City wants comment on potential bus fare increase

Mar. 21, 2013 @ 07:14 PM

City Council on Thursday agreed that the Durham Area Transit Authority’s operators should begin gathering public comment on the possibility of raising bus fares.

A fare increase is one of the options city officials have for closing a projected fiscal 2013-14 bus-system deficit of about $1.6 million. Service cuts and increased city property tax subsidies are the others.

The system’s operator, Triangle Transit, has floated the idea of a two-stage fare increase, with the base rate going from its current $1 a ride to $1.25 in fiscal 2013-14 and $1.50 in fiscal 2014-15. Pass fees in that scenario would also change, and fare-free rides for seniors and children could be curtailed.

Several officials cautioned that they’re not, at this point, sold on the idea.

Gathering comment “just give us the basis for making a decision” later this spring, Mayor Bill Bell said, adding that the council needs more data.

The city last raised bus fares in 2003. Officials estimate the two-stage increase would, if fully implemented, generate about $1 million a year.

But the council also grappled Thursday with the likelihood that a fare increase would cut the system’s ridership.

Transit usage is subject to what economists call “elasticity.” Put simply, as prices for many types of goods rise, demand for them falls.

John Tallmadge, Triangle Transit’s director of commuter resources, said the normal rule of thumb in the bus trade is that a 10 percent increase in fares will lop off 4 percent of a system’s ridership.

DATA is on track to serve about 6.6 million riders in fiscal 2012-13. Triangle Transit estimates that number could drop to about 6.1 million in fiscal 2015-16 if base fares rise to $1.50.

That’s less than the 10-up, four-down rule of thumb would suggest, but officials also have to reckon with likely population increases.

But Tallmadge acknowledged that the elasticity estimates are somewhat shaky, as they depend on research that dates from the 1970s and some more recent studies.

Good data isn’t easy to come by because many transit systems are reluctant to share it, he said.

Councilman Eugene Brown voiced skepticism about the estimates, and Bell asked administrators to check what happened to DATA’s ridership after the council raised fares in 2003.

The idea of a phased-in, 50-cent fare increase is growing out of discussions Triangle Transit has been having with bus system managers in Raleigh and Cary.

They reason that a common fare and pass system would help the region’s bus systems work more closely together and make things more convenient for riders.

While Triangle Transit isn’t “advocating for a fare increase, we have for five or six years tried to work toward a unified fare structure,” said Wib Gulley, the agency’s general counsel. “We think that’s friendly and useful for folks who ride throughout the region, and it’s a region we’re trying to knit together.”

But Tallmadge acknowledged that one key bus system, Chapel Hill Transit, isn’t at the table because it has no fares.

The talk of a fare increase comes in the wake of referenda in Durham and Orange counties that established voter support for expanding public transit, by margins in each of about 59 percent. The referenda approved half-percent local-option sales-tax surcharges for expansion that are going into effect on April 1.

The two counties at present are on their own in the Triangle when it comes to planning expanded service. Wake County hasn’t held a similar referendum and doesn’t look like it will any time soon.

Republicans who control Wake’s county government are opposed to putting the surcharge on the ballot, and polls have consistently shown its chances of gaining voter support in Wake are about 50-50.

The projected deficit at DATA comes mostly because the system is losing federal grant money that helped underwrite the fare-free Bull City Connector, and because the state government has cut back on transit subsidies.

City Transportation Director Mark Ahrendsen on Thursday signaled reluctance to consider service cuts, given that DATA just implemented a new route structure intended, as he put it, to “right-size” the system and improve its on-time performance.

He also cautioned the council that another possibility – using money from an upcoming increase in vehicle-registration fees – would siphon into current operations revenue that was to combine with the sales-tax money to support service expansions.

The sales-tax proceeds are themselves off-limits for use on current operations. By state law, they’re only available for expansion.