Bus Riders Union of Austin, Texas | El Sindicato de Pasajeros

Transit agency wants to phase in fare increases, charging seniors and some with disabilities.

By Ben Wear
Austin American-Statesman
Tuesday, May 13, 2008

Capital Metro officials Monday revived a fare increase plan, this time phasing in a doubling of bus ticket prices over three years, which would bring the base fare to $1, and ending free rides for seniors and some people with disabilities.

The transit agency staff hopes to begin charging 75 cents a ride in 2009 and raise that 25 cents in 2011. The current fare is 50 cents. Chief financial officer Randy Hume, among other changes, recommended that riders 65 and older and people whose disabilities do not qualify them for special services pay 50 percent of the base rate. People with more severe disabilities would still have free rides.

Commuter rail tickets and express bus fares would be $1.50 a ride. Capital Metro would continue to offer discounts for monthly passes and for the door-to-door service offered to people with qualifying disabilities. Downtown Dillos, free now, would cost 25 cents a ride.

Capital Metro's staff last year recommend a series of increases to take the fare to $2.20 by 2014, a plan later scaled back to doubling fares this year. But that idea was shelved last fall after intense public opposition.

The increases now on the table would have to go through the transit agency board and then a specially formed committee of local elected officials. The plan was coupled with the release Monday of a new long-range financial forecast that shows Capital Metro accumulating a $600 million surplus over the next two decades. That stands in contrast to an agency forecast two years ago that showed Capital Metro falling into the red by 2010 and racking up a $410 million deficit over 20 years.

A sizable chunk of that billion-dollar difference — about 40 percent — would result from increasing fares not only in 2009 and 2011, as the staff recommended Monday, but also by 25 cents every two years through 2028. The final base fare under that scenario would be$3 a ride.

But the only fare increases being considered for now, Hume said, are the two taking the base rate to a dollar.

"The main message (last fall) was that it was too much at one time," Hume said. "But if we don't increase our revenues, we can't grow the system the way we want to."

Capital Metro last year took in just $5.6 million from passenger fares, and about that much from its agreement with the University of Texas to provide shuttle bus service. The overall operating budget, meanwhile, was about $147 million, meaning that revenue from the agency's 1 percent sales tax and other nonfare sources pays for more than 90 percent of the cost to run and maintain buses.

For most of Capital Metro's 23-year history, this unusually low "fare recovering rate" was no problem (though most transit agencies charge more and raise 15 percent or more of their costs from bus tickets). The sales tax generated enough that the agency accumulated significant surpluses each year.

With the advent of commuter rail, however, along with increasing labor, health care and fuel costs, that comfortable picture has become more austere. Just how austere remains subject to the assumptions analysts make.

The latest forecast, aside from incorporating those regular fare increases, assumes that revenue from the sales tax will grow about 5.3 percent a year. Hume said that is essentially the growth rate of the tax over the past decade. It also assumes that salaries and benefits will grow about 3.6 percent a year, that fuel costs will increase 8 percent a year and that theagency will add bus service and rail cars and almost double ridership.

The forecast does not mention any other rail projects, including streetcars downtown or commuter service to Manor, which have both been discussed recently.

As for the predicted surplus, longtime board Chairman Lee Walker noted that about 85 percent of it comes in the final five years of the forecast. Changing the assumed growth rate of the sales tax a few tenths of a percent would swing the final result significantly, he said.

"It's hard to put a lot of credence in a surplus that occurs in years 16 through 20," Walker said, while praising the analysis Hume and his staff produced. Walker and other board members, at least initially, seemed comfortable with the new fare increase plan. Walker, who is leaving the board later this month and thus won't have a say in the final increases, said the agency's long-term financial health depends on charging a reasonable price for the product.

The fare schedule "needs to go up, and it needs to go up over time comparable to the increase in our costs," Walker said.

bwear@statesman.com, 445-3698