Who will pay for Kansas City, MO’s free transit? By Kristin Musulin March 4, 2020, Smart Cities Dive, https://www.smartcitiesdive.com/news/who-will-pay-for-kansas-city-mos-free-transit/572980/
All eyes are on Kansas City as the “fare-free” transit trend has piqued curiosity. Yet there won’t be an initiative to watch if the city’s transit agency can’t secure funding.
Kansas City, MO made national headlines for more than just football this winter, after the city council unanimously approved an ordinance to explore free fixed-route transportation citywide.
The news garnered a significant amount of buzz for a plan that isn’t yet finalized — and for a concept that isn’t new. If successful, however, it has potential to become a model for other large cities nationwide.
Fare-free transit programs in the U.S. date back to the 1960s, as dozens of cities have piloted or implemented varying levels of “free” public transit services. A 2012 report from the Transportation Research Board found fare-free public transit services are most common in small urban areas, resort communities or university-dominated communities.
But there’s been “more deliberation over it, more thinking about it [and] more pondering the question” in bigger cities over the last few years, according to Art Guzzetti, vice president of policy and mobility at the American Public Transportation Association (APTA).
For instance, Washington, DC Mayor Muriel Bowser eliminated fares on Circulator bus lines in February 2019 as part of an initiative to increase equity and access for bus riders. That initiative continued through September, but was stopped on Oct. 1 after the city council rejected a proposal with $3.1 million in funding for free Circulator service. DC Circulator did not respond to Smart Cities Dive’s requests for comments.
Boston and other large cities are also considering making bus lines free, while Washington’s capital of Olympia welcomed free buses on Jan. 1. Houston was also looking into fare-free transit, but the Metropolitan Transit Authority of Harris County staff poured cold water on that conversation when it released an analysis showing costs for the agency would increase in a fare-free system.
Kansas City’s fare-free plan — which would apply to buses — is notable, as it would make it the first major U.S. city to fully adopt free transit citywide. (The city’s streetcar, RideKC, has been free since it opened in 2016.) Robbie Makinen, CEO of the Kansas City Area Transportation Authority (KCATA), said eliminating fares across the whole system would not only increase ridership, but would make transit more efficient and would help boost the local economy. Yet one major obstacle stands in the way of implementation: an $8 million price tag.
Nothing is ever truly free
KCATA has been planning to eliminate city transit fares for nearly four years, but the process is easier said than done, according to Makinen.
“This isn’t about flipping a switch and saying transit is free. Nothing is free. It’s zero-fare,” Makinen told Smart Cities Dive.
The agency has slowly increased free bus access in the city, first eliminating fares for veterans, followed by eliminating the fares for high school students in four districts, and then for safety net providers, he said.
To fully eliminate transit fares, KCATA will need $8 million to cover the annual bus farebox revenue. The agency had been in talks with the city to secure that money in Mayor Quinton Lucas’ 2020-21 budget, but the city’s budget proposal released in mid-February only allotted $4.8 million for the initiative. Makinen remains optimistic that the agency will be able to close the funding gap, noting in a statement that he’s “confident with the support of Mayor Lucas and our civic partners that we will make zero fare a reality.” The agency is working to collaborate with private-sector partners — Blue Cross Blue Shield of Kansas City (Blue KC) is a potential sponsor of the initiative — and said zero-fare initiatives can be born of ambitious public-private partnerships.
“If we can get those kind of partners around this kind of idea, boy I think we’ve started something special and something that can be looked at nationally,” Makinen said.
Moving forward without those private partners will be difficult. If fares are eliminated, agencies must ensure that transit is still well-funded overall, regardless of where the money comes from, said Guzzetti.
“If the idea is that we want to make transit better, a way to do that is not to scale back the funding,” he told Smart Cities Dive. “If you are going to go free-fare, it shouldn’t be at the expense of your current service or your current capital investments.”
The costs of fare collection
Until KCATA can secure funding for its zero-fare program, bus riders will continue to pay fares — and KCATA will continue to pay an overhead cost for that fare collection. In fact, many agencies have pointed to the costs of collection as a reason to go zero-fare altogether.
“One of the things we’re hearing is the cost of collecting is not insignificant,” Guzzetti said. “It’s a diminishing cash world but the fare collection equipment, both on the bus and the fiduciary controls, there’s a lot of cost that goes with that.”
Makinen said it costs his agency $1 million to collect fares annually, with more money to be spent if fareboxes need to be replaced. He also said 90% of disputes that occur on Kansas City’s buses are centered around paying that fare — $1.50 — which causes inefficiencies in the system.
“Going zero-fare not only makes your system more efficient, allows you to load and unload quicker and your on-time performance gets better, but it also makes operators safer,” Makinen said.
