Transit Death Spiral and What If We Give It Away? A Look at the Feasibility of Free or Cheaper CTA service July 19, 2020 Public Transit Officials Fear Virus Could Send Systems Into ‘Death Spiral’: Transit leaders are urging Congress to provide billions of dollars in aid, and warn of dire consequences if they decline.

“Unless the economy comes ripping right back, and there’s a vaccine, and social distancing is eliminated, we fall off the financial cliff in 2023,” said Jeffrey Tumlin, who leads San Francisco’s city transit network.
“Unless the economy comes ripping right back, and there’s a vaccine, and social distancing is eliminated, we fall off the financial cliff in 2023,” said Jeffrey Tumlin, who leads San Francisco’s city transit network.Credit…Christie Hemm Klok for The New York Times

By Pranshu Verma, July 19, 2020

WASHINGTON — Jeffrey Tumlin, who leads San Francisco’s $1.3 billion transit system, is in a hard spot.

Ridership on his transit system is down 70 percent citywide, reeling from the effects of a pandemic that has killed over 138,000 in the United States alone and smothered the national economy.

His agency predicts $568 million in revenue losses over the next four years, and in an effort to stay afloat, he has had to eliminate half of his city bus lines, unsure if they will ever come back.

In March, his department received $373 million from Congress as part of a $25 billion package to help public transit agencies across the country.

It was a one-time infusion of funds that staved off the worst — a potential deficit of $410 million by the year’s end that could have forced 1,400 transit workers to lose their jobs and deplete the agency’s rainy day fund in three months.

But coronavirus cases are rising in over three dozen states, and the first round of congressional aid is quickly drying up. Transit leaders in cities including Seattle, Los Angeles and Miami warn they need billions of dollars more in aid, otherwise their systems could collapse.

“Unless the economy comes ripping right back, and there’s a vaccine, and social distancing is eliminated, we fall off the financial cliff in 2023,” Mr. Tumlin said. “That would result in such severe service cuts that it puts us on what is called the transit death spiral.”

As transit use plunged across the country because of the pandemic, the economy cratered into a recession, putting nearly 11 percent of Americans on the unemployment rolls and closing about 66,000 small businesses, dealing a blow to the sales and income tax revenues that many city and states use to fund transit agencies.

The closed Castro District metro station in San Francisco. All metro routes have been replaced with bus service since April.
The closed Castro District metro station in San Francisco. All metro routes have been replaced with bus service since April.Credit…Christie Hemm Klok for The New York Times

The mix of forces has been brutal: Ridership has plummeted 90 percent on some of the nation’s biggest systems, including in New York and the San Francisco Bay Area. Reduced tax revenues are forcing state and local leaders to trim their transit subsidies. Transit agencies across the country are projected to rack up close to $40 billion in budget shortfalls, dwarfing the $2 billion loss inflicted by the 2008 financial crisis.

This could affect the industry forever, transit experts say, causing leaders to substantially cut service to match catastrophic drops in revenue. Capital projects meant to upgrade transit systems and reduce the risk of accidents would have to be delayed. Wait times could become so long that using public transit to commute may become unrealistic.

“For city economies as a whole, this is a threat to their viability,” said Ben Fried, a spokesman for the TransitCenter, a philanthropic foundation that supports nationwide transit overhaul. “For some people, it’s going to put their job out of reach. If employers can’t count on workers having access to jobs, firms are going to choose to locate elsewhere.”

Transit leaders across the country are imploring congressional leaders to provide up to $36 billion in additional assistance.

They want to ensure subways, buses and rail systems across the country can weather a sustained decline in revenue and be ready as the economy and school system reopen.

“Our transit systems collectively move millions of students throughout the school year and are responsible for getting millions more people to work every day,” a coalition of 26 transit leaders wrote to Senate leaders on Tuesday. “Without additional federal assistance, many of our agencies will be forced to make difficult decisions that will negatively impact the lives of essential workers and the returning work force.”

Experts say big city transit systems are likely to be hit the hardest and quickest. Their operating budgets tend to depend heavily on rider fares and sales tax.

A passenger on a bus in Brooklyn in April. New York City’s  transit system has lost $700 to $800 million in revenue every month.
A passenger on a bus in Brooklyn in April. New York City’s transit system has lost $700 to $800 million in revenue every month.Credit…Jonah Markowitz for The New York Times

But small and midsize agencies, which tend to rely more on direct support from state and local governments, or revenue sources like property taxes, will not be spared. They are most likely to see their worst budget woes creep up early next year.

And while the emergency federal funding has stopped transit systems from facing immediate doom, aid is predicted to dry up in five to eight months for big city networks, compared with 12 to 20 months for smaller systems, according to expert analysis.

“If the emergency response is not robust, and robust over a prolonged period of time, these agencies will be looking at long term cuts to service,” Mr. Fried said. “It’s just really scary to think about where transit systems and transit riders are going to end up.”

Already, the situation is grim.

In New York, transit officials have characterized the financial crisis as a “four-alarm fire” that threatens to hobble the city’s transportation network and hamstring the region’s economic recovery.

