares could lead to even more federal aid for L.A. Metro, which has already received a $861.9 million bailout this year.

|

The Los Angeles County Metropolitan Transportation Authority, called Metro for short, will convene a taskforce this week to study the idea of abolishing fares on its buses and trains.

The aim is to boost ridership and support low-income riders who've been hit hard by the coronavirus pandemic. Still to be determined is how the already financially strained Metro would cover the costs of making its service free to riders.

"Metro has a moral obligation to pursue a fareless system and help our region recover from both a once-in-a-lifetime pandemic and the devastating effects of the lack of affordability in the region," Metro CEO Phil Washington* told The Source, Metro's blog.

The idea has earned the support of L.A. Mayor Eric Garcetti, who chairs Metro's Board of Directors. Garcetti said on Twitter that abolishing fares would be "an important step toward a more equitable and sustainable future."

The Source post notes that the median Metro rider's household income is $17,975 for bus riders and $27,723 for rail passengers, two income brackets that have been hit hard by the health and economic impacts of coronavirus.

Eliminating fares for all riders, regardless of income, would be an expensive proposition.

In fiscal year 2019, Metro says it pulled in $250–$300 million in fares to cover $1.9 billion in operating costs. In 2018, Metro collected $300 million in fares from its bus and rail services, which covered just under 20 percent of its operating expenses.

The money that Metro would lose from eliminating fares come on top of the extra costs it has had to assume because of the pandemic, says Baruch Feigenbaum, a transportation expert at the Reason Foundation (which publishes this website).

"To carry the same number of folks, they have to run extra trains, because they're trying to do some form of social distancing. They have added health costs for their employees," says Feigenbaum. "Ridership is going down and costs are going up, and you're saying: 'Let's just get rid of one of our major revenue sources.'"

Metro estimates that it's facing a $1.8 billion funding shortfall because of the pandemic. The Coronavirus Aid, Recovery, and Economic Security (CARES) Act including $25 billion in federal grants to distressed transit agencies; Metro received $861.9 million of that.

The California Transit Association, of which Metro is a part, is asking for an additional $3 billion this year to cover local transit agencies' pandemic-related losses.

Metro says that it would study other sources of revenue to cover the costs of lost fares, including state grants, federal grants, and more advertising.

Asked whether it would cover the costs of fare abolition with tax increases or service cuts, a Metro spokesperson tells Reason that "we are not considering tax increases and have the ability to adjust our service levels now to meet on-street realities."

Feigenbaum argues that eliminating fares weakens Metro's incentives to keep costs under control. "As long as [riders] are paying some cost, there's still some incentive to keep costs down," he tells Reason, given that higher costs will have to be reflected in fare prices. "If you get rid of the fare altogether, there is no incentive whatsoever."

The past few decades have seen Metro prioritize expanding light rail service frequented by higher-income "transit choice" riders, while cutting bus services normally used by lower-income "transit-dependent" riders. If riders aren't expected to cover any of the costs of their rides, Metro would one less check on its tendency to build pricey but little-used rail lines at the expense of more heavily used bus lines, Feigenbaum points out.

Transit-dependent riders themselves report valuing service improvements over the elimination of fares.

"Most low-income bus riders rate lowering fares as less important than improving the quality of the service," the Transit Center found in a 2019 survey of 1,700 riders from 7 cities. "This suggests that if a transit agency had to choose between devoting funds to reducing fares or to maintaining or improving service, most riders would prefer the latter."

That same survey says that Los Angeles, given its low farebox recovery ratio, would be best placed of any large transit system to eliminate fares. But it also concludes that other policies, such as congestion pricing or higher parking fees, would do a better job of increasing transit ridership and improving transit service.

Studies of fare-free transit find that the idea works best when adopted by smaller cities, such as college and resort towns, where the costs of fare collection are high compared to revenue taken in and where transit systems have enough capacity to absorb new riders.

Denver and Austin both abolished fares in the 1970s only to reinstate them later. The abolition of fares, coupled in both cases with expanded service, did increase ridership, according to a 2012 study. But it also generated overcrowding on vehicles and an increase in "problem passenger" incidents. The Kansas City Council voted last year to make public buses fare-free but it has yet to implement the system. A sticking point, reports Smart Cities Dive, is finding the $8 million needed to cover the cost of ditching fares.

Feigenbaum suggests that fare vouchers for low-income riders, funded by higher fares for less price-sensitive transit users, would be a better approach than abolishing fares entirely. That would help subsidize riders who need transit while forestalling the need to hit up taxpayers for additional revenue.

Correction: The original version of this article misspelled Metro CEO Phil Washington's first name. 