In Washington, the Intercity Transit Authority recently kicked off a five-year zero-fare demonstration project across its bus routes, which serve the cities of Olympia, Lacy, Tumwater and Yelm. That project was adopted due in part to the cost of farebox collection.
“Honestly, going fare-free was not our end game. It is not where we started, it probably couldn’t have been further in our minds,” Ann Freeman-Manzanares, general manager of Intercity Transit, told Smart Cities Dive.
Freeman-Manzanares said the agency was faced with needing to make a capital investment in a new farebox, and began running numbers on the cost of that investment and associated maintenance. It looked further into the costs of processing the money, as well as the time operators and service staff spend dealing with broken fareboxes or fare disputes.
The agency found it was bringing in $2.7 million annually in fare collection, and spending about $600,000 annually in hard costs and time to process the fares. Freeman-Manzanares said the agency also took into account the amount of time that customer service staff was dealing with fare processing and questions, and ultimately decided the cost of collecting a fare was not worth the money it brought in.
Intercity Transit now operates free buses, thanks to a tax measure that generates $16 million-$20 million annually in new revenue for the agency. Voters passed that measure in November 2018.
But for Genfare President Eric Kaled, blaming high costs on fare collection is an argument that “doesn’t hold water and logic.” Genfare, which offers solutions-based fare collection systems, has not been impacted by the fare-free movement in U.S. cities, according to Kaled.
“[I]f you’re saying it’s zero price, it means it is zero worth,” Eric Kaled – President, Genfare
“You really believe that fare collection is the problem of the public transit, and that’s the reason the expense is so high? It doesn’t make a lot of sense because I can tell you right now, fareboxes last for over 10 years,” he told Smart Cities Dive. “So once you buy a farebox, once it’s funded, you don’t pay a lot for operating … The more expensive thing is just running a bus.”
Making transit fare-free actually eliminates its value as a transportation option, according to Kaled.
“If you talk to any business professor, they will tell you, you put a price on a value or good based on worth. So if you’re saying it’s zero price, it means it is zero worth,” he said.
‘Ridership is a byproduct’
Another red flag raised by Kaled is the impact that zero-fare transit will have on ridership — particularly the types of people who board the bus. Kaled said free transit is bound to be frequented by squatters and folks who “can be more obnoxious” than the rider who traditionally pays for transit.
“If you put it [public transit] for free, the people who ride that bus who couldn’t afford it now are riding it for free. It is questionable whether or not the current rider’s quality goes up. I would argue quality goes down,” he said. “And to be very frank, if you do that in an area like San Francisco where there’s already a homeless problem, who do you think sits on the bus if it’s for free?”
Freeman-Manzanares said this isn’t a problem for her transit agency. “One thing that we have made clear and that we will continue to make clear is that zero fare doesn’t mean zero rules,” she said. “When people get on board, they need to have a destination. People need to behave themselves.”
Makinen has brushed off concerns about a potential increase in misbehavior, if KCATA is to go zero-fare.
“The naysayers, or the transit profits as I like to say, are the ones who say, ‘Oh my God, crime in the streets, cats living with dogs, mass hysteria, society as we know it will break down.’ I think that’s ridiculous,” he said.
Regardless of who boards the bus, it’s inevitable ridership will increase when transit is free. In the first month of its zero-fare demonstration project, Intercity Transit saw bus ridership increase by 20%, equating to about 66,000 boardings. Freeman-Manzanares said this result was not enhanced by any advertising, aside from some posts on community boards.
The City of Lawrence, MA also eliminated fares recently along the three bus routes that run through the city, resulting in a 24% increase in ridership year-over-year, according to Mayor Dan Rivera. This was made possible by tapping into the city’s cash reserves. Rivera said the city surveyed nearly 350 riders and found 90% of respondents use the buses to get to work, while 87% of them make $20,000 or less a year. “When you make less than $20,000 a year, and you’re saving $80 [a month], that’s a lot of money,” he told Smart Cities Dive. The fare is “the only thing keeping people off the bus,” Rivera continued. “So pay the fare. Let people get on the bus.”
Freeman-Manzanares echoed this. “When we’re talking about quality of life, this isn’t about the cost of a bus pass. This is about changing people’s lives,” she said.
Zero-fare programs attract not only low-income riders, but also riders who wouldn’t have otherwise considered public transit. Justin Rees, CEO of Ford Mobility’s TransLoc, which works with KCATA on some transportation programs, said fare-free programs can help “promote the behavior” of considering public transit over a more personal transportation option.
But to Makinen, “ridership is just a byproduct.” He said the true reward of going fare-free is the impact it has on economic development and rider quality-of-life. According to an economic impact study from the University of Missouri-Kansas City, zero-fare transit in Kansas City could generate up to $18 million in regional economic activity outside of the farebox.
