Affordable Free Public Transit for Halifax Regional Municipality

Free public transit is an ideal dreamed of by many cities for its potential impact on everything from everyday life, to the economy, environment, traffic, social equity, innovative and inspirational population mindset, among other benefits. However, it is an ideal not financially feasible in most cities. By chance and circumstance from analysis to be shown, the current budgets of HRM and Halifax Transit can be feasibly adjusted for HRM to offer free public transit, some or all of the time, in many ways to cater to a range of political wills and progressive thinking to pay for it. It is mostly a matter of priorities, with some shifting and/or addition of tax dollars, pending which of many scenarios chosen. HRM’s citizens and City Council only have to commit to becoming a global example in providing free public transit, demonstrating to other municipalities in similar financial scenarios what can be done to revolutionize their public transit systems! Free public transit in HRM, and the progressive mindset of its citizens to help make it happen, would immediately become trademarks of the city’s identity, associating it with qualities like progressiveness, innovation, equitability, and make it the talk of North America and beyond!
 

HRM can provide all of its current public transit for free on weekends and holidays via any one of the following options:

  1. Realistic budget cuts presented by HRM to cover for a 6.6% increase to taxation subsidizing Halifax Transit. The HRM Budget Allocator online tool lets citizens try city budgeting, and it allows cuts and increases up to 10% on every part of the budget, listing associated potential benefits and consequences. A 6.6% increase to Halifax Transit is standard fare in this context. Try it and see if you could find cuts to fully fund free transit on weekends and holidays, approximating with a 5% or 10% Halifax Transit increase. A screen capture of the Budget Allocator site is provided in case the site would be taken down once the budgeting process was over. If you do a 10% increase, maybe consider 6.6% for the free transit, and the rest for route improvements!
     
  2. An additional $20 in taxes each year per single family household. Those earning more or less than average would naturally pay a bit more or less, respectively, from existing tax system structure. The increase quantified in Option 1 amounts to a 1.2% overall budget increase, or about $20 in taxes per average single household given $17 is the amount given for a 1% increase, as seen in the screen capture of the Budget Allocator graphic above.
     
  3. Some mix of additional taxation, budget cuts, and/or other sources of funding to be found (e.g. private sponsorship).
     

HRM can provide all of its current public transit for free on weekends and holidays, then add another day or two each year, until it becomes free at all times, with options above repeated annually for 4-6 years.

  • This gradual approach to free public transit at all times could be fine-tuned each year to make adjustments, like increased ridership, route changes to meet new demands, etc.
     
  • It would also spread the cost of free public transit at all times over 4-6 years, to marginal annual increases of about $20-25 of additional tax for an average single family household currently paying about $1700. Some would be paying more or less pending their level of income, obviously, but some of the lowest income households could also be exempt.
     
  • It would give citizens something to look forward to come each new fiscal year in an extra day or two of free public transit, for 4-6 years to come! Monday is the first suggested day to be added since some will have been covered by holidays already, and making Mondays a bit brighter for many with a free public transit ride to and from work, or elsewhere.
     

HRM can provide all of its current public transit for free AT ALL TIMES via either of the following options:

  1. An additional $125 in taxes each year per single family household. This is not a small amount for some despite it being just $10.34 per month (5 adult bus tickets = $10), or less in total than two $78 monthly adult transit passes. Low income households would pay less than $125, and some lowest income households could be exempt at minimal impact to the wealthy.
     
  2. Some mix of additional taxation, budget cuts, and/or other sources of funding to be found (e.g. private sponsorship).
     

     

How is Free Public Transit Affordable in HRM?

Public transit (also called public transport or transportation, or mass transit), is subsidized by taxes and/or other monies in most systems. Riders pay less than the true cost of the ride they take, on average, with the percentage their fares cover known as the farebox recovery ratio. The higher the farebox recovery ratio, the more of the true cost of a ride a rider is paying. Making public transit free means foregoing some or all fares as revenue for the system, pending the extent to which public transit would be free. So if a system were mostly subsidized already, there wouldn’t be much left to subsidize to make it free all the time. As an example, compare Toronto’s GO Transit with farebox recovery ratio of 76.6% [1], meaning 23.4% was subsidized, to Edmonton’s ETS with a ratio of 39.4% [2], meaning 60.6% of it was subsidized. Transitioning to 100% subsidization for completely free public transit would be a much bigger shock to Toronto’s budget and taxpayers than to Edmonton’s.

