The Looming Mass Transit Apocalypse

Outside of a handful of the nation’s largest, densest cities, public transit in the United States is doomed, contends Randal O’Toole, a Cato Institute scholar, in a new analysis, “The Coming Transit Apocalypse.”

Nationally, commuter rail and buses already commandeer $50 billion a year in public subsidies to cover operating expenses, O’Toole says. The cost to the public will only grow as the industry grapples with billions of dollars in maintenance backlogs and unfunded pension and retirement healthcare liabilities. The coup de grace will come within five to ten years as driverless ride-hailing services provide greater convenience — door-to-door service — at roughly the same cost per mile as mass transit.

The industry response to these pressures, says O’Toole says, has been to seek ever bigger subsidies. Rather than throw good money after bad, he advises, municipal governments should plan for an “orderly phase-out” of publicly funded transit services.

O’Toole’s critique of the industry is especially timely for Virginians to ponder as the Commonwealth, along with Maryland, Washington, D.C., and the federal government patch together a rescue package for the fiscally ailing Washington Metro service. Do Virginia taxpayers want to saddle themselves with huge new obligations for a commuter rail and bus system that might not survive the driverless car revolution?

Transit is the most expensive and heavily subsidized form of travel in the United States, O’Toole says. In 2015 transit agencies nationally spent an average of $1.14 per passenger mile (only a quarter of which was passed on to passengers in the form of fares). That compares to 60 cents per passenger mile for Amtrak, 26 cents for driving, and 16 cents for flying. While massive subsidies have helped expand total transit ridership as the population has grown, urbanites are taking fewer transit trips per person than in the past.

Metro is an essential piece of transportation infrastructure in the Washington region, but nowhere near dominant. While Metro accounts for only 3.8% of overall metropolitan travel, according to O’Toole, 17.6% of commuters use it. The percentage rise to 28.1% in the central city.

Mass transit is a marginal contributor in Virginia’s smaller metros. In Richmond, buses accounts of 0.3% of all trips, 1.9% of commuting, and 5.5% of commuting in the central city. The numbers are comparable in Hampton Roads. Light rail and buses account for 0.4% of all travel, 2.0% for commuters, and 5.5% for central city commuters.

The declining price of gasoline in recent years has contributed to a fall-off of mass transit after it peaked briefly in the mid-2000s, says O’Toole. Lower-income people are especially sensitive to the price of gasoline, and when gas prices fall, many switch to automobiles. The fracking revolution has kept U.S. gasoline prices relatively stable in recent years, and O’Toole does not expect that to change any time soon.

Meanwhile, despite massive subsidies, mass transit agencies have racked up a maintenance backlog that federal officials estimated to be $87 billion nationally (in current dollars) in 2010 and $95 billion (in current dollars) in 2015. To eliminate the backlog within 20 years, 100% of funds now spent on improvements would have to be shifted to maintenance, O’Toole says. That shift is unlikely to ever take place, he adds, because politicians show a pronounced bias in favor of “ribbons over brooms” — headline-generating new projects over nitty gritty maintenance work.

Rail infrastructure has an estimated life of 30 years, after which time it needs to be thoroughly rebuilt or rehabilitated to avoid the risks of delays and accidents. Those are precisely the problems that have dogged the Washington Metropolitan Area Transit Authority (WMATA) as it allowed its maintenance backlog to grow, leaving it with $17.4 billion in unfunded capital needs over the next 10 years. As service and safety have deteriorated, the commuter rail system has been experiencing a steady erosion of riders and fares that has intensified the fiscal crunch.

WMATA is facing another disastrous predicament that has garnered relatively little attention: The agency has accumulated $1.027 billion in unfunded pension obligations and $1.767 billion in unfunded health care obligations. Those massive liabilities are over and above the authority’s unfunded maintenance needs.

