#1 Council direction on Transit Fares
NEIGHBORHOOD SERVICES MEMORANDUM
March 2, 2009
TO: City Council
FROM: Jennifer Petruzzello, Neighborhood Services Director
SUBJECT: Council Direction on Transit Bus Fares
Summary
The Neighborhood Services Department has considered two primary options to
address the affordability of Janesville Transit System (JTS) bus fares for low to
moderate income individuals given the current economic conditions. This report
includes background information on transit fares and ridership, as well as a brief
analysis of two options.
Department Recommendation
Based on a review of the options, the Neighborhood Services Department
recommends that the Transit fare increase originally scheduled for July 1, 2009
as part of the passage of the 2009 Transit System budget not be implemented.
Given the current economic conditions, the Department is sympathetic to the
financial needs of our riders, many of whom live at or below the poverty line; and
feel that eliminating the rate increase is the most equitable means to address
their needs at this time. The Administration believes that this course of action will
benefit the greatest number of citizens and carries with it the possibility of at least
a portion of the projected revenue loss being made-up by increased ridership in
the last 6 months of the year. Adopting this alternative also creates no additional
administrative workload for transit staff, results in a small cost-savings as public
information activities that generally accompany a fare increase would not have to
be carried out, and re-printing of bus passes and token bag inserts would not
have to occur. This option also relieves the City of being put in the position of
choosing which agencies qualify to receive discounted tokens and which do not,
and the potential difficulties that process may cause. Finally, while there is a
potential $10,000 negative impact on the General Fund, the possibility does exist
that this impact can be lessened, if not eliminated by some additional revenues
as well as potential expenditure reductions.
Suggested Motion
I move to direct the Administration not to implement the 2009 mid-year increase
in transit fares and that transit fares remain at their current level throughout 2009.
City Manager Recommendation
This memo addresses two concerns raised about the fairs for the transit. First,
the increase proposed during the budget would disproportionately impact
individuals who are unemployed and lower income individuals. Second, there
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are current clients of various not-for-profits who have a need for assistance in
riding the public transit.
The two options presented address each concern. The Council could delay the
increase indefinitely, or delay an increase in the rates to be reviewed again in
October 2009. I would prefer a delay of the increase with a review in October.
I am also supportive of the second option because it provides some immediate
relief to potential users of the system, but am only recommending implementation
of this option if it is capped at between 3000 and 5000 tokens and implements a
50% decrease in token cost for this program from the $1.25.
Request
The review of the Transit Fare increase and consideration for a discounted fare
program was requested by Council President Loasching and City residents Tim
Cullen and Larry Barton. The concept of their proposal is to “provide a reduced
City of Janesville bus token purchase price to charitable organizations, thereby
making public transportation more affordable for the needy, with increased bus
usage and revenue for the city”. They have suggested that recognized charitable
organizations be given the right to purchase bus tokens in bulk for the reduced
price of $175 for units of 500 tokens, or a cost of $0.35 per ride. The current price
of these tokens would be $1.00 each or $500.00. This proposal amounts to a
65% fare reduction. Charitable organizations receiving reduced cost tokens could
be required to commit to purchase a certain dollar amount or quantity of tokens
each year or portion of the year to assure the City of a base amount of revenue
from this program.
Background
The 2009 Adopted Budget includes a mid-year increase of $.25 in the basic cash
fare charged to JTS customers to $1.50/ride, effective July 1, 2009. There would
also be proportional increases in all other cash fares, token and pass prices
charged to bus riders. This fare increase was anticipated to bring in an additional
$10,000 in fare revenue during the last six months of 2009. Approximately 13%
of transit revenue comes from passenger fares, with the balance coming from
other operating revenues such as bus advertising. Currently, 75-80% of the cost
of a bus ride is underwritten by federal, state or local funds. The general fund
operating subsidy for Transit in 2009 is budgeted at $718,000.
A majority of bus riders in Janesville are what is commonly referred to as “transit
dependent”. This includes low income individuals without access to a vehicle,
senior citizens who no longer have a driver’s license and disabled persons who
are unable to drive. The most recent survey of JTS passengers was completed in
2005. That survey included a question regarding total family income. At that
time, 42% of the bus riders responding had family incomes under $10,000 and
85% had family incomes under $35,000. The following table demonstrates the
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income disparity of Transit riders as compared to the City of Janesville as a
whole, and is further indication of the strong transit dependency of JTS riders.
