Shoot it to me straight doc, how bad is it?…
Looking through the numbers, Metro-Denver’s RTD financial sheet could be mistaken for Frankenstein’s monster: routes go to places where density doesn’t exist, the majority of people who pay for the system don’t ride it, and the primary funding comes from a sales tax which is notorious for obscuring true costs and regressively impacting lower income residents. And despite the declining ridership and ballooning debts and depreciation, RTD recently decided to raise fares to make up the shortfall. When you are down significantly at the poker table, do you really double down on your bet, to keep the gamble going?
So how much does RTD really cost residents, riders, and denverites?
Many people are surprised to find out that fares only comprise a small percentage of RTD’s revenue – 16.79% in 2017. For the average rider that comes out to $722.65 per year ($140M fares / (6.7% transit ridership * metro-denver 2.88M population).
Riders pay $722.65 / year
The vast majority of RTD’s funding comes from a regional sales tax of 1% which came out to 71.61% of RTD’s funding or $598 Million. Spread out over greater Denver’s population, that represents an average cost of $207.11 per year for every resident whether you ride transit or not.
All residents of Greater Denver pay $207.11 on average
(whether they ride transit or not)
Denver tends to have higher sales tax receipts and more efficient use of space per resident; how does that translate to transit costs for a Denver proper resident?
Denver has $656 Million in city sales tax revenue 2017 based on a 4.31% city sales tax. If you backwards calculate what the comparable RTD tax generated in the city of Denver (1%) it comes out to $152 Million which is 18.22% of RTD’s total revenue of $835 Million.
Where costs are tied to miles of transit operated and proprtional to land serviced, farebox revenue is a product of ridership and heavily dependent on population density. Denver’s 6.62% of land serviced by RTD and 18.22% of RTD’s sales tax income means that Denver’s pays a rate of 275% what other RTD member cities pay to service their land areas.
Denver is subsidizing surrounding cities and counties at a rate of 275% what other RTD member cities and counties are paying for their land to be serviced.
Based off of Denver’s additional sales tax liability, the average Denver resident likely pays closer to $569.55/year in sales tax to RTD.
Denver proper residents probably pay closer to $569.55 per year in sales tax to RTD.
(whether they ride transit or not)
In particular to combat lower revenue of decreasing ridership, RTD just increased the Local fare 15% from $2.60 to $3, the regional fare increased 27% from $4.50 to $5.25 and the fare to Denver International Airport increased 16% from $9 to $10.50. While RTD nobly reduced fares for low income folks, children and seniors, it ignores the elephant in the room that ridership is declining roughly 1% per year for the last 5 years. This ridership decline is despite Denver’s growing population and additional transit lines to low density suburbs. In total only about 6% of Metro Denver’s population uses transit compared to solo vehicle commuting at 67.9%.
Is it wise to raise the cost to ride, when there is a ridership problem? Denver, even before the rate hike, had some of the most expensive fares in the country as of 2017…
Any solutions?
Option 1: Go full Netherlands…
At this point, honestly, consider just making the system free and consider reducing service to neighborhoods that are built around cars not buses. When only 16.7% is from fares and the system costs $835M every year, consider making the fares free and at least you will get higher ridership for the massively subsidized system. Lots of run on benefits may be realized as well in reduced pollution, less traffic deaths, decreased congestion, less DUIs and more when considering the considerable costs of subsidized parking of personal vehicles around Denver (this all of course assumes that induced demand doesn’t immediately fill the gap, which data shows it probably will). Maybe consider a $10 year long pass that can be purchased by any rider, simply so that people have a slight ownership of the privilege it is to ride public transit and be able to revoke access to people who don’t treat it with respect for the enjoyment of everyone else using it (disruptive/scary/inappropriate behavior).
If Denverites alone, were to cover the $140M farebox to make RTD free to the whole front range it could be done with a sales tax increase of less than 1% as Denver’s current 1% sales tax contribution is estimated to be around $152 Million. If all of RTD’s participating 2.92 Million people participated (instead of Denver’s ~704,000 people), free public transit could be realized with an additional sales tax as low as .24% on top of the 1% already charged for a total of 1.24%.
Transit could be completely free for a sales tax of 1.24% instead of the current 1%
Option 2: The equitable solution, land tax:
If Denver wanted to really make free transit costs equitable they could instead use a land tax (not property tax) to make up the farebox proceeds and could have free transit at a cost of $0.14 per square foot of land ($140M / 1.07B sq. ft. of property). This is compared to what we currently pay in property taxes $0.67 per square foot of land or our true cost of infrastructure $1.06/sq. ft. land.
If you have a standard old lot size of 3,125 feet in an older neighborhood you would pay about $437/year. If you have a sprawling 12,000 square foot lot in the Polo Club requiring significantly more infrastructure to service it and carbon output to maintain your lifestyle, the costs would be loser to $1600/year. If you own or rent a more efficient apartment or condo, congrats you get to crowd source these costs with the rest of your building.
Transit could be completely free for an equitable $0.14 per sq. ft. land tax.
Option 3: It’s the density, Stupid!
If you choose to live in a far flung suburban neighborhood with primarily single family homes, maybe you are making a transit choice that other’s shouldn’t be forced to pay for? Should RTD really be boasting about sheer numbers of remote square miles serviced (as observed on it’s website) or perhaps it’s time for quality over quantity approach to transit focused on providing quality and enjoyable transit to dense neighborhoods that could best use it? These neighborhoods would offer the best bang for the buck to take additional cars off the road, or maybe even tilt the equation for the 73% of people who travel alone by car to work if a better transit alternative existed?
Transit could be free if RTD cut costs and prioritized moving the most number of people- largely in denser neighborhoods – rather than than focusing on glamour stats like number of far flung square miles serviced
One last armchair expert critique:
Not to dog pile, but a personal regret as a CU Boulder alum, is that the light rail line that showed the greatest promise with density and actually has existing rail line is the only one not completed to date. From the perspective of an armchair blogger, 40,000 college kids that often don’t own cars and would like to regularly get around the front range in a quality way, not to mention the hundreds of thousands of other residents and businesses along the corridor, seems like an ideal route to prioritize?
Of course I am talking about the long awaited and indefinitely deferred proposed B-Line to Boulder & Longmont.
