CA: Should MTS delay or cancel plans to improve trolley service?

The Metropolitan Transit System is considering cutting a service upgrade and other options to head off a structural budget deficit of roughly $100 million next year.

Projected budget shortfalls are the result of federal pandemic aid finally running out.

One idea is to get rid of a plan to boost ridership by increasing service that could cut wait times in half. Set to take effect in June, trolley lines would arrive every 15 minutes versus 30 minutes. The plan would also add an express bus from the border.

MTS officials have discussed other options, such as higher fares and asking voters to approve a sales tax increase. The plan to increase ridership, announced in May, was based on the theory that more people will take public transit if it is more frequent.

Q: To fix its budget, should MTS delay or cancel plans to improve service?

Economists

James Hamilton, UC San Diego

YES: It’s nice to have big visions. But you also have to live within your budget. San Diego’s transit system has been sustained with temporary assistance like the COVID-19 subsidy that isn’t going to be repeated. We need to make more effort to ensure that all riders pay and that good service is provided at the lowest possible cost. But even with those, there’s no alternative to scaling back expansion plans.

David Ely, San Diego State University

NO: Efforts to resolve the deficit and ensure long-term financial stability should focus on actions that can be expected to generate more revenue. Improving the attractiveness of taking the trolley and buses, through reduced wait times on popular routes and other steps, will be needed to significantly boost ridership and revenues. However, other steps such as fare increases will probably need to be considered to close a structural deficit of this size.

Ray Major, economist

YES: MTS has no choice but to delay or cancel plans to improve service. MTS is between a rock and a hard place. To increase ridership they need to provide more frequent service, but increasing service will cost more than the additional fare box revenue collected. This would lead to a greater deficit making it even harder to balance their budget. If public transportation is a regional priority, more money needs to come from somewhere.

Kelly Cunningham, San Diego Institute for Economic Research

YES: It is crucial for expenses not covered by operational revenues but from noncontinuing funding stimulus and reserves be canceled. Fares should preferably cover operational expenses without always making taxpayers subsidize them. Addressing fare evasion jumpers alone would reduce annual estimated losses by about $12 million. Gradual fare increases should be implemented. Furthermore, converting the entire bus fleet of existing efficient compressed natural gas to more expensive zero-emission vehicles must obviously be postponed as well.

Alan Gin, University of San Diego

NO: Delaying or canceling improvements in service would negatively impact potential ridership gains. There are other ways to reduce the deficit, including seeking an exception to clean transit bus requirements and an extension of funding under SB 15. The state’s improving budget situation would allow the latter. Given the positive externalities associated with public transit use, economic theory suggests that it is economically efficient to provide subsidies for the service, whether through SB 15 or some other source.

Executives

Bob Rauch, R.A. Rauch & Associates

YES: The San Diego Metropolitan Transit System faces a budget challenge partly due to a state grant funding freeze. As a result, MTS must postpone planned trolley and bus service improvements until the future of those funds is more certain. The approved budget for fiscal year 2025 maintains current service levels and keeps fares affordable. Delaying the upgrades is necessary to ensure that essential services continue without interruption.

Austin Neudecker, Weave Growth

NO: Cutting service contradicts our goal of making public transit a reliable and attractive choice for everyone. Although we are facing budget challenges, investing in improved service can increase ridership over time. The proposed express bus contradicts the objective of keeping costs down and asking for tax increases will likely face resistance. We should prioritize maintaining service enhancements to ensure we meet the community’s transportation needs now and in the future.

Chris Van Gorder, Scripps Health

YES: Government agencies need to live within their budgets and become more efficient like business must do.  They can’t keep asking taxpayers for increases at virtually every election; the well is starting to dry up, as recent elections proved. California has among the highest taxes in the country, contributing to the high cost of living locally and statewide.

Phil Blair, Manpower

YES: Like any organization, MTS needs to stay within its budget and what it can afford. Expansion of services can happen when they can afford it.

Gary London, London Moeder Advisors

YES: A budget crisis represents a moment of opportunity for change. The system is grossly underutilized. It is fundamentally old school, with its reliance on fixed rail and big buses to move people around. Transit administrators and policymakers might view the budget crisis as an opportunity to visit the future, which includes better land use planning (jobs and housing closer together). Embracing new transportation technologies characterized by smaller, e-power, autonomous and flex-route vehicles.

Jamie Moraga, Franklin Revere

YES: MTS should delay or cancel service improvement plans to address its budget issues. The agency should operate without relying on federal and state subsidies, avoid tax increases, and refrain from raising fares. Instead, MTS needs to make necessary cuts to balance its budget, ensuring it’s not running at a loss. They should focus on collecting fares efficiently and fining fare evaders. Improving their financial situation should take precedence over service enhancements.

Not participating this week: Norm Miller, University of San DiegoHaney Hong, San Diego County Taxpayers Assoc. Caroline Freund, UC San Diego School of Global Policy and Strategy

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