NEXT: Joe Biden Condemns Riots: 'Setting Fires Is Not Protesting'

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Wow. This story is completely unbelievable! LA has public transit?
    Just kidding. LA transit sucks ass. The routes are mostly random and you need a ton of transfers to get anywhere. A friend visited from Chicago, I told them to cab it (25 min from LAX to Torrance) , they said they could navigate the buss just fine. 4 hours later I picked them up at the nearest buss stop (0.5 miles) to my apt.
    LA has a crap transit system that need tk die

    1. You could walk to Torrance in 4 hours (if you are nobody).

      1. You took this comment personally, didn’t you?

        1. I’m just looking out for missing persons.

          1. I am making 70 to 60 dollar par hour at home on laptop ,, This is make happy But now i am Working 4 hour Dailly and make 400 dollar Easily ..OPt This is enough for me to happy my family..how ?? i am making this so u can do it Easily…

            ==========► Click here

    2. I make up to $90 an hour on-line from my home. My story is that I give up operating at walmart to paintings on-line and with a bit strive I with out problem supply in spherical $40h to $86h… someone turned into top to me by way of manner of sharing this hyperlink with me, so now i’m hoping i ought to help a person else accessible through sharing this hyperlink… strive it, you HERE? Read More

    3. I agree that Metro service is awful (I actually used to wonder if there was a minimum number of DUI convictions or other license suspensions that were required before applying for a job as a bus driver in L.A.).

      Seems like getting from LAX to Torrance should be easier than that, though since Torrance Transit runs buses very close to LAX, if not directly into the airport loop. I don’t know their routes or how someone from out of town would know to navigate them, but I work near LAAFB and see the Torrance Transit buses in the area all the time.

  2. OR –
    They could repeal AB5, sell the whole mass transit mess to a different democratic city, and fund uber/lyft rides to and from work, medical facilities and grocery stores for a bucket load of people.

    BUT –
    would those people be as reliable a block of campaign donors and voters as the unions and government employees now running the system into bankruptcy?

  3. It’s a terrible idea. The buses and trains would get filled up immediately with homeless and drug dealers. The entire system would stink and would be dangerous and unusable. They would lose more of the customers who are willing to pay. Security costs will go through the roof. And the ‘criminals’ will be the people who complain.

    I got on the Metro just before the pandemic and a black woman excitedly asked me (as the token white person on the train), “I heard they’re giving us checks. How much will they be?” This was right after Mnuchkin breathlessly announced stimulus checks for the whole country (part of his plan to bankrupt small business to snap them up for cheap). Well I feigned ignorance, but it was clear she was mocking whitey for giving them money. Well at least that’s how it felt. This is the same thing.

    1. They want to destroy small business, not snap them up cheap.
      They can control the entire population by controlling the tech giants.
      They can control a few tech giants, who are already on their side politically, with a few kind words and no regulation when those guys get together to cancel all conservatives.

      1. Change scares them. Big businesses represent stasis. Small business represent innovation and change. It terrifies the bejayzus out of them.

      2. Mnuchkin’s a socialist? Did not know that….

      3. Small business owners are Republicans, so destroying them has been part of the plan.
        Large business owners are both Republicans and Democrats, but large companies can be controlled through boycott threats and online temper tantrums.

  4. “Metro has a moral obligation to pursue a fareless system….” Thankfully, since car owners don’t pay fares, we can raise gas taxes, tolls, etc, so we can provide free transportation to those who need it. After all, It’s the responsible thing to do.

  5. “Metro has a moral obligation to pursue a fareless system and help our region recover from both a once-in-a-lifetime pandemic and the devastating effects of the lack of affordability in the region,”

    You also have a moral obligation to find a funding source other than my wallet.

  6. … once-in-a-lifetime pandemic -Metro CEO

    a) What a maroon.

    b) I’m expected to believe this was the once in lifetime pandemic ? The possibility of a devastating pandemic in our lifetimes, like the many pandemics throughout human history that upended entire populations (interestingly many of which originated in China) is very real, but to suggest that covid 19 is historically significant in anything other than the response of governments and their allied institutions is willfully ignorant or deliberately deceitful.
    Also, fuck China.

    1. It would be nice if it is a once-in-a-lifetime overreaction to a pandemic.

      1. If Newsom gets his way, it’ll be a once-in eternity overreaction in CA, because he’s declared there’s no criteria that could be met at this point which would allow for a return to how we lived 10 months ago. There can’t be a recurrence of a policy that’s never lifted.

  7. “”we are not considering tax increases and have the ability to adjust our service levels now to meet on-street realities.””