Major Canadian city transit systems have a farebox recovery ratio between that of Toronto’s GO Transit and Edmonton’s ETS [3]. However, Halifax Transit’s farebox recovery ratio is just 29.1% [Derivation A]. Halifax Transit riders are getting 70.9% of their fares subsidized, in other words! Increasing this subsidy to provide limited free public transit, or increasing it to 100% for fully free public transit, given the budget size for all other items mentioned earlier, is not much of a shock to HRM’s budgets and taxpayers. This is true in budget percentage and dollars. This is why HRM is in an ideal spot to embrace the Utopia of free public transit for its citizens. Its biggest barrier is not one of finance, but one of mindset to do so!

Countering the high public transit subsidy rate in HRM with a fare increase is a fair argument, but a very weak one. There has been a steady 2% decreasing ridership for the past few years without fare increases [4], despite fares being lower than other similar sized Canadian cities like Windsor, Regina and Victoria [5]. Increasing fares may recover lost revenue from fares due to decreasing ridership, but any practical increase would only marginally address the high subsidy rate. A fare increase of about 1/3 or 66 cents on a $2 adult ticket would be required to bring Halifax Transit’s farebox recovery ratio to Edmonton ETS level that is still low for Canadian cities, assuming no decrease in ridership that would not be realistic. That fare increase would be a shock to riders, be way out of line with average annual inflation, and affect lower income people disproportionately. The certain decrease in ridership might even be enough that Halifax Transit’s farebox recovery ratio would dip below 29.1% currently!

Lowering fares is a popular way to incentivize more riders to take public transit, but it is neither very effective nor innovative. Given Halifax Transit’s ridership patterns has 14-15% of passengers boarding on weekends [Derivation B, 6], meaning roughly the same percentage of fares is obtained on the weekends, and high fare subsidy rate, foregoing that percentage of fares to increase ridership is affordable. However, doing so in the form of free public transit on weekends would be far more revolutionary compared to a 30 cents reduction on a $2 adult bus ticket, and be more equitable to those earning less income. Throw in a few holidays to the weekends for uniformity of free public transit when most people are not working. Offering free public transit in other time slots, like after 7 p.m. on all days (as an example, not actually analyzed), may provide the same financial outcome, but it would not be practical to enforce at changeover times when a ride may or may not be free. As Halifax Transit does not run around the clock, it would be easier to delineate free public transit days, even if framed as 3 a.m. Saturday to 3 a.m. Monday to mean the “weekend”, with no buses running near 3 a.m., compared to specific time slots each day.

Extending when public transit would be free to all times is a bigger financial burden, obviously, than just on the weekends and holidays. However, it is feasible with Halifax Transit’s low 29.1% farebox recovery ratio. If there were doubt on the value of free public transit at all times, one could just try it free on weekends and holidays for a year to see outcomes before deciding to extend, keep as is, or go back to no free public transit.

As for potential additional costs to operate Halifax Transit due to increased ridership, these can be addressed in several ways:

  • Many buses run far from full capacity, so there is lots of room for increased ridership. More fuel would be required, but that would be a marginal cost. HRM buses probably weight 18-19 tonnes, seeing similar models from BC Transit’s fleet. At capacity of 64, using an average weight of 62 kg per person, a bus going from half to full capacity would only be taking on 2 tonnes or 10-12% of its weight, minimizing costs from fuel increase.
     
  • Additional frequency of buses and/or new routes that may be required for increased ridership is beyond the scope of this analysis based on current services being offered free of charge. However, given the very low costs of additional taxes to pay for free services compared to current fares, people aren’t going to have anything to reasonably complain about over tax increases a few dollars per year beyond estimates given, and a few dollars is all it would take.
     

As for potential “losers” if free public transit were enacted, some that may seem not to benefit include:

  • People who don’t use transit. True, so long as they choose not to. We all pay taxes used to provide services and benefits we don’t use or benefit from, directly, at least. That’s the nature of tax usage to deliver services. However, transit would be available to everybody any time it runs so there would not be any discrimination to keep anyone from using HRM’s public transit.
     
