Transit funding structures

Found a report at the World Bank site written by Prointec Inocsa Stereocarto for the Madrid transit agency comparing operations integration and funding sources for several major transit agencies. I was mostly looking for just how lavishly France funds the Paris Metro, and found ample evidence: the French government kicked in $800M to run the Parisian transit system in 1997, and that local employers paid nearly $1.7 billion in payroll taxes (and discounted passes) to finance system operations. The riders paid just 25.7% of the RATP’s total cost, with taxpayers picking up the rest: 31% from the 2% payroll tax, 17% from the feds, and the rest from payments and traffic fines from the local governments.

Compare that to 53% farebox recovery for CTA, with just $700M in regional subsidy (plus a 25% match and reduced fare reimbursements from the state, totaling <$250M) for all of RTA, for instance — to serve a metro area of similar scope, although half as densely populated, and therefore much more expensive to serve with transit.

Update 17 July 2006, from a Fiscal Policy Institute (Word file) document:
MTA (NYC) finances roughly break down to 70% system generated (about 55% fares, 15% advertising and tolls), 25% dedicated taxes, and 10% transfers from other governments (including $250M from NYC). The six dedicated taxes include corporate income, petroleum importation, vehicle registration fees, 0.25% on real estate transfers and mortgage recordings, and 0.25% on retail sales. The taxes were introduced in the early 1980s, with a nexus focusing taxation on “two groups who derive significant benefit from an effective mass transit system: (1) the business community and property owners,” who benefit from better access, higher density, higher property values, and better business productivity from a broader labor pool, and (2) drivers, “since an efficient mass transit system relieves congestion and enhances their mobility.” Transit also improves the environment, facilitates economic activity and expands the tax base, and supports jobs elsewhere in the state: “public spending on mass transit has by far the highest economic multiplier among all industries in New York State”; $1 billion spent yields $3.4B in total economic output, 37,500 jobs and $1.8B in payroll. (Sadly, this is unsourced.)

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3 thoughts on “Transit funding structures

  1. Found a FPI document with greater detail. It’s worth a block quote (retyped):

    Adequately funding mass transit is a good investment for New York

    – Fosters sustainable, environmentally sound development. Effective mass transit lessens energy usage and promotes [a] cleaner environment. New York needs an expanded regional mass transit system to support new development in the urban core [where most regional residents live] rather than see this development go to the outer fringes of the region in a manner that promotes sprawl and ultimately, a more costly form of development.

    – Supports and expands the state’s tax base. An effective and expanded transit system will enable NYC to better retain and attract the high-value economic activity and high-paying jobs that contribute so greatly to the NYC and NYS economy and local and state tax revenues…

    – Public spending on mass transit yields a high return on investment for New Yorkers. Because mass transit relies so heavily on labor, goods and services that are largely supplied locally within New York State, the IMPLAN input-output model indicates that spending on local mass transit has by far the highest economic multiplier among all industries. (This is remarkable particularly since the model does not capture in the transit multiplier the higher business productivity in other industries that mass transit makes possible.) Thus, dollar for dollar, spending on local mass transit produces a greater local (NYS) economic benefit than public spending to subsidize financial activities, manufacturing, or any other leading NY “export-oriented” economic sector…

    – The 37,500 jobs supported by a billion dollars in spending on public mass transit includes: 12,500 direct jobs… 14,800 jobs in supplier (indirect) industries, and 10,200 jobs throughout the economy providing consumer goods and services…

    Spending on cars, on the other hand, generates relatively few local jobs for most North American metropolises. Detroit and Houston aside, cars and oil are largely imported to our cities, and thus cost a lot and don’t generate many local jobs. In fact, they don’t generate many jobs at all — according to the IRS, 73% of the retail price of gas and 86% of the retail price of a car is “costs of goods sold,” which immediately goes up the economic ladder. (Joe Cortright, “Portland’s Green Dividend“) Compare that with transit: 74% of CTA’s operating budget goes to local labor, with some of the rest (security, paratransit, power) also paying local people. Just 2% goes for fuel.

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