January 24, 2005
Politicians in the District,
Maryland and Virginia aren't happy with a Metro funding panel's
call to raise sales taxes by as much as half a percent to fund new
buses, subway cars and other needs.
They shouldn't be. Metro's panel apparently looked only at the revenue side of the ledger and forgot all about costs. Yet improved cost efficiency -- not new taxes -- offers the best way to solve Metro's money problems.
Simply put, Metro's costs are too high. For example, in San
Diego, costs per passenger mile are 35 percent lower than they are
here. If Metro costs were at the San Diego level, our system would
need $300 million less annually. Metro doesn't deserve one more
penny of revenue -- through higher fares or through higher taxes --
until it gets its out-of-control costs in order. Perhaps the most
promising solution to Metro's cost overruns is "competitive
tendering," a system by which private companies compete for the
right to provide service at lower subsidies. Competitive tendering
already is used for bus service in Montgomery, Fairfax, Prince
George's and Prince William counties, although the counties
continue to set fares and decide where and when buses will
Some of the world's largest transit systems have converted to competitive tendering. It started with London's famous red bus system. Since 1985 costs per mile on the London system have been halved while service has expanded. Copenhagen, Adelaide and Perth also have competitively tendered their bus systems, with savings of 20 percent or more. Stockholm has competitively tendered not only its bus system but its commuter rail system and subway, which carries 50 percent more riders than Metro does. Stockholm's savings have exceeded 50 percent.
Significant savings also have been achieved in the United States through competitive tendering in San Diego, Denver, Los Angeles, San Francisco and Las Vegas.
Competitive tendering is certainly worth a try here -- especially considering that the depth of the Metro funding crisis has been overblown. A little more than a 10 percent reduction in Metro costs would save the system $2.3 billion during the next decade.
Metro's money challenge is less daunting than that faced by many private companies that have managed to turn themselves around even though they can't stick taxpayers with the tab for their inefficiencies.
Metro can solve its funding problems -- it just has to go back to the drawing board instead of reaching into taxpayers' pockets.
Wendell Cox is a Heritage Foundation visiting fellow, he served on the Los Angeles County Transportation Commission.
First appeared in The WashingtonPost.com