There was a time, a quarter-century ago, when Capital Metro decided that its services were priceless. The transit agency stopped charging for bus rides in 1989.
The results, for ridership, were stimulating: a 70 percent jump in one year, to 31.2 million boardings. And the revenue loss, given that the base fare had been 50 cents a ride and that the agency had so many discounted and free fares already, was only a few million dollars.
But a year later, after complaints that transients were using the climate-controlled buses as rent-free mobile homes, Capital Metro reinstituted the old fares. Oddly, ridership fell just 12 percent in 1991, leaving it about 9 million a year above what it had been before the free-fare period. The get-’em-in-the-door experiment apparently worked.
Those prices sat there unchanged, more or less, until 2008. Since then, they’ve pretty much done nothing but change.
On Sunday, Capital Metro fares increased pretty much across the board by about 25 percent, the fifth time in the past eight years that some or all local bus and rail prices have gone up. A one-way bus fare is now $1.25, up from a buck last week, and the 31-day basic bus pass, which was $33, hit $41.25.
The increase is even more stark if you go back six years, before that first change. The base fare is up 150 percent, while inflation over those years was less than 15 percent. The 31-day basic pass, just $10 before all this started in 2008, is more than 300 percent higher. A 31-day pass to ride express buses from the suburbs to downtown, $17 in 2008, is now $96.25, a 466 percent increase.
That pass also allows you to ride MetroRail, an option that didn’t exist until 2010. A one-way ride on the train, originally set at $1.50 in 2008 (long before opening), is now $3.50, a 133 percent increase.
Hardest hit are people with certain disabilities that qualify them for the agency’s door-to-door van service, called MetroAccess. In 2008, they could buy a 10-ride booklet for $3. Those 10 rides, after today’s increase, now cost $17.50, a 483 percent increase.
And people with disabilities and those 65 years and older, who once enjoyed free fares on regular buses, have been paying half-price fares since 2011.
So what to make of this much more expensive transit? Capital Metro finds itself trying to balance its primary mission — moving as many people as possible — with money needs.
The move toward higher fares originated in 2006 and 2007, when the agency’s finance staff told the Capital Metro board that prices needed to go up because the authority’s “fare recovery rate” — the percent of operating costs covered by fares — was so much lower than other transit agencies around Texas and the country. In fiscal 2008, when the agency’s annual operating expenses were $163.6 million, fares brought in $13.2 million, or about 8.1 percent. Revenue from the agency’s 1 percent sales tax, along with some federal grants, covered the rest of the cost of carrying people.
The agency’s chief financial officer at the time said Capital Metro needed higher fares to move toward a fare recovery rate close to 20 percent. As you’ll see below, that hasn’t happened.
Actually, the real trouble was that, for the first time in its history (21 years at the time), Capital Metro no longer had more money than it needed. Until then, the healthy tax revenue had allowed it to run its buses and still stockpile several million dollars at the end of each fiscal year. Hard to ask your mostly low-income customers to pay more when that’s the case.
What staffers had realized by 2006, although they were shy about sharing it with the public, was that with MetroRail and other facilities under construction, money was about to get tight. By early 2009, even with that first fare increase, the agency’s savings account had quickly fallen from more than $200 million to $4 million, and expenses were due to go up when the rail line opened.
So we had fare increases in 2008 and 2010 (seven months earlier than first approved, to raise even more money), 2011 (although this set of changes included a MetroRail fare decrease in what turned out to be a successful effort to goose ridership on the new, struggling rail line), 2014 and now this one.
The effect on revenue has been impressive: Capital Metro expects $22.8 million in fare receipts this year, about 73 percent more than what came in seven years ago before the price increases began. But that 20 percent fare recovery target remains a dream.
Expenses have likewise gone up, to $222.8 million this year, meaning fares will cover about 10.2 percent. The recovery rate is even worse for MetroRail, 8.4 percent last year. The year-old MetroRapid bus service is at 5.8 percent, agency spokeswoman Francine Pares said.
The effect of higher prices on ridership, meanwhile, has been substantial. In the 2007-08 fiscal year, before the increases, Capital Metro hit its all-time high of 35.4 million annual riders. In 2013-14, there were 33.2 million boardings, down 6.2 percent. The agency expects another 1.2 percent dip this fiscal year, to 32.8 million.
Yes, the agency has $9.6 million a year more in fare revenue than it was collecting in 2008. And the higher fares are still technically a huge bargain, given the massive tax subsidy and the higher cost in many cases to take a car instead.
But ridership this year, assuming Capital Metro’s estimate from September holds up, will be just 5 percent above that figure in free-to-ride 1990, and Austin’s population has almost doubled in the quarter-century since then. With gas selling for under $2 a gallon, that car in the garage has become a more attractive option for a significant number of people.
Capital Metro might have to choose whether it wants to maximize money in the bank or bodies on the bus.