Since March, when the pandemic ground urban life to a standstill and ridership plummeted over 90 percent, the transit system has lost $700 million to $800 million in revenue every month. The transit agency now faces a $10 billion budget shortfall through 2022.

Already, the agency announced it would suspend its sweeping $54 billion plan to modernize the city’s antiquated transportation network — a move that risks plunging the system into disrepair, experts say. Transit officials have also warned of devastating cuts including trimming jobs, reducing service and increasing fares and tolls.

Midsize agencies have not been spared. Denver’s transit agency is cutting service by 40 percent. In New Orleans, where 14 percent of its transit workers have tested positive for the virus, fare revenue has dropped by 45 percent. Cleveland, where unemployment levels have reached 23 percent, will lose 14 percent of its revenue by 2021.

This could plunge systems into a “transit death spiral,” where cuts to service and delayed upgrades make public transit a less convenient option for the public, which prompts further drops in ridership, causing spiraling revenue loss and service cuts, until a network eventually collapses.

And for many transit agencies, the pandemic came right as their systems were finally recovering from the 2008 recession.

“We all thought that was one of the worst things we’d see in our lifetime,” Beth Osborne, director of Transportation for America, a transit advocacy group, said of the financial crisis’s effect on public transit. “The pandemic is a much more profound, much more immediate impact.”

But the industry’s plight has not been forgotten by those on Capitol Hill.

San Francisco has curtailed public transit in the hopes of reducing the spread of the coronavirus.
San Francisco has curtailed public transit in the hopes of reducing the spread of the coronavirus.Credit…Christie Hemm Klok for The New York Times

In May, the House passed a coronavirus aid package that would dedicate an additional $15 billion in funding to transportation agencies.

The package has stalled in the Republican-led Senate.

Twenty-five senators, led by Bob Menendez, Democrat of New Jersey, urged Senate leaders this month to include $32 billion in aid for public transit in the next coronavirus package the Senate is set to consider in the next two weeks.

“We must recognize the true costs of the coronavirus on our transit systems,” the senators wrote. “Decreased farebox revenue has continued longer than we anticipated two months ago, and the reduction in other revenue sources such as local sales taxes are deeper than anyone predicted.”

Senator Mitch McConnell, Republican of Kentucky and the majority leader, plans to take up another coronavirus aid package when the Senate returns from its recess on Monday, but he has said that package will be far narrower than the previous round of relief, including liability protections for companies that reopen during the pandemic, and funding for health care and education.

Transit leaders across the country warn that the longer Congress waits to act, the deeper the effects will be to their city’s bus, rail and subway systems.

“When they get around to it, they no longer are doing damage prevention,” said Karl Gnadt, the managing director of the Champaign-Urbana Mass Transit District in Illinois. “The damage is already occurring.”

Christina Goldbaum contributed reporting from New York.

Pranshu Verma is a reporter in the Washington bureau, and part of the 2020 New York Times Fellowship class. He reports on diplomacy and transportation policy. @pranshuverma_A version of this article appears in print on July 19, 2020, Section A, Page 8 of the New York edition with the headline: Officials Fear Pandemic Could Send Systems Across Country Into a ‘Death Spiral’. 


By John Greenfield, StreetsBlog, Apr 5, 2018

[Streetsblog Chicago editor John Greenfield publishes a weekly transportation column in the Chicago Reader. We syndicate the column on Streetsblog Chicago after it comes out online.]

Last month, community organizer Jahmal Cole floated a bold proposal: Eliminate all fares for riding the CTA. As the founder of the My Block, My Hood, My City nonprofit, he often leads underprivileged youth on transit field trips to different neighborhoods.“I think [the CTA] should be free,” Cole said during a Metropolitan Planning Council discussion of Chicago segregation, to applause from the crowd, according to a report by Streetsblog Chicago’s James Porter. “I used to ride the Red Line every day… It’s like the aorta of Chicago. I would definitely make it extended farther than 95th Street, and I would make it cheaper to ride.” He argued that providing public transportation at no cost to riders would help more Chicagoans access cultural, educational, and career opportunities.

Some Streetsblog commenters scoffed at the idea. “‘I think it should be free,’ means he thinks someone else should pay for his transportation, as nothing in this world is free,” one reader wrote.

But is it really such a crazy idea from an economic point of view? Transit helps people get to schools, jobs, and preventive health care, and if a higher percentage of current Chicago residents were well educated, employed, and healthy, that could save a lot of money for society. And coaxing more people out of cars and onto buses and el trains would mean less congestion, pollution, and crashes, which would lead to less lost productivity and property damage, lower bills for public health and first responder services, and less wear and tear on roads.

For example, a 2014 study by the National Highway Traffic Safety Administration found that U.S. traffic crashes cost $871 billion a year in economic and societal costs. Since the city of Chicago represents about 1/120th of the nation’s population, our share of that loss could be roughly $7.3 billion.