  • Taxi drivers may worry about potential lost rides, but, ironically, they would probably stand to gain if more people moved about. Transit travelers won’t always be taking transit both ways so they may take the occasional extra cab ride, like if they stayed later for a party, or something took longer and they need to get somewhere next sooner. People won’t opt for free transit over cab rides because if they were going to take a cab ride in the first place, it wouldn’t be over a $2 difference of public transit costing some money, and being free.
     
  • Post-secondary students with public transit passes already paid as part of their tuition. Details on what is involved this financial arrangement is not available. However, it would not be hard to make sure they don’t get short-changed as part of this policy. If they had contributions to the fares being subsidized, then it would only be a matter to make sure they don’t get charged for it again, clearly shown so that any net tuition increase would be fully on the institutions’ charge. Until free transit is available for at least half the week, though, it’d only be a small decrease.
     
  • People who ride Halifax Transit on bus passes should be given a few dollars’ reduction on passes, if the weekends & holidays option were enacted. A few dollars’ reduction, like to $75 from the current $78 adult pass, for example. It may not be proportionate to the overall fare reduction in offering for weekends and holidays for free, but considering about 70% of ride costs are subsidized, on average, already, it’s not like pass holder will be losing out on much with a small price reduction. They should be minor enough in impact that budget impact estimates in this proposal would still remain accurate.
     

Finally, there is political appeal. All policies must have some political appeal because it is the politicians that approve them. Even the unpopular policies must have some appeal that is better than a worse case scenario, but there isn’t anything unpopular here. Imagine if bringing free transit to a city were part of your political legacy! And it would be as it’s not only revolutionary, once the public gets a taste of it, it’d be real tough to campaign on a platform to repeal it unless things were really desperate. This isn’t a fad that will go away any time soon!

 

How would HRM pay for free public transit?

  • Budget cuts are very realistic options that are done all the time, whether out of necessity or streamlining inefficient services. Try the Budget Allocator to see if you could make up lost revenue for free public transit on weekends and holidays (approximate as 5% increase in Transit budget), on budget cuts alone or for the most part!
     
  • Taxes would be the worst case scenario, but given it is the main source of city budget revenues, it might be inevitable. Still, to see the relatively small impact annually is encouraging of how feasible free public transit in HRM can be!
     
  • Other funding could be from any number of sources. HRM’s finance staff would know best what options might be available, but free public transit would be massively appealing to be associated with as a sponsor or partner, private or otherwise! And the price tag isn’t huge in HRM compared to most other cities!
     

The Analysis

This is the boring, but critical, part of the proposal to show the analysis, data and their sources to support all claims made.
 

Derivation A – Halifax Transit’s Farebox Recovery Ratio

 ITEM  VALUE  SOURCE
Total Operating Costs $112,927,429 HRM 2017-Approved-Book, Halifax Transit Section (E) PDF, Page E5, 2016 Actual Expenditures Total
Total Fare Revenue $32,858,874 HRM 2017-Approved-Book, Halifax Transit Section (E) PDF, Page E5, 2016 Actual Fee Revenue Total
Total Tax and Other Revenue $80,068,555 HRM 2017-Approved-Book, Halifax Transit Section (E) PDF, Page E5, 2016 Actual Sum of all Revenue except Fee Revenue; very close match to $80.66M value on Budget Allocator graphic as tax $ needed to support Transit
Farebox recovery ratio 29.1% Fee revenue divided by total Operating Cost expressed as %
Tax increase to cover for all fee revenue (i.e. free public transit at all times) $124.80 Fee revenue expressed in $M, divided by $447.59M budget (on Budget Allocator graphic), to get % of budget, then multiplied by $17 for 1% increase as noted on Budget Allocator graphic

Link to full HRM 2017 Approved Book (10.4 MB)
 

Derivation B – Halifax Transit Weekend Ridership & Costs

Annual ridership totals were not available from HRM to compare daily and weekend ridership distribution, so sampling from quarterly reports had to be done. Quarterly values were confirmed to be representative of any quarter, and thus all year, with data from the local advocacy group, It’s More than Buses, who archived past ridership data. There were obviously small variations among quarters, but not enough that any quarter’s data would have been misleading for annual projections. Annual fare revenue and other financial information in Derivation A were actual annual totals provided by HRM, and did not have to be derived in this manner.

Ridership from Fall 2016 is shown as an example, taken directly from HRM and embedded below to validate authenticity of source data.