“It’s going right back into the community. It’s going right back to buy bread, a pair of shoes, to generate sales tax,” he said.
Increased ridership can also have wider implications on the success of transportation goals in relation to parking, congestion and pollution.
“Those are all areas you save in. As leaders look at these opportunities and realize it’s not a free lunch, so to speak, when it comes to transit, when you’re seeing the benefits of increased ridership and the effect on the climate and on traffic congestion, there could be a benefit there financially and that can be shifted over to help fund and expand on transit operations,” Rees told Smart Cities Dive.
Rivera echoed the positive impact of his city’s zero-fare program so far, beyond increased ridership. “God forbid we have all of these people wanting to use public transportation. That would be a great thing,” he said. “Dollar for dollar, I can’t think of a better way to spend that [than] to impact both the economy and the environment at the same time.”
Uncertainty in Kansas City
As of now, it is unclear if Kansas City will see the same successful implementation of zero-fare transit as Olympia, WA and Lawrence, MA, or if other cities will beat Kansas City to the punch. Regardless, Guzzetti said free transit is just one way to make public transportation a bigger part of the mobility ecosystem.
“We want to really push transit. It shouldn’t just be, ‘We’re going to make transit free,'” he said, noting that agencies should prioritize improving service and making transit a higher profile choice. In Kansas City, this is already top of mind.
“Everybody in our industry sits around scared of like, TNCs [transportation network companies]. We’re competing against everybody. It’s bus versus scooter, bus versus TNC, bus versus streetcar,” Makinen said. “No, it’s not that at all. There is room in the tent for everybody. You, as a transit authority or agency, it’s your job to take those and plug them into your system so they can support your system. At the end of the day, as a customer, all you want is access and options.”
Last week, Kansas City Mayor Lucas proposed budget amendments to the city council, including more funding for “transit access and service towards our zero-fare transit goals.”
Here are my proposed changes to the @KCMO FY 2020-21 budget. I’m confident these changes advance our shared goal of adopting the most equitable budget in KC history while maintaining our proposed balanced budget. -MayorQ@KansasCityFilm@ChildrensMercy@HireKCYouth@KCSourceLink
As KCATA holds its breath for the outcome of the finalized budget, Makinen sees this challenging process as one that will move the needle for innovation in Kansas City.
“Change comes at the end of your comfort zone,” Makinen said. “Where we are in Kansas City, we’re at the end of our comfort zone. That’s where progress, that’s where innovation, that’s where all that lies. And you’ve got to be willing to innovate and move forward and build a transit agency for the next 20 years, not the last 20.”
August 27, 2019 Emily Park
It costs $1.50 to ride a bus in Kansas City. That’s $15 per week to get to and from work—$50 per month for those that purchase a 31-day pass.
That may not sound like much. But for low-income residents of Kansas City who don’t own a vehicle and struggle to make rent and put food on the table, it’s a significant line item on the budget. Karen Slaughter—president of the Key Coalition Neighborhood Association, an East Side community group—says many of her neighbors, and even members of her own family, take these costs into account when deciding where to apply for jobs.
“If they were to make the buses free,” Slaughter says, “I think that it would be a revolutionary difference.”
It could happen. Since being named CEO of the Kansas City Area Transportation Authority four years ago, Robbie Makinen has been quietly devising ways to eliminate fares. Veterans now ride free, as do many K-12 and college students. He has also forged partnerships with businesses that grant their employees free fares. And recently, the KCATA announced a partnership with local safety-net providers that allows them to distribute free rides to their clients. In all, about 25 percent of KCATA riders don’t pay to ride.
Kansas City’s newly elected Mayor Quinton Lucas is also on board with the idea of zeroing out fares entirely, nodding toward the goal in this month’s inauguration address: “We will still have important work to do … to ensure we’re continuing our steps toward free public bus transit for all in our city,” Lucas said.
Were the KCATA to eliminate fares across the board, that would make Kansas City the first major city in the country—a few small college and resort towns have already done it—with a free transit system.
“Just because nobody else is doing it, that’s not a reason for us not to do it, ” Makinen says. “What’s wrong with trying it? What’s the worst thing that happens? It doesn’t work, and Robbie gets fired.”
There is already, of course, one free mode of transit in Kansas City: the KC Streetcar.
The streetcar’s success is partly a function of the fact that anybody can hop on, at any time.
“I think what we know is, if you remove the fare, you remove a barrier to use, and more people are going to ride the system,” says Tom Gerend, the executive director of the KC Streetcar Authority.
Several years ago, Gerend and the streetcar’s board of directors were faced with many of the considerations the KCATA is examining now. Ultimately, they decided the cost of maintaining a fare collection system—and the estimated 25-30 percent decline in ridership that would result in charging passengers—was more than the revenues they would collect by charging fare on the streetcar (which is funded through a specialized tax district).
