Soaring Transit Subsidies Must Be Controlled

The demand for mass transit subsidies is approaching crisis proportions. A study was performed to determine why the demand for transit operating subsidies is growing, what can be done to control subsidy growth, and what improvements are needed in the federal transit operating assistance program.

One reason for growing subsidy demands is that rising transit operating costs are not being offset by productivity improvements. Although labor accounts for 70 to 80 percent of operating costs, transit systems have difficulty in using labor efficiently because demand peaks during commuter rush hours. Transit systems are experiencing serious problems in maintaining their bus and railcar fleets. Many systems: (1) are not properly recruiting, training, and promoting their mechanics; (2) do not have adequate preventive maintenance programs; (3) are not properly controlling spare parts inventories; and (4) have restrictive work rules preventing the efficent use of maintenance personnel. The demand for operating subsidies is also growing because transit systems have adopted and maintained unrealistically low fares, even though operating costs are increasing.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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