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Fri, 05 Sep 2008
New Management at RIPTA won't help, but money might
RIPTA got itself a new board chair last week. John Rupp, Governor Carcieri's newest appointment to the board, succeeded Robert Batting, who resigned after being outvoted in an effort to ease the agency's managing director out the door.
These are obviously troubled times at the transit agency, and, as usual, money is at the bottom of it all. The agency is having a bunch of problems all at the same time, which makes it seem like one big fiasco. These are the important parts of the story:
- The price of fuel. I don't have to explain this one, do I?
- The price of fuel. I have to explain this. Because you -- yes, you -- are buying less gas than you did last year, RIPTA has less money from the gas tax. For whatever reason, gas taxes in America are typically denominated in cents per gallon rather than a percentage, like the regular sales tax. So when the price goes up, people buy less, and the tax revenue goes down, even though people are spending more.
- The loss of Medicaid money. Medicaid? A large number of RIPTA riders are (well, were) riding with passes paid for out of state Medicaid funds. Medicaid rules allow the state to provide funds for patient transportation, but the federal government has deemed bus passes an unacceptable use of that money, so that funding is gone. (Medicaid may wind up paying more for patient transportation now, but that's a different story.)
The combination of all these factors, along with some lingering red ink from last year, means RIPTA is looking at a $12 million deficit in the current year out of a budget of around $104 million. They are currently planning to make up this difference in service cuts, but because of rules about how quickly they can change their schedule, they can't start until the middle of the year. So the cuts have to be twice as severe in order to make up the money in half a year. Meanwhile, of course, the agency is suffering record ridership, with most buses full and getting fuller.
Bob Batting, the departed board chair, had a tumultuous ride since his appointment in 2003, and it was worse since he became chair earlier this year. He clashed frequently with RIPTA management, and spent a lot of time isolated from the rest of the board.
Now let's be clear here. It's not always a bad thing for board members of an agency to have a not-necessarily-smooth relationship with the management. After all, the board is supposed to oversee the managers, not always a relationship that leads to lasting mutual affection. But on the other hand, is it asking too much to hope that the board chair of the state's only transit agency be an advocate for public transit?
Batting was never that. His only real relation to RIPTA's services was as a taxpayer. He was quite clear when first appointed that he did not ride buses and his major interest seemed to be cutting costs everywhere. Consequently people viewed him as little more than the Governor's hatchet man, appointed to dismantle a service unimportant to Carcieri's political base. (By his own admission, the new chair never rode the bus before his appointment, either.)
The problem with trying to get RIPTA to run in the black is that, with the possible exception of a couple of subway lines in Tokyo, there isn't a transit agency in the world that operates without subsidy, and expecting RIPTA to run without one is simply not realistic. The fares just went up to $1.75, but to run in the black without subsidy, they'd be more like $8, and that's only if you assume the same number of riders.
What about the way it used to be? Surely the buses and trolley lines in the 1920's and 1930's made money? Why can't they now?
One reason is that before WWII, transit wasn't really competing against cars and highways, but a more important reason is that many of the local trolley lines were operated as loss leaders for some other business. For example, the Red Cars in Los Angeles existed in order to promote Henry Huntington's real estate development interests in the suburbs. In many cities, trolley lines were owned by electric companies, used to persuade those cities to give them a monopoly on electric service. The 1935 act of Congress that allowed electric companies to be regulated by states (not upheld by the Supreme Court until 1946) also forbade the utilities from owning trolleys any more.
But it's not as if they were hot properties. In Washington, DC, it took more than three years to find a buyer for Capital Transit, and then when Louis Wolfson and his brothers bought it, they looted the company of its cash holdings, and slashed service (check out here).
In other words, before the days of public transit subsidies, there were private transit subsidies.
But this is no different than subsidies for roads, airports and harbors, all of which are thought to be acceptable places to spend government money.
RIPTA lurches from crisis to crisis not so much because of bad management, but because their funding was cut. It needs a stable source of revenue in order to provide a valuable public service to our state. Without that, we're not going to have a bus system worth the name any more. In a world with declining oil reserves, increasing oil prices, rising sea levels and more traffic than we know how to handle, that would be the real fiasco.
UPDATE: Due to an arrangement reached this summer, the program cuts in Medicaid won't affect RIPTA's bottom line until FY10, and are not responsible for the current-year deficit.
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