When driverless cars become a reality, the cost of operating a ride-hailing service will be decline to the cost of operating the car, says O’Toole — about 40 cents per vehicle mile. “Door-to-door driverless service will also be far more convenient than transit, thus making transit inferior to shared driverless cars in every way.”

As riders shift to driverless ride-hailing services, the economics of mass transit will deteriorate even more rapidly: fare revenues will decline, maintenance backlogs will grow, and there will be more schedule delays, more safety incidents, more poorly maintained facilities, and more disillusioned riders.

How can municipal authorities respond to this ticking fiscal time bomb? First, says O’Toole, they can stop building fiscally unsustainable new projects. Second, as rail lines wear out, transit agencies should replace them with cheaper-to-operate buses. Third, plan express buses and bus rapid transit services that share lanes with other traffic rather than rely upon dedicated lanes. Fourth, make a priority of paying down debts and unfunded liabilities. And fifth, instead of subsidizing all passengers, convert subsidies into vouchers for lower-income riders.

Bacon’s bottom line: Predictably, transit agencies will do none of these things. Instead, they will lobby for bigger subsidies. The big question is how much tolerance taxpayers will have for pumping new money into a failed business model. My guess is that taxpayers will continue to be cajoled into paying continued subsidies until such time as driverless cars and jitneys take so much market share from commuter rail and buses that the impending collapse of public transit is obvious to all. Of course, by then, it will be too late to salvage much from the situation.

The only thing that can possibly save mass transit is a rapid evolution toward denser, mixed-use land use s along transportation corridors that would enable rail and bus to serve more riders and generate more fare revenue. That evolution is happening along Washington’s Metro system, but it is a slow, herky-jerky process that speeds up and slows down with business cycles and metropolitan booms and busts. Even then, I am highly skeptical that mass transit could ever pay for itself. If rail loses money in New York, it will lose money everywhere in the U.S. (Yes, yes, I know that roads and highways are subsidized, too, but the subsidies are much smaller per passenger mile. In any case, the road network should move to a pay-as-you-go system just as mass transit should.)

What seems absolutely foolhardy, given what we know now, is to double down on our commitment to new money-losing mass transit projects. State and local governments can sustain the fiscal drain for only so long. When they inevitably have to cut back — read my posts about Boomergeddon — the retrenchment will be all the more painful for riders, transit agencies and taxpayers alike.

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17 responses to “The Looming Mass Transit Apocalypse”

  1. Transit sustainability is definitely dependent on land use policy. See Tysons or Reston. WMATA isn’t going anywhere. The Commonwealth wants the option to the use the I-66 inside the beltway toll money to help fund a new Rosslyn Station and/or Long Bridge.

    This would add the capacity of at least 400 buses (200 in each direction) per hour across the Potomac.

    In regards to bus service, with all the new HOT lanes going in, Virginia should study using electric autonomous buses. I-66 would be a good place to start. With the toll company providing capital for improvements and a transit subsidy, DRPT could issue an RFP/PPP to provide a level of service (all day, rail frequency) and transit fares could be free between Gainesville, Centreville, Stringfellow, Fairfax Corner and Vienna Metro Station.

  2. Bosun’s Bottom Line – All forms of transportation should not receive any direct or indirect subsidy from federal, state or local governments. That includes air, land, and sea. If the users do not pay the total cost of the direct and indirect cost of the service, then that service or facility should be eliminated. Heck, I am still waiting for the railroads to pay me for all the free land they got after the Civil War. (Cue the crickets.) Bosun

    1. Steve Haner Avatar
      Steve Haner

      Bosun, if you think the US Treasury or the US economy lost money on that deal to build the intercontinental railroad, trading land acquired from the French at pennies an acre, please be careful not to manage your own money…

  3. LarrytheG Avatar

    Good to hear from Bosun again! Well … is that truly what we really want?

    and a question about tolls… should we be doing HOT lanes?

    or should we just build what we can afford to build and let people figure out gridlock?

    finally – why do we not say that public safety, fire, rescue police are not “subsidized” also?