Makinen’s thinking regarding free buses runs along those same lines. The challenge is figuring out how KCATA can absorb the loss of revenue that will come from cutting fares.
It’s not actually that much money: $8 million a year out of the KCATA’s $105 million operating budget. The figure seems even smaller when viewed in light of Kansas City’s operating budget of $1.7 billion.
Makinen isn’t yet ready to propose a definitive answer for how to close that $8 million gap. But the transit authority is considering a few options. One is requesting more funding from KCMO, which occupies the largest portion of KCATA’s service boundaries. (KCATA is a bi-state agency with routes that travel into the Missouri counties of Jackson, Cass, Clay, and Platte, and the Kansas counties of Wyandotte, Johnson, and Leavenworth.)
The city of KCMO already collects two sales taxes that benefit transit, though not all of those funds are directed toward KCATA. About $2 million per year goes to the streetcar, and somewhere between $3–4 million goes to the city’s public works department. Redirecting that $5–6 million toward free fares could go a long way.
“I’m not saying it necessarily has to come out of that bucket,” Makinen says. “I’m just saying, out of $1.7 billion, for something that would make this much of an impact on people—I think we can all figure it out.”
Councilwoman Teresa Loar (2nd District At-Large), chair of the council’s Transportation, Infrastructure and Operations Committee, says she stands ready to usher along some policy.
“I think it’s far more important that people be able to get to work, and get to where they need to go, than tourists going up and down Main Street,” Loar says. “We want to sit down with the ATA and the streetcar folks and see where the money’s been divided up and how it’s been divided up.” (Loar also suggests philanthropic partnerships as a possible avenue for additional funding.)
The potential extension of the streetcar line to UMKC and the Country Club Plaza would generate significant new revenues from a much larger designated taxing district. Some of that money could be shifted toward buses, Gerend says. The streetcar expansion would also allow KCATA to cut the Main Street Max Line, which would save $4 million.
“The streetcar’s bringing—with our extension to UMKC—all new money funding for transit operations on Main Street,” Gerend says. “There’s an opportunity to free up some existing resources and redeploy them in other corridors and other parts of the system.”
Councilman Eric Bunch (4th District), the new vice chair of the transportation committee, says he would support using general fund money. He notes that $17 million from the city’s general fund is used to subsidize parking garages.
“Legally, I don’t think we can just divest in those obligations, but it’s just a good example of how this isn’t about money, it’s about prioritization,” Bunch says. “And if we want to make public transit a priority, the money is there.”
The KCATA is seeking funding through state and federal levels as well. Makinen says he’s reached out to the Federal Transportation Authority, pitching the idea of KC as a case study for federal research into free transit systems.
“Nobody has the magic bullet yet,” Makinen says. “But it’s there. I’m telling you. If we can’t find $8 million, that’s ridiculous.”
There are objections to these plans. One is security. If buses are free, the thinking goes, ill-intentioned people could board the bus as often as they like, where they’d be free to act dangerously and wreak havoc.
But Makinen is skeptical that $1.50 is what “keeps the wolves at the gate.” To the contrary, he argues that eliminating fares will make city buses safer. Most disputes on the bus occur over fares, and buses carrying cash are more likely to draw thieves. KCATA has also been holding discussions with mental health organizations about bringing designated professionals onto the bus who’d have resources to offer and the ability to spot trouble before it starts.
Another concern: If ridership increases after slashing out fares, how will KCATA pay for more buses to support the new ridership?
Makinen’s response: The KCATA is already paying for routes that aren’t being adequately utilized. Even at peak times of the day, buses usually aren’t full, and some are practically empty during non-peak times. “Honestly, we have the capacity now,” Makinen says. “Ridership is not very high. We could absorb a 30 percent increase and still not have to move a thing.”
So what happens now? Mayor Lucas—who mentions increasing KCMO general fund contributions to KCATA and setting up community benefit agreements as part of upcoming economic development projects as potential ways to get to $8 million—says free buses is “something that I actually am optimistic about in the next 100 to 150 days, I guess, coming up with real pathway.” The mayor adds that he has already been having discussions with Makinen, Gerend, and the city’s public works KCATA liaisons on the topic. With a willing council—nearly every single member has publicly expressed support of the general idea—there seems to be few reasons it couldn’t happen.
“This isn’t just some, ‘Let’s turn on a light switch, [and we’ll have free buses],’” Makinen says. “We have been methodically going through this process.
“Everybody is coming to the table,” he continues. “All the council people, the mayor…we are talking with the state of Missouri. Congressional delegations are thinking through this. I’m just excited that everybody’s taking it so seriously, and I truly, truly believe we are going to get this done. I’m confident we’re going to see an answer by the beginning of the year.”