Response to the San Antonio VIA Metropolitan Transit Report

Comments on the
VIA Ad Hoc Committee Report

10 June 1998

VIA Metropolitan Transit appointed an ad hoc committee to review the recommendations of the Texas Public Policy Foundation (TPPF) Opportunity Analysis, which was published on November 18, 1997. The committee presented its report to the VIA Board of Trustees on June 2, 1998. The following comments are organized by recommendation, as contained in the Opportunity Analysis.

Recommendation #1 Reduce administrative costs by 25 percent.

VIA response: Not Addressed

Situation: As indicated in the Opportunity Analysis, administrative costs have risen inordinately in recent years. A 25 percent reduction would still leave VIA administrative costs well above the benchmarks established in the Opportunity Analysis. The $4 million in savings would very likely fund the cost of a fare reduction to 40 cents for the foreseeable future.⁽¹⁾

Conclusion: The administrative cost savings as recommended in the Opportunity Analysis should be implemented

Recommendation #2: Minimize operating costs

VIA response: Not Addressed.

Situation: As indicated in the Opportunity Analysis, more than $100 million could be saved over the next decade through a competitive contracting program that does not require layoffs or any reduction in employee compensation. These savings would provide a significant opportunity for service expansion and/or lower taxes in the future.

Conclusion: The competitive contracting program as recommended in the Opportunity Analysis should be implemented

Recommendation #3: Rollback of 1995 fare increase.

VIA Response: Targeted fare reductions

Situation: The Opportunity Analysis had noted that the 1995 fare increase of 87.5 percent resulted in a large ridership loss. Worse, the ridership loss was unnecessary, because VIA's unrestricted reserves were more than sufficient to finance the lower fare for years to come.

VIA has responded by recommending modest, targeted fare reductions, the most significant of which is a 33 percent in the monthly pass (from $30 to $20) and a 67 percent reduction in the price of an express service monthly pass (from $60 to $20). The base fare would remain at $0.75. VIA explains its relative fare levels and fare ratios compared to other transit agencies. VIA provides details of the ridership loss suffered as a result of the fare increase, noting that "discretionary trips as opposed to work trips such as senior citizens and mobility impaired suffered greater losses" Senior citizen trips, for example, declined by half..

The proposed fare targeted reductions are a step in the right direction, but not enough.

VIA's 1995 fare increase was the largest fare increase in the US transit industry for at least the 25 years and resulted in the largest year to year ridership loss in the last quarter century. VIA appears to justify the higher fare using an analysis of other transit agency fare structures and fare ratios. The analysis fails to consider the human toll of having driven thousands of largely transit dependent riders off the transit system. That Boston or a host of other cities may have raised their fares gives little comfort to a low income rider who can no longer afford to travel as much on VIA. That VIA's financial condition does not require the higher fare makes the case for restoring the 1995 base fare all the more compelling.

San Antonio has a very large transit dependent (largely low income) population and is now has the lowest per capita income of any metropolitan area with more than one million people.

Reducing multiple ride pass prices provides no benefit to low income citizens who may not, at any one time have enough discretionary cash to purchase a pass or who do not ride the bus enough to justify a pass purchase.

VIA indicates that work trip ridership losses were less than non-work trip losses. Yet VIA's proposed monthly pass reductions would benefit most those who use transit for commuting to work. This is particularly evident with respect to the express pass reduction from $60 to $20. As noted above, this provides no relief to transit dependent riders who pay the base fare. Further, the express fare reduction provides virtually no relief to the much less affluent workers using VIA to commute to jobs outside downtown, because the express network provides little, if any service, to outside downtown locations (downtown public transit commuters have nearly 25 percent more income than those who commute to non-downtown locations ⁽²⁾). In short, these fare reductions discriminate against the less affluent, who are more dependent upon VIA. This could expose VIA to legal challenges similar to the Los Angeles transit civil rights case. The remedy required in the Los Angeles discrimination case was a major factor in precipitating what may be described as an extremely severe financial crisis.

Non-work trips by the transit dependent are not, as VIA characterizes them, "discretionary trips" (see above). Discretionary trips are those for which the rider has an alternative, such as an automobile. By its "discretionary" characterization and fare reduction recommendations, VIA appears to infer that these non-work trips by the transit dependent are less important than work trips, many of which are made by people who have automobiles available. Most transit dependent riders do not have access to automobiles and as a result, they represent a "captive" marker, not a discretionary market. It is not a discretionary trip when a low income person uses the bus to for shopping or a medical appointment. It is a very serious matter to have impaired the mobility of the community's most needy.

Conclusion: VIA can afford to restore the 1995 fare structure, which would also likely restore a significant portion of the lost transit dependent ridership.⁽³⁾

Recommendation #4 Temporary tax reductions

VIA response: Not Addressed

Situation: As a part of the overall recommended program, the Opportunity Analysis proposed that VIA enact an immediate 50 percent temporary tax reduction and routinely enact similar reductions whenever possible. This opportunity remains available to VIA.

Conclusion: The temporary tax reduction recommended in the Opportunity Analysis should be enacted.

Additional Issue: Cash Reserves

The Opportunity Analysis indicated that VIA has higher cash reserves than are necessary to operate the agency. These reserves could be used to reduce fares and/or to finance a temporary tax reduction.

VIA Response: Recommendations to (1) change the working capital reserve requirement to two months from three, (2) change the name of the "Restricted Cash (Reserve) Fund for Future Transit Improvements" to "Unrestricted Cash Reserves for Future Transit Improvements and (3) establish a restricted Stabilization Fund of $12.4 million.

The first two of VIA's recommendations are positive steps, but again, not enough.

VIA did not deal with the fact that other transit agencies are able to operate with much lower reserves.

Even under the new reserve definitions, VIA maintains excess unrestricted reserves, rising to $37 million in 2002. These reserves, for future transit improvements are available for use to reduce the fare to 1995 levels and restore much of the transit dependent ridership that was lost. This is a transit improvement that could be achieved in the immediate future, and would cost, at most $5 million annually. It is unlikely that any other yet unspecified transit improvement could provide as significant benefits to the community. Failure use the reserve in this manner puts VIA in the position of holding cash for which it has no serious plans rather than using these readily available funds for the benefit of its most needy riders (and former riders). This is an untenable policy that could be likened to the parent who starves the family while saving for an around the world tour.

The third VIA recommendation --- establishment of the stabilization fund has not been analyzed. It is, however, consistent with VIA's tendency to hold more in reserves than is necessary to responsibly operate the agency.

Overall Conclusion

VIA's fare reduction and two of its cash reserve requirement recommendations are commendable. The opportunities available to the VIA, however, are much greater. It is to be hoped that more substantive policy actions will follow, for the benefit of VIA riders and the taxpayers (further along the lines recommended in the TPPF Opportunity Analysis).

1. The Opportunity Analysis estimated the cost of restoring the 1995 fare structure to be $4.4 million annually. It is estimated that VIA's presently recommended fare reductions would reduce that amount to less than $3.7 million.

2. San Antonio 1990 data, calculated from US Census Bureau data.

3. The Opportunity Analysis assumed that the rollback to 1995 fares would attract up to 80 percent of the lost ridership.