    Where’s this gung-ho attitude on any other subject?

    1. I take it he means that 20% of the bus fleet will head from Boyle Heights and Koreatown to Beverly Hills/Santa Monica/Palisades/Malibu in the AM and then park on the west side before heading back east after dinnertime?

  8. Anything that is free isn’t worth anything.

    1. Someone’s paying for it (taxpayers) but the riders will get what they (don’t) pay for the ride.

  9. In some ways, prices are a really inefficient invention. Think how much time and hassle would be saved every day if you didn’t have to fuss with wallets, digging for change, stuffing change back in; or if stores didn’t need cash registers, cashiers, posting prices al over. Probably get a 10% boost in the economy.

    It’s really easy to think like that. I do it every time I have to pay cash and collect change, or even pay with cards. Such a hassle!

    At some point, I actually pondered the beast for a while, and realized that yes, an economy could eventually settle down to optimum production and consumption … if nothing ever disturbed its equilibrium. No weather upsets, no one goes on vacation, no holidays, no one ever gets sick or dies or is born, no equipment ever breaks, mines never need to switch veins, no one ever thinks of a better way to do anything — can you imagine the repercussions from finding a cheaper more efficient way to make steel? Workers laid off, needing new jobs, not consuming their fair share …

    That’s the problem with socialists (well, one of many). They never think, they never imagine, they just assume the status quo is the best possible world if it only had a few tweaks.

  10. So using that logic we should all tell our employers we’ll work for free but the government not only has to pay us what we had but more. Liberals, like retardation on steroids.

    1. Wasn’t that Yang’s campaign platform?

  11. They may establish a fare-free transit system but it won’t be a transit system free of fear.

  12. I make up to $90 an hour on-line from my home. My story is that I give up operating at walmart to paintings on-line and with a bit strive I with out problem supply in spherical $40h to $86h… someone turned into top to me by way of manner of sharing this hyperlink with me, so now i’m hoping i ought to help a person else accessible through sharing this hyperlink… strive it, you HERE? Read More

  13. People laugh at California, but just you wait until they get those shiny bullet trains running. Then they’ll get the last laugh. Any day now.

    1. You’ll be able to get to Merced at 60 miles per hour! If you can ever get through LA traffic to get to the train station.

      1. It’ll be a 2-3 hour drive to the station in San Bernardino, at which point you’ll have the choice of paying $150 to take the train to Fresno or Meeced or to just keep driving up the 99 and get to the same place in less time (doing 75-90 on the highway without all the intermediate stops) and using only about $40-50 worth of gas (depending on your vehicle’s MPG).

  14. My god this pandemic has certainly hit the Metro’s financial situation hard.

    “In fiscal year 2019, Metro says it pulled in $250–$300 million in fares to cover $1.9 billion in operating costs. In 2018, Metro collected $300 million in fares from its bus and rail services, which covered just under 20 percent of its operating expenses.”

    Nevermind.

    Two questions. One, how is there such of a wide dollar range for fares collected in 2019? Is it closer to 250 or 300 million? Or they just have no idea what they collected within that range.

    And two, how did they manage to hike operating costs 30% in just one year?

    1. they save money by not hiring accountants, apparently

  15. One problem is a person could no longer use the “can I get fifty cent for the bus, please?” ruse.

  16. So they’re losing something like $2 per rider but they’re going to make up for it in volume?

  17. What really shocks me is the income levels they gave for the passengers.

    With the cost of living around here, I’d have thought that it costs more than $28k/year to be homeless in L.A. That’s got to be far less than half the income required to be at the local “poverty line”

  18. As soon as transit is free the bums will move in and never leave. It was already bad enough before COVID, but when they don’t even have to jump the turnstile they are going to live in the cars and ride all day. The smell and filth will be intolerable and ridership will probably drop despite the elimination of cost. I rode the Gold Line every day to Union Station then took the subway to 7th and Figueroa. The Gold Line was tolerable but had its share of incidents. The subway was horrifying. The only upside was (thanks to taking the subway every day) when COVID hit I already had a large stockpile of hand sanitizer and wasn’t impacted by the shortages.

  19. Ridership had decreased well before the pandemic hit. People didn’t want to ride with the homeless psychos that seem to be on every bus.

  20. Remember that saying, If wishes were horses all beggars could ride……..is this a signal to the tax payers that they are in for another new years dubbing, sucker punched by the liberal left and made to scrub the human feces from the sidewalks??…..I guess there will be donation jars on board and if you do not donate they will have handholds for you to use on the outside of the car…..you freaking libs are a hazardous hoot…………….

Please to post comments