COST AND PERFORMANCE EFFECTS OF TRANSIT OPERATING SUBSIDIES IN THE UNITED STATES

Current plans to eliminate US federal operating assistance to transit are based on the belief that subsidies lead to increases in the cost of services and losses in productivity. Surprisingly, however, there has been very little statistical analysis to date which demonstrates the effects of operating subsidies on performance, cost trends, and ridership. This paper attempts to contribute in this area by examining the historical effects of subsidies on the cost and performance trends of 17 California transit properties. Initially the competing arguments for and against operating subsidies are examined, followed by a review of what we currently know about the effects of subsidies on performance. Using a pooled time series analysis, it is then found that subsidies have indeed had a degrading effect on the performance of California transit properties over time. In particular, subsidies appear to have had a stronger influence on transit's cost spiral than its productivity declines, and the effects of local support have generally been far more onerous than federal and state subsidies. It is concluded that probably much of the blame placed on federal subsidies has been excessive, and that there is probably better ground for reducing local rather than federal aid. (Author/TRRL)

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Filing Info

  • Accession Number: 00382798
  • Record Type: Publication
  • Source Agency: Transport Research Laboratory
  • Files: ITRD, TRIS
  • Created Date: Apr 30 1984 12:00AM