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Budgeting for Metro: A Better Approach

by Elena Safirova

Budgeting for Metro: A better approach

This article appeared in the Washington Business Journal.

Recently, Metro unveiled its proposed operating budget for fiscal 2008. To eliminate shortfall, Metro officials propose a set of measures that include a fare hike with a growing gap between peak and off-peak fares, an increase in parking fees and a core-area charge for Metrorail trips passing through the core of downtown.

At first glance, the program sounds progressive and seems to adhere to the principles of peak-period pricing, which aims to redistribute the load more evenly across facilities and times of day. In fact, the Washington Metropolitan Area Transit Authority is one of the few transit systems worldwide that already has time-of-day pricing, and the proposed changes will only make the existing pricing schedule sharper.

However, this policy could result in some unpleasant consequences.

Transit is not the only transportation option available to the regions travelers; less than 22 percent of rush-hour trips in the District and close-in Northern Virginia are made by transit, compared with about 78 percent by car.

One of the goals of the transit system is to reduce road congestion by providing convenient commuting options to people who would otherwise drive. Making transit more costly without treating driving in the same manner will very likely push some commuters back to their cars and aggravate congestion on the roads.

This argument also applies to the proposed downtown core surcharge for 19 central Metro stations.

In some sense, the surcharge is a transit version of area pricing, similar to the one implemented in London. However, in London the daily charge is applied to cars and therefore encourages commuters and tourists alike to use public transportation instead of private autos when heading downtown. But the area charge solely for rail passengers obviously will have the reverse effect: It will simply encourage some area commuters to return to their cars.

It is unlikely that time-of-day pricing on Metro will encourage commuters to travel to work off-peak.

For one thing, the definition of rush hour adopted by Metro is already quite inclusive, spanning from 5 to 9:30 a.m. and from 3-7p.m. If anything, it is more likely to make downtown businesses consider moving outside the core to reduce the cost and hassle of commuting.

It is equally unlikely that the core-area surcharge will encourage travelers to make more sensible route choices. The predominately radial design of the Metrorail system makes downtown stations unavoidable even for people traveling between suburbs.

Washington Metro is the second-largest system in the country. It is heavily concentrated in the downtown core, with 56 percent of commuting trips ending in the downtown area.

Unlike many other urban areas, Washington has a public transit system that is a popular option and provides valuable service for all residents in the area by reducing road congestion.

Using our transportation-simulation model of the Washington metropolitan area, we estimate that the congestion-reducing benefits of Metrorail considerably exceed the system's annual operating deficit. If the area's motorists benefit so much from the transit services, shouldn't they have to pay?

The solutions to closing the Metro budget gap of $116 million are not limited to the instruments of Metro itself; other transportation policies affecting a wider set of travelers can be used.

For example, a central-area toll similar to the one in London, and increase in gas tax, a conversion of Washington's high occupancy vehicle (HOV) lanes into high occupancy toll (HOT) lanes are just a few available options.

Our simulations show that the levels of charges required to raise $116 million are quite moderate.

For example, it would take only an increase of 8 to 10 cents per gallon in gas tax to close the gap. Of course, opponents are likely to argue that such measures will not be very popular, but neither are the proposed Metro fare hikes.

All this is not to say that congestion pricing of transit services is a bad policy. But until congestion pricing is introduced in a comprehensive manner in the entire transportation system, the proposed progressive steps for the transit system alone might actually do more damage than good, both now and in the future by discrediting other pricing ideas among the public.



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