The seemingly utopian concept of free transit isn’t so foreign in Europe. Estonia’s capital city, Tallinn, population 450,000, was a pioneer in this area, rolling out free transit service for residents in 2013. City officials there say that the program is financially sustainable, since it has encouraged more people who live in the region to establish residency in the city. They say the resulting $25 million-plus gain in income tax has more than covered the $15 million in lost fare-box receipts, allowing the city to continually increase transit service to meet demand.

But could complimentary public transportation work in a metropolis as large as Chicago? We may soon find out, since in March Paris’s Socialist mayor, Anne Hidalgo, announced plans to study the feasibility of making transit free across the city of 2.2 million in an effort to boost mobility and fight pollution.

Still, when I asked the CTA about Cole’s proposal, spokesman Steve Mayberry indicated that the agency doesn’t consider the concept worthy of serious consideration. He noted that state legislation that has been in place for 70 years requires the transit system to recoup half of its annual operating budget ($1.51 billion in 2018) from fare-box revenue. “This kind of idea has zero successful precedent among U.S. transit agencies,” Mayberry added.

It’s true that Seattle ended its 40-year-old policy of free downtown transit service in 2012 as a cost-cutting measure. On the other hand, the regional transit system in Chapel Hill, North Carolina, that state’s second largest, is still free to ride thanks to funding from local municipalities and the University of North Carolina, and there are plans for a future service expansion.

Chicago transit experts and advocates were also skeptical about whether totally free transit could work here. “Due to our city and state budget problems, we are probably the last metropolitan region in the country that should considering this,” said DePaul transportation professor Joe Schwieterman. He added that if the CTA was a free resource, it would create a “tragedy of the commons” scenario where riders would be more likely to abuse the system, amplifying passenger concerns about safety and cleanliness.

Even staff from the progressive Active Transportation Alliance expressed doubt that free rides for all Chicagoans could be feasible under the current fiscal climate. But governmental relations director Kyle Whitehead said the group has been working with UIC’s Great Cities Institute about quantifying the burden of transit fares on low-income residents, and how a lack of transportation options prevents many people from getting and keeping a well-paying job. Whitehead said this research could help make the case for reduced fares for low-income residents. (The CTA currently provides reduced or free fares to CPS students, low-income seniors, people with disabilities, and members of the military.)

“Yes, yes, and thrice yes,” responded Ronnie Matthew Harris, head of the south-side transportation advocacy group Go Bronzeville, to the idea of income-based CTA fares. “I’d go further and say it should be free for all under 18. Not [just] because of it increasing access, but to help create a generational culture of use of and reliance on public transportation.”

Matt Wilson, an economic development planner with the Great Cities Institute, told me the think tank’s research for Active Trans found that in lower-income communities on the south and west sides, the annual cost of buying CTA monthly passes ($1,260) is more than 5 percent of the per capita income for the total employed population. In Little Village the figure is 11.6 percent, and in the Altgeld Gardens area the number is 15.1 percent—a major financial burden.

Map created by the Great Cities Institute for the Active Transportation Alliance.
Map created by the Great Cities Institute for the Active Transportation Alliance.

Wilson added that it would be “incredibly hard” to measure whether reducing transit fares could pay for itself in terms of lower societal costs. “I would imagine that if CTA or the city was to subsidize fares, it would be more of an investment for the social benefit of Chicagoans, not something where cost is intended to be recovered.”

Audrey Wennink, a director with the Metropolitan Planning Council, acknowledged that offering free transit for all Chicagoans would be an uphill battle. However, citing last month’s Paris announcement, Wennink said that if there is political will in Illinois to address climate change and economic inequality—she noted that about 71.5 percent of CTA riders are people of color and 29 percent are low-income—it might be possible to overcome the financial barrier through creative revenue strategies.

For example, Wennink said, more of the state transportation budget could be shifted from roadways to transit, or tolls could be added to all the highways in the region to fund public transportation. Another idea would be to create a new tax on employers that would be earmarked for transit. About 42 percent of the $12.3 billion annual operating budget for the Paris regional transit authority comes from a tax on firms with ten or more employees.

But if those progressive ideas are nonstarters in a broke, tax-fatigued state like Illinois, Wennink had a couple more modest proposals. The Seattle-area transit authority currently offers the Orca Lift program, with $1.50 fares for residents earning less than 200 percent of the federal poverty level, similar to Chicago’s Divvy for Everyone discounted bike-share program. Wennink added that cities like Portland, Oregon, have implemented “fare capping,” which means that riders who pay as they go for multiple rides during a given time period never spend more than the price of the equivalent transit pass.

While free CTA for everybody might not be in the cards in the foreseeable future, making public transportation more affordable for low-income residents is a no-brainer. “Making [transit] even more accessible to riders could be great for our region and really distinguish Chicago as a place with high quality of life,” Wennink noted.

Filed Under: Beyond ChicagolandBus TransitChicago PolicyFunding & FinanceNeighborhoodsNewsRail TransitState PolicyAnne HidalgoAudrey WenninkCTAEstoniafree transitGreat Cities InstituteJahmal ColeJoe SchwietermanMatt WilsonMy Block My Hood My CityParisPromotedTallin