Avg weekday boardings (value for each day of 5 days)  96,032 Halifax Transit Quarterly Performance Report, 2016-2017 Q4, Weekday total for Fall 2016 in Part F, page 10
Avg Saturday boardings  50,492 Halifax Transit Quarterly Performance Report, 2016-2017 Q4, Saturday total for Fall 2016 in Part F, page 10
Avg Sunday boardings  30,446 Halifax Transit Quarterly Performance Report, 2016-2017 Q4, Sunday total for Fall 2016 in Part F, page 10
Avg weekend boardings  80,938 Sum of avg Saturday and Sunday boardings
Avg weekly boardings  561,098 5 times avg weekday boardings, plus weekend boardings
% weekly boardings on weekends  14.4% Avg weekend boardings divided by avg weekly boardings
Weekend fare revenue estimate  $4.74M % weekly boardings on weekends above, multiplied by total fare revenue from Derivation A; slight over estimate as higher express route fares are not collected on weekends
% increase to weekend fare revenue if holidays were added on  11.5% 12 holidays were given to be generous (better to over estimate); 12 days plus 52 weekends of 2 days each (104 days) is 116 days, divided by 104 weekend days, expressed as % = 11.53
Weekend and holiday fare revenue estimate  $5.29M $4.74M weekend fare multiplied by 11.53
% weekend fare of Total Tax and Other Revenue (subsidized operating costs for Halifax Transit)  6.6% Weekend and holiday fare revenue estimate divided by $80.66M subsidized total for Transit on Budget Allocator site; slight over estimate as higher express route fares are not collected on weekends or holidays
% weekend fare of entire HRM Budget  1.2% Weekend and holiday fare revenue estimate divided by $447.59M value given on Budget Allocator site
Tax increase per avg single family household to cover for free public transit on weekends and holidays, if all put on taxes  $20.08 % weekend fare revenue of entire HRM budget as new revenue required, multiplied by $17 per avg single family household for each HRM budget % increase; value shown is without rounding all the way through calc
Avg weekday boardings ratio to avg total weekend boardings  1.186 Avg weekday boarding divided by avg weekend boarding; for determining tax impact of paying for free public transit on an avg weekday compared to weekend
Tax impact per single family household to cover for free public transit on a weekday  $21.36 Weekend fare revenue multiplied by weekday to weekend boarding ratio to get weekday fare revenue, divided by 1% of $447.59M HRM budget, multiplied by $17 per single family household for every % increase to HRM budget

 

Halifax Transit Quarterly Ridership for Fiscal Years 2012-2016
[source: It’s More than Buses]

FY YEAR Q1
Apr-Jun
Q2
Jul-Sep
Q3
Oct-Dec
Q4
Jan-Mar
Annual Total
2012-13 4.43 4.51 5.28 5.14 19.36
2013-14 4.61 4.71 5.36 5.08 19.76
2014-15 4.58 4.65 5.29 4.94 19.46
2015-16 4.6 4.61 5.28 5.01 19.5
2016-17 4.49 4.64 5.14 4.88 19.15
Avg % Distribution between FY 2012 to FY 2016 23.4% 23.8% 27.1% 25.8% 25% value each season if all were same
% Distribution in FY 2016-17 23.4% 24.2% 26.8% 25.5%  25% value each season if all were same

 

Conclusion

It has been demonstrated HRM could afford to provide free public transit on weekends and holidays, or at all times, immediately or gradually, without too much of a shock to its budget and taxpayers. However, it is impossible to answer every question related to any policy proposal. If you have a question, please leave a comment below. It will be answered as soon as possible.

Now it only remains to be seen if, once presented to the decision makers and general public, if they will have the mindset to be on board with the idea to try and make it happen, rather than reject it to reasons like fiscal constraints. If public transit were about connecting people to opportunity, as was identified in the keynote at the SHIFT in Transit conference at Dalhousie University in March 2017, there may be no single, more effective way to do this than to make public transit free.

 

REFERENCES

  1. Annual Report, Wikipedia table with reference
  2. Wikipedia table, with reference no longer online
  3. Wikipedia table with reference
  4. CBC Oct 2 2017, CBC Mar 24 2016
  5. CBC Sep 20 2013
  6. Sampling of daily boarding data from three Halifax Transit’s Quarterly Performance Measures reports [2016-2017 Q42017-18 Q12017-18 Q2]. HRM removes them over time so copies are provided here for permanent reference.
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s