    I’m trying to figure out the distinction between METRO paid for with taxes and fire and rescue paid for by taxes… what makes one subsidized and the other not and how do we know what is a truly cost-effective fire/rescue and one that is way more costly than it should be?

  4. LarrytheG Avatar

    Oh and I really don’t buy the density argument.. You could have more density easily if you got rid of all that workplace commuter parking!!

    That’s the very first thing I notice when I see a big corporate campus…–y1a12VY9–/c_scale,f_auto,fl_progressive,q_80,w_800/gmgpvz7nvwaymo5hubxh.jpg

  5. Steve Haner Avatar
    Steve Haner

    Gee Jim, if you are right and autonomous taxis and vans are going to replace buses and metro trains, what will the roads look like? That won’t exactly reduce congestion, will it? (Perhaps getting rid of human operators might improve flow and reduced crashes, let’s hope…)

    1. The main effect we can predict from fleets of driverless cars working 24/7 is that there will be less need for parking. Otherwise, it’s hard to say. Optimists will suggest that ride-hailing apps and driverless cars will lead to more flexible, convenient ride sharing services in cars, vans, and buses, taking people off the road. But we won’t know for sure until it happens.

      1. Reed Fawell 3rd Avatar
        Reed Fawell 3rd

        “fleets of driverless cars working 24/7.”

        The consequences, seen and unforeseen, of this innovation are mind boggling. Imagine the risks and rewards inherent in such change and how it might be implemented.

        How might driver-less cars “available” to some or all work? Then combine it with drones, and with residual private cars, and how these three impact patterns of development, and other transit modes, and styles of living and the human psyche. Imagine here the risks of power and control shifts inherent in such change, as between various groups and cultures. Here we are looking at the potential for culture shock and for consequences, seen and unforeseen, on an immense scale found only in science fiction.

  6. Reed Fawell 3rd Avatar
    Reed Fawell 3rd

    I largely agree with Jim Bacon’s bottom line, but want to stress that the failure of mass transit need not happen. And it should not happen! Mass transit is as critical to our future urban and suburban development as it ever was. So we must use it (along with other tools) to achieve best results. But like with everything, the difference between success and failure lies in good planning, execution and management driven by strong vision and ethics. Without these qualities, failure is inevitable. History proves this.

    Here are some comments I made to Jim’s article “Subsidies as Usual for Mass Transit” published here in October 31, 2013:

    “America has a cultural problem with mass transit by rail.

    This became apparent to me when I saw Europe by rail in the 1960s. Then a single Eurail travel pass took one seamlessly from the southern tip of Spain to far north of the Arctic Circle in Norway and Sweden. And it carried me most everywhere in between – including from east to west across East Germany to West Berlin and across France to Brittany on the English Channel (long before the Chunnel that now connect Britain and France.

    And the Paris subway of the 1960s featured underground stations that were art galleries in miniature served by the quiet hiss to subways seemingly transported on air. Whether across town or across the continent, Europe had its act together, all of its complex rail transit system build throughout a Europe devastated by a world war only two decades earlier. Ever since then America has by and large only limped along on its seemingly ever troubled rail systems. And time does not seem to fix our cultural shortcomings and incompetence, but make them worse.

    A few of the many examples include: A DC subway system that is not financially viably because we are unable to build sufficient mixed use densities close enough to its subways stops to support the overall system, or operate it at anywhere close to its potential capacity. An Arlington County that cannot build several miles of trolley up Columbia Pike without spending 20 million dollars on 22 above ground “trolley stops.” An airport in Loudoun that spends $1.6 billion dollars on a Crystal Mover System to move passengers 2500 feet to airplane gates, a project so beset by troubles that only half of it gets built for twice the cost projections for the whole.

    Why can’t we fix this?

