A bus gap: Are fancy suburban bus lines taking taxpayers for a ride?

The Minnesota Valley Transit Authority offers a transit experience to match the incomes and expectations of their higher-end customers.
MinnPost photo by Steve Berg
The Minnesota Valley Transit Authority offers a transit experience to match the incomes and expectations of their higher-end customers.

Income disparity between rich and poor has been growing in this country for nearly four decades, so it comes as no shock that a two-class system has taken hold in Twin Cities bus service.

Metro Transit provides dependable, no-frills trips throughout region, concentrating most intensely on high-volume inner-city routes that rattle along bumpy urban streets. In that sense, Metro Transit is the workhorse.

But there’s a show horse, too. Several of the half-dozen suburban “opt-outs” have evolved into premium bus lines. Two agencies in particular — SouthWest Transit and Minnesota Valley Transit Authority (MVTA) — offer a transit experience to match the incomes and expectations of their higher-end customers. Coach-style buses are tidy and comfortable, with cupholders and reclining seats. Stations are clean and well-lighted, some of them with gourmet coffee and impressive landscaping. For a city rider to experience a trip on a sleek SouthWest coach from the agency’s nicely appointed station on Technology Drive in Eden Prairie is a bit like trading a White Castle slider for a steak at Kincaid’s.

The disparity wouldn’t raise eyebrows if the suburban opt-outs were paying their own way, but apparently they’re not. In this case it’s pretty clear that the haves are riding on the backs of the have-nots, that taxpayers are serving up a higher level of subsidy to the show horses than to the workhorses.

Suburban opt-outs
Consider the numbers. According to the Metropolitan Council, the opt-outs get about 15 percent of the region’s transit dollars but provide only 6 percent of the service. Even when the service is of a similar type — say, long-distance express routes — the suburban opt-outs’ subsidy is higher per passenger. In the case of SouthWest, it’s nearly twice as high — $4.02 compared to $2.38 for Metro Transit express routes.

Including all types of service, taxpayers are subsidizing the opt-outs at $4.02 per passenger compared to $2.26 for Metro Transit. And SouthWest is costing more, coming in at $5.17.

The question is, why? The Legislative Auditor is looking for an answer and expects to issue a report by the end of the year.

It’s not that the metro area has a terribly wasteful bus system. On the contrary, many regions would envy its ability to draw one-third of operating revenues from fares. Still, the Twin Cities is not immune from the critical operating shortfalls that beset transit operators nationwide, due mainly to falling tax revenues. And it’s the source of those revenues that begin to explain this region’s disparity problem.

Major service cuts in the late 1970s drove a number of suburban communities to break away from the metro transit compact and start separate bus lines. These “opt-outs” relied on property tax levies for bus operations, as did Metro Transit’s predecessor agency.

But that changed in 2001 when the Legislature shifted funding to the Motor Vehicle Sales Tax (MVST). That was a bad idea. First came the irony: transit revenue growth would depend on the increased sales of competing vehicles — cars. Then came declining car sales and slumping MVST revenues, which have failed every year since 2004 to meet projections.

State Rep. Alice Hausman
State Rep. Alice Hausman

State Rep. Alice Hausman, DFL-St. Paul, said another mistake was the Legislature’s failure to dissolve the opt-outs when the funding source changed. Not only did the suburban lines survive, they used their political clout to aggressively negotiate an advantageous slice of the new metro-wide revenue pie. Hausman accuses SouthWest and MVTA, especially, of “empire building” — adding staff, facilities and equipment that duplicated Metro Transit’s efforts. The result, she said, has been a lack of efficiency and equity as well as a mishmash of transit governance that she hopes the Legislative Auditor can help untangle.

Politics also played a part. Conservative forces normally hostile to government subsidies have been strangely silent as Republican areas in the southern and western suburbs benefit disproportionally.

SouthWest Transit’s CEO, Len Simich, responded to the criticism recently in a lengthy piece published in some of the Star Tribune’s zoned editions.

While not disputing the subsidy-per-passenger statistics, Simich said the numbers fail to account for some very long commuter routes that push up SouthWest’s costs. He said also that the amenities his agency offers have attracted riders, and that that’s a good investment for the region.

Hausman insists her motives are not to harm the suburban lines but to “lift all boats” — or, perhaps, all buses. The issue of racial inequity has not arisen, she said, responding to a question. And she will not raise it, she added. But one Metro Transit official called the situation “a civil rights lawsuit waiting to happen.”

Transit provider

Type of service

Passengers

Subsidy per passenger

Cost per revenue hour

Fare recovery

Metro Transit

Express

8,304,000

$2.38

$152.88

46.1%

Metro Transit

Total

73,392,000

$2.26

$110.85

30.4%

Suburban

opt-outs

Express

4,184,000

$2.71

$173.56

46.2%

Suburban

Opt-outs

Total

5,169,700

$402

$156.19

34.1%

     SouthWest

Express

   992,000

$4.02

$186.39

36.7%

     SouthWest

Total

1,147,000

$5.17

$178.03

30.3%

     MVTA 

Express

1,865,000

$2.16

$167.74

51.7%

     MVTA

Total

2,596,000

$3.96

$146.73

32.7%

Source: Metropolitan Council, 2008 figures

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Comments (20)

  1. Submitted by Joseph Skar on 09/03/2010 - 10:09 am.

    What percentage of the MVST do the suburban opt-out contribute? You can make a fare, ha-ha, assessment of subsidy allocation if you don’t know who is funding the subsidy in the first place.

