Report: METRO stable during recession

Defies national trend

Steve Hawley, Apr 02, 10.

Houston’s METRO is one of the few transit agencies nationwide that has not considered raising fares or cutting service during the current recession, according to a new report from the American Public Transportation Association (APTA) and cited by Guidry News.

According to the study, 84 percent of all US transit agencies have either cut service or raised fares, or are considering doing so. Transit agencies have struggled in recent years with high fuel prices, dwindling sales tax revenues during the recession, and lower ridership due to higher unemployment.

Two-thirds of transit agencies have eliminated positions or are considering doing so, and almost half have laid off employees or are debating such a course. But, Guidry News reports, “Thanks to fiscal discipline - which resulted in a nearly flat budget the past five years - METRO is prepared to weather the current economic downturn.”

In fact, the agency is even expanding its service: “[S]ince Jan. 1, 2009, METRO added two cross-town bus routes (Renwick and Eldridge), a Park & Ride route (Pasadena), and two Signature service routes (Quickline and Swiftline).” The agency has also begun construction on three of its five planned light rail expansion lines.

The agency has not been entirely unaffected, though, and last year it implemented a hiring freeze, except in critical areas such as mechanics, bus drivers, and police officers, in an attempt to control costs.

METRO President & CEO Frank Wilson attributes the agency’s success to a change in philosophy since he took over the organization in 2004. That year, the agency cut its least productive bus routes in an attempt to increase its operating ratio - the return on every dollar of investment. Since then, the operating ratio has risen from 13 percent to 21 percent. And in 2008, METRO raised its fares from $1.00 to $1.25, eliminating steep annual discounts available to more affluent riders.

Wilson explained METRO’s philosophy in an interview last year with Houston Tomorrow:

Our pension costs are going up, our fuel costs went through the roof, our medical costs go up like everybody else’s. We’re eating those cost increases through efficiencies, by spending less money. ... We lost some riders [with the service cuts in 2004], but we held our costs flat, and now all those savings have built up, now we’re starting to add service back that people are actually using.
...
We’re not after the last rider at any cost, we’re looking at making sure METRO is fiscally sound and providing good, sound, stable, reliable services over the long haul, and sometimes you have to do tough things in business, and we’ve done them. And our numbers and our charts and our records show that we’re getting good results from it. Thirteen to 21 [percent operating ratio] - that’s not an easy number to move, by the way. We’re still battling, and it really is an uphill battle.

However, this approach has brought the agency some criticism, especially from Mayor Annise Parker, who took office in January. In February, Parker told the Houston Chronicle, “I’ve been concerned that Metro has been drawing the line in the wrong place. They’re too concerned with the bottom line and not concerned enough that their job is to provide transit to people who really don’t have any other option.”

The mayor even suggested eliminating all bus fares, which reduce the agency’s income by $66 million annually, or 20 percent of its expenses. Outgoing METRO Chairman David Wolff, whom Parker publicly criticized during the mayoral campaign, strongly disagreed her suggestion, saying that eliminating fares would force the agency to cut one-third of its bus service and would reduce its federal funding as well.

A Transportation for America report noted last year that cutting service is especially harmful to low-income communities and could make the current economy worse by preventing people from getting to their jobs.

Mayor Parker recently appointed five members to the METRO board, giving her appointees a controlling stake in the transit agency.

APTA report (March 2010): Impacts of the Recession on Public Transportation Agencies (pdf, 570 kb)
Transportation for America report (August 2009): Stranded at the Station