    The reasons are many. For one our regulations and approval processes are absurdly burdensome and are highly subject of undo political manipulation. Market studies and feasibility studies are corrupted to achieve conclusions that based not on facts but on special interest mandates and diktat. Our design, construction and management systems are also broken and corrupt. Thus, Arlington says it takes 18 months to build a bus stop. 25 years ago I built a major high rise building in Arlington in 18 months. Management and construction processes and oversights now are designed to milk the job of public funds for the benefit of contractors of all sorts and varieties instead of being used to build infrastructure on time & budget at the best price for the public benefit. Here again the reasons are many. One rampantly growing cause of all this dysfunction is the notion the public monies are not spend to build things but to stimulate the economy. So if there are no shovel ready projects we pretend there are and spend billions of dollars on imaginary projects. This corrupts the whole system. It legalizes theft of public monies that go into peoples pockets rather than into buying concrete and building it into something useful, needed, and necessary. This wastes vast sums. It corrupts our public and private institutions, our competencies, our ethics, and our society.

    Despite these chronic problems encountered today, the power of mass transit (including subway and trolley) to jump-start and maintain vibrant mixed use urban growth and/or revitalize and failed and dying urban communities is firmly established and based on historic fact. The proven success of the trolley goes back into the nineteenth century in the Washington DC region.

    In the late 19th century the trolley there revitalized the old town of Rosslyn in Arlington County, and powered Georgetown’s spread “up the hill and into the highlands northward above and beyond the Potomac River. At this same time, the brand new trolley going across the first bridge over Rock Creek opened up North West Washington to far denser development than otherwise possible, all the way to the Maryland line and beyond, including Chevy Chase to Chevy Chase Lake some six miles into Maryland.

    The trolley drove this highly successful urban growth so that it occurred earlier, faster, and with far more density than otherwise possible.

    Of course seven decades later the subway was later major a catalyst to reviving the new down town Arlington, an event that also would have taken far longer, and suffered far more pain and loss before success, without the subway. I say this as someone who build one of the first office buildings along that subway line.

    Now, in hindsight, it was likely a big mistake to allow the rise of the auto to fully replace the trolley on DC streets after the war. Facts bear this out. For the trolley not only then, but also today can supplement the auto and subways, filling a roll between the auto and subway that fuels and sustains successful mixed use development. It can often add into the synergistic mix of transport options.

    But success is in the details that are great and highly varied. So good integration into the particular scheme of each community is always a challenge that demands customized solutions and requires the tight discipline and management to get a synergistic result. Like finding how parking fits into a larger and more complex picture. For a sense of that see:

    But around DC, heavy rail came first, carrying folks long distances. Next came light rail in late 1900s. The electric trolley expand cities for two reasons. It could carry more people better than a wagon or carriage. Just as importantly, it could carry more people better up steep grades. The latter fact expanded the town of Georgetown and the areas around Dupont Circle DC taking urban growth up into the highlands of NW Washington DC. The same thing happened across the river in Arlington, carrying growth up the ridge into the highlands beyond Rosslyn at Key Bridge. The auto came later. But the trolley was critical until after the world war 11. But with the rise of the car, surburan sprawl started its broader spread outward. In the early 1950s, I recall clutter stop and go traffic through DC all the way through Manassas, before you hit a clear road south on 29 to Warrenton, Va. In 1954 or 55, I recall the first Shopping Center at Seven Corners, built before the advent of the Interstate put sprawl into high gear a few years later.

    At to today’s incompetence to responsibly build public mass transit infrastructure consider this. In 2006 the Metropolitan Washington Airports Authority assured the public that should it manage the Dulles Toll Road, then its tolls would increase at the rate of inflation to pay off the Silver Line Revenue bonds. Under its 2006 proposal to take control, the average toll rates would raise to $2.20 in 50 years, MWAA assured. By 2013 WMAA had raised the tolls by 50% to $2.75. In January of 2014 the tolls will go up to $3.50. (some 85 years ahead of schedule.) This will pay for Silver Line construction cost overruns and also non Silver Line work such as the Dulles Loop Road to pay for what Dulles airport needs to jump-start its air cargo hub, all contrary to assurances to the public in 2006. ….”

