This week we're lucky to have another one of
Oscar's excellent analytical posts.
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Metro's 2023
annual report, covering the 12 months ending September 2023, was recently posted online.
This is the third annual report fully affected by the Covid transit downturn.
While ridership and financial statistics continue to improve, operating cost and boarding subsidy continue to remain excessively high.
We can see in this plot that ridership was down 50% in 2021, 36.3% in 2022 and 23.8% in 2023. So there is steady progress toward pre-Covid ridership. At 68.6 million, ridership remains 33.3% below the 2002 peak of 102.8 million.
Metro's operating budget exceeded $1 billion for the first time in actual dollars in 2023, coming in at $1.006 billion, although inflation-adjusted values exceeded $1 billion in 2017, 2019, and 2020.
The following plot shows Metro ridership on a monthly basis through February 2023, which had the best ridership performance in the post-Covid era. Overall ridership in February was down 14.7% versus the 12 months prior to Covid, which is better than the national average of
down 24.2%. We can see in this plot that ridership gains are being powered by traditional bus service, which is only 4.8% below the pre-Covid average.
The next plot shows the operating cost per boarding and taxpayer subsidy per boarding, which benefited from improved ridership. For the 68.576 million boardings, the operating loss was $955.3 million. Subsidy per boarding was $13.93, down from $15.10 (inflation adjusted) in 2022. Operating cost per boarding was $14.59, down from $16.36 (inflation adjusted) in 2022.
Even with improvement, the 2023 values are far higher than historical values, and the operating cost is much higher than the national average.
Looking at data in
APTA national statistics (see spreadsheet tab 73), in 2019 the national average operating expense per boarding was $5.20, and Metro was $9.50. In 2021, the most recent data available at APTA, the national average was $11.25 and Metro was $17.57.
Last year I reported that a regular weekday Metro rider making two boardings (with no transfers) for 250 days per year received an annual subsidy of $7,550 dollars, which was equal to the annual operating cost of a new small sedan for 12,000 miles per year driving. With the subsidy reduced and the cost of car ownership going up, I could find only two new cars using the
AAA calculator with an annual ownership cost less than
the 2023 Metro ridership subsidy of $6,965. As shown in the plot, they are the bare-basic Kio Rio and Nissan Versa. For 5-year-old cars, it still takes a small economy car to be below the subsidy.
Even with the improved performance, the $6,965 annual taxpayer subsidy per regular rider remains shockingly high.
The next plot shows major Metro budget items. Metro received yet another huge influx of federal funds in 2023, a $221 million operating grant and $252 million total grants including capital grants, lifting total revenue to $1.37 billion. Metro received mind-boggling Covid operating grants totaling $714 million in 2020 and 2021, while fare collections in those two years was down only $81 million compared to 2019 fare revenue. The annual report states the following:
"Operating grants (includes capital grants authorized by the FTA for use in maintaining capital assets) are primarily used to maintain transit vehicles and operating specific transit programs such as METROLift and METRO STAR Vanpool. ... The significant increase of $216.7 million in FY2023 primarily related to the funds from the ARP Additional Assistance, Urbanized Area Formula Program and preventative maintenance program." [sic]
The problem with these huge grants which have no correlation to ridership is that all cities receive them, and of course all the expense gets piled onto the $34.6 trillion
national debt.
Sales tax revenue exceeded $1 billion for the first time in 2023, coming in at $1.028 billion. Infrastructure assistance, generally used for road maintenance and improvement, was $193 million, down 4.3% from the 2022 inflation-adjusted value of $202 million ($196 million actual).
The next plot shows Metro fare revenue and average fare collected per boarding. Average fare per boarding plummeted after Covid and continues to worsen, dropping to $0.66 cents in 2023, which is the lowest value in the plot (which starts at 2001), and probably the lowest ever in the history of Metro on an inflation-adjusted basis.
The next plot shows the average fare collected as a percent of the cost of providing the service for a boarding. With an average fare of $0.66 and a cost per boarding of $14.59, the fare covers 4.5% of the cost, which is a slight improvement from 4.3% in 2022.
In April 2023 I posted an
article called "Does Metro's Advertising Budget Influence Local Reporting". The local media seems to treat Metro very nicely. For example, I never saw any media outlet report that the per-boarding taxpayer subsidy was $17.57 in 2021 and $15.78 in 2022. Could the favorable media treatment be due to Metro's large marketing budget, with millions of dollars being spent on advertising? Metro's marketing budget spiked upward to $18.2 million in 2023, the second-highest value in the plot which goes back to 2010.
Metro's New Leadership
Mayor Whitmire recently appointed a new
board chair and new
board member.
A good goal for the new Metro leadership is to lower the $13.93 taxpayer subsidy per boarding back to pre-Covid levels of around $10 per boarding. Ten dollars is still a very high subsidy, but a reasonable goal to achieve.
Reaching this goal will require continued ridership recovery and, most importantly, curtailing excessing spending and working to improve the efficiency of operations.
I would also be interested in knowing more about the low average fare collection per boarding. The official Metro fare is $1.25, and rates for Park & Ride service are much higher. Yet Metro's average fare collected is only $0.66, the lowest since 2001 and probably the lowest in Metro's history (on an inflation-adjusted basis). What's the reason for this? Is Metro not collecting fares? Is Metro giving more and more riders discounts or free rides?