Annual Household Income - 2005
Percentage of City of Janesville
Response
ResponsesPercentages
Under $10,000 41.9 5.6
$10,000 to $19,999 24.9 9.5
$20,000 to $34,999 18.6 21.6
$35,000 to $ $50,000 9.4 17.6
Over $50,000 5.2 45.8
Total100.0100.0
As required by Federal law, the Transit System currently offers fares at one-half
the regular rates for senior citizens (defined as persons over the age of 65 years)
and disabled individuals who possess a federal Medicare card or who have
received a special identification card from the Transit System. These customers
are presently charged $.60 per ride. Children under the age of five ride free
when accompanied by a fare paying adult (limit two children per adult). An
unlimited ride monthly pass is available for $37.50, which can produce a savings
of 25% per ride for frequent riders who use JTS an average of 40 times per
month. Tokens may be purchased in a 10 pack for $10.00, which is a 20%
discount. An All Around Town one-day Pass good for unlimited rides within
Janesville from 8:45 am to 6:15 pm is $3.00.
In 2001, the City Council approved a discounted youth token program with
Partners in Prevention (at that time the United Way Youth Violence Task Force).
Under this program, half price tokens are available to agencies which provide
after-school and non-school day programming for youth aged 11-17, as a means
of connecting those who might not otherwise have transportation available to
programs which provide an alternative to gangs and anti-social behavior.
Partners in Prevention funds this program with private donations and has in the
past used Community Development Block Grant funding as well. In 2008,
approximately 2,000 Youth Tokens were purchased for distribution to these
agencies, generating $1,200 in revenue to the City.
In addition to the Youth token program, JTS token and pass sales to private non
profit agencies, state and county governmental service organizations totaled over
$42,000 in 2008. This number reflects 19 separate organizations that were billed
for the passes, or those who requested a receipt. This does not include “over the
counter” cash sales by the Transit System office or the five other fare sales
outlets in the community where no receipts are requested. If these were
included, the actual number would be somewhat higher.
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In researching this issue, Transit staff surveyed sixteen of our peer transit
systems. Twelve of the sixteen do not offer agencies a special or discounted rate
on fares. One system offered a group rate through their domestic violence
center; another offered a fares through their Boys & Girls Club & YMCA for after
school programs (similar to our arrangement with Partners in Prevention), and a
third offered a discount to passengers, with the difference paid by the hospital.
Madison Metro has an extensive pass program, encompassing the University,
private business firms as well as community agencies.
Analysis
Staff considered 2 primary options to address the concerns of affordable
transportation.
Do not implement the July 2009 planned rate increase.
1. The
advantages of this option include:
a. Maintaining affordable fares for all transit riders equally. Since an
estimated 85-95% of all riders are persons of low to moderate
income, repealing the July 2009 increase is the most equitable way
to reach this population; and
b. Administrative efficiency would be maintained. Because the change
would be across the board, a new program would not need to be
created and managed by the Transit staff.
The disadvantage of this option is a potential increase in the general fund
subsidy for the Transit System. The anticipated revenue from this fare
increase is $10,000. To balance the budget, this amount would have to be
added to the General Fund’s share of Transit revenues. To eliminate both
the fare increase and any effect on the General Fund. Transit
expenditures would have to be reduced by $21,000, as state and federal
assistance are also reduced. It is possible that Transit expenditures for
diesel fuel in 2009 may be less than anticipated, which could offset the
loss of fare revenue. At present, fuel costs per gallon are approximately
half of the budgeted amount. However there is no way of knowing what
costs for the balance of the year will be at this early date, so making this
assumption now is not recommended.
Implement a pilot program whereby a limited number of tokens (i.e.
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5,000) would be available for non-profit organizations at a reduced
cost.
The advantages of this option include:
a. Providing additional tokens to low income individuals which will
increase their mobility to access jobs, job training and services in
the community;
b. Reduced cost tokens may provide some financial relief to non profit
organizations who are struggling with shrinking budgets and
increasing demands; and have to choose among giving rent
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assistance, food assistance and transportation with limited budgets;
and
c. The tokens provided under this program may be targeted to
address specific needs (i.e. employment, education, health care).
The disadvantages of this option include:
a. A value decision would be made as to who would receive the
discounted tokens; both from the standpoint of which agencies would
be eligible participants as well as which clients of the agencies would
qualify. (i.e. Private non-profits only or government-sponsored
agencies as well; individuals accessing the services of the participating
non-profit, rather than being spread across all of the low-moderate
income individuals);
b. The number of non-profit agencies anticipated to request the tokens
and the amount of their request may significantly exceed the tokens
available, leading to demands for program expansion;
c. Current Transit customers who are managing to pay the regular fare
may shift from paying those fares to discounted fares through the non-
profits, resulting in a net loss of revenue and an increase in cost to the
General Fund, which ultimately must make –up the difference;
d. A new program would be created, which would add an additional
administrative responsibility to already stretched staff; and
There are obviously other variations of this plan which could be considered at the
Council’s option. These could include: a general fare decrease to ease the
burden of transportation costs on all citizens, with, however a commensurate
impact on the General Fund. The reduced-cost token sales to agencies could
also be adjusted by allowing a decreased or increased number of tokens being
available through non-profit organizations, or modifications of the cost structure
to the agencies.
cc: Eric Levitt, City Manager
Jay Winzenz, Director of Administration
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