  7. LarrytheG Avatar

    The usual problem with these tomes is that it’s pretty easy to detail the flaws and problems of something whether it be Richmond Schools or METRO transit … or for that matter transit in general.. not only in the US but worldwide.

    The more relevant question is what would DC looks like traffic-wise without METRO? Would it be acceptable? It might.. but I think anytime we talk about the “failure” of transit – it’s a hollow discussion unless we are willing to talk about an alternative better way forward.

    too many times – we grouse and complain about something and pronounce it a “failure”.. an Apocalypse… but we never get much beyond that to talk about how to go forward.

    It’s not exactly like Washington MSA is not already one of the worst congested cities in the US…

    and the other problem is the blame METRO mindset then others will also say the problem is “land use” .. and of course that’s yet another “failure” of government….

    and yet.. if we actually did have the govt condemn more land around METRO than METRO needed just for facilities so that METRO could then use that land – much like the Railroads did in the early history of this country – all heckfire would break loose about the “abuses” of government.

    And no doubt some of those complaints might come from the very same folks who are just fine with letting Dominion essentially do the same thing with their pipeline… Ok for Dominion, not okay for METRO?

    If you actually look at the world’s successful intercity and intra-city trains -that’s how they do work. They are not only in charge of the train – they are in charge of the land-use around those train stations.

    But of course – we could not do that here because METRO management cannot be trusted… they’ll just take that land and give it away to developers for pennies on the dollar, right?

    I’m okay with identifying problems.. we have many – but in doing that – don’t we also have some responsibility to proffer what we think should be done instead ? We’re not going to pronounce METRO an abysmal failure and walk away – so what is the path forward?

    Oh.. and please show me a “profitable” transit system anywhere in the world except where they do own the land around their stations?

    1. Virginia is stuck with Metro, and we have to find a way to make it work. In so doing, it is helpful to acknowledge the economic realities we are facing.

      You’ll never fix the problem if you don’t understand the problem. You’ll never cure an illness if you make the wrong diagnosis. Once you get an agreement on the first, you can move on to the second.

      One thing we can do is to stop throwing good money after bad. Another thing we can do is get serious about reforming our land use policies — zoning for more dense, mixed-use development — but that is even more ticklish than the mass transit question and, even if enacted, will take decades to have the desired effect on the economics of mass transit.

  8. Peter Galuszka Avatar
    Peter Galuszka

    The Cato report presents a typical libertarian critique of public spending. It does not seem to address how mass transit eases other problems. If the DC area went to more Uber cars, you’d get even more traffic congestion and contribution to global warming unless the Uber vehicles were all electric.

    1. Well, there’s a good chance driverless cars will be electric in another ten years!

    2. Electric vehicles get you nowhere in the great GW decarbonization debate unless the electricity is created using non-carbon-fueled generation. A molecule of CO2 is no less harmful if it comes from burning natural gas.

  9. TooManyTaxes Avatar

    When the airline industry was in financial trouble, it cut costs in many ways. More fuel-efficient planes were purchased. Smaller planes were used on less busy routes and smaller markets. Compensation, including pensions, were reformed. Many tasks were automated. And sadly, a number of people lost jobs. But the industry made a lot of tough changes and is quite prosperous now.

    WMATA has severe financial problems, large-scale deferred maintenance, a culture of carelessness, severe pension problems, unfunded liabilities and a plan that includes overtime in the calculation of benefits, declining ridership and general distrust by elected officials and the public (except for true believers in transit at any cost), etc., etc.

    So, the solution most often proposed for WMATA is higher tax subsidies. Why the difference?

  10. LarrytheG Avatar

    re: ” You’ll never fix the problem if you don’t understand the problem. You’ll never cure an illness if you make the wrong diagnosis. Once you get an agreement on the first, you can move on to the second.”

    I’m all for that – but then I expect to see ” a way forward is”.

    when “understanding the problem” is a non-stop series of ” it’s failing and we’re all gonna die”… blather.. that’s NOT “understanding and yes… when the view comes from CATO – CLEARLY – they’re NOT interesting in fixing it – because they fundamentally oppose the concept itself!

    Acbar is 100% right about “electric”.. if it does not come from non-fossil fuel sources.. you’re not really gaining anything – you’re just transferring and offloading the pollution.

    but that does not really have much to do with the idea that people would be using autonomous cars – conceptually – which, if you think about it – is more a form of public transit than it is about personal mobility in your own vehicle.

    The idea that it would be just as good or better than your personal vehicle because you could.. any time, in any place, call for a vehicle – that would appear in minutes… is not going to be a reality for awhile ..

    This is a problem with looking at some technology that can do something versus how that technology would be implemented as a system – essentially a public transit system with lots and lots of yet-to-be-addressed real-world problems like – are you really going to get a car anytime anyplace and even if you could how will that car and others like – at coexist on public roads with human-driven vehicles?

    In some respects – this is sorta like the Jetsons… though I’ll surely eat my hat .. if I turn out to be wrong.

    I don’t think anyone is going to get rid of their current methods of mobility in anticipation of on-demand autonomous cars – UNTIL – such a system is common and proven.. the early adopters will do their thing like they have with Uber and Lyft… but reality has a way of bringing things down to a level lower than what folks were envisioning.

    Also curious about how transit needs “land use” to work properly but autonomous cars – apparently not?

    how does that work?

    that seems to turn the metro world topsy-turvy !!!

    so now.. we don’t need density? …. just enough highways?


  11. TooManyTaxes Avatar

    A bit part of the “problem” is that most areas in the Greater Washington Metro Area simply lack the density to support heavy rail. US DOT’s funding standards, even the early and easier ones that Senator John Warner had grandfathered for the Silver Line, were too tough for the Silver Line to meet. The project simply did not produce sufficient benefit for its costs. I suspect most other rail extensions would reach the same result.

    But since the Silver Line was not about transit, but rather, justifying huge increases in density for key landowners who donated big bucks to elected officials, it magically passed the FTA’s funding test during the GW Bush administration. So much for responsible government. But that doesn’t change the economics. Also not helping is the fact the Silver Line is a spur line. It’s good for those living near the line, but simply doesn’t serve the many people who would have to transfer downtown D.C. to get on the Silver Line to Tysons and beyond. Tell me why a person in Bethesda would get on the Red Line, ride it to Metro Center, get on the Silver Line and go to Tysons?

    We are seeing new density at Tysons and, to the good, much of it is right at the stations within 1/8 of a mile or not much more than 1/4 of a mile. But that density is extremely expensive, both from a land purchase and from construction. Fairfax County officials have stated that the average price per acre throughout Tysons is $5,000,0000. Obviously, it’s a lot higher within the TOD areas for each station.

    To justify construction on such pricy lots, buildings need to be high. Most are 200 feet and over. The cap is 400 feet more or less. High rise construction is very expensive as are rents, etc. And keep in mind, the development and financial plan fails to fairly capture the value of the public infrastructure investments that generate the value of the land near the rail stations. If an economically sound financing plan had been adopted, the costs for landowners and tenants would be much higher.

    Meanwhile, Tysons is generating tremendous levels of new vehicle traffic that overwhelms the main arteries, pushing commuter traffic on to narrow neighborhood streets. Aided by apps like WAZE, commuters fill neighborhoods to the point where residents cannot get into or out from their homes. I know many people whose normal drive from home to the McLean Community Business District normally takes 10 to 15 minutes finding themselves taking 45 minutes or more during the very long rush periods.

    And for this we should pay higher taxes?

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