  2. Submitted by dan buechler on 09/03/2010 - 11:26 am.

    Good article. Would be interesting to have more data on the suburban bus commuter demographic and income etc.

  3. Submitted by Joseph Skar on 09/03/2010 - 11:55 am.

    Why would demographic and income be relevant? If the suburbs are paying a much greater portion of the MVST than the core cities they should receive a greater allocation of the proceeds. Until the funding allocation is determined, by city, this story is a witch hunt.

  4. Submitted by Fritz Dahmus on 09/03/2010 - 11:56 am.

    Great article! It’s obvious Southwest is racist and should be prosecuted! The suburbanites have struck again.

  5. Submitted by donald maxwell on 09/03/2010 - 12:18 pm.

    This is just one example of class warfare against the lower classes that permeates our system.

    Another transportation example is “MNPass”; the conversion of “sane lanes”, the failed experiment that did not expand ride sharing and reduce automobile use, into fast lanes for those able to pony up. The slow lanes are thus left for those without the money to buy the equipment and pay the tolls.

    The egregious example that I am most familiar with is the approach to the I-94 tunnel from I-394. (Why a superhighway from Wayzata to downtown Minneapolis is “interstate” is beyond my ken.) The wait and delay for eastbound traffic is just galling, and the most considerate drivers, those who get into the right lane early, are the ones who wait longest to get into the tunnel.

    There is a partial solution to this particular bit of failing infrastructure. The toll ramp from 394 to tunnel has a larger radius and is capable of handling more traffic than the short-radius regular lane. The cost of turning the toll ramp into the main lane would be trivial compared to the billion dollars for another tunnel lane.

    The sane lanes didn’t work; it’s time to convert them to general use, not build more. Isn’t building them as “HOV” lanes, knowing they will be underutilized, and then tolling them, something of a fraud?

    BTW, isn’t it a French company that gets a cut of the tolls? Are they also in on the new toll lanes on I-35W? Who did that bit of privatization?

  6. Submitted by Gregory Lang on 09/03/2010 - 12:44 pm.

    First off, kudos to the MTC for handling “Super Thursday” without significant problems. Just to review we had the State Fair, Vikings, Twins and the musical “Wicked” at the same time. The MTC got a bit lucky when the Twins went into overtime but still a very good job! (Hint to Minnpost: Someone might want to do a follow up on this because the MTC system was, in theior own words “stretched to the limit” and performed well with the biggest problem being a light rail set losing power.

    Anyway, as the original article said, 99% of the people in the opt out areas have other transportation options. Suppose the MTC had service in these areas and nobody used it?

    Myron Orfield and his ilk want to redistribute “the poor” throughout the metro area. This gets difficult without public transportation. If push comes to shove the opt out burbs might choose no subsidized bus service. These burbs already think that “subsidized housing” is a dirty word.

  7. Submitted by Theo Kozel on 09/03/2010 - 12:53 pm.

    “Politics also played a part. Conservative forces normally hostile to government subsidies have been strangely silent as Republican areas in the southern and western suburbs benefit disproportionally.”

    AKA, nothing new under the sun.

  8. Submitted by Thomas Swift on 09/03/2010 - 03:27 pm.

    “Cityscape is supported in part by a grant from the Central Corridor Funders Collaborative.”

    Sheesh, featuring such non-biased stories and coverage, I’d never have guessed that in a million years.

  9. Submitted by Richard Schulze on 09/04/2010 - 06:48 am.

    The most important thing that a liberal needs to know in talking to conservatives about public transportation is not to use liberal arguments. You can’t argue for transit on the basis that the poor need it. Conservatives aren’t particularly interested in that.

    On the other hand, when you start talking about things like promoting and shaping economic development and redevelopment, that’s a big interest to conservatives. When you talk about offering transit that is of a quality that conservatives would actually want to use–which usually means rail transportation–they’re interested, because conservatives are just as tired as everybody else of sitting stuck in traffic.

  10. Submitted by Paul Udstrand on 09/05/2010 - 11:24 am.

    //On the other hand, when you start talking about things like promoting and shaping economic development and redevelopment, that’s a big interest to conservatives.

    Depends which conservatives your talking to. Today’s Republicans by and large are impervious to any rational argument that conflicts with their ideology. They’re not interested in shaping economic development because they think it shapes itself. They see public planning as a dangerous government intrusion into the free market. By and large there simply is not point in arguing with these conservatives in the first place.

    I agree that arguing for the “poor” is needlessly restricted argument however. Forget whether or not it’s conservatives are interested in the poor, the fact is decent public transportation systems don’t just serve the poor to begin with. Us any decent public transportation in the world and you’ll see everyone from executives to cleaning staff sitting in the seats every day. On some trains, in some places, you even see Vice Presidents.

  11. Submitted by Paul Udstrand on 09/05/2010 - 11:41 am.

    //If the suburbs are paying a much greater portion of the MVST than the core cities they should receive a greater allocation of the proceeds.

    Sooooo if if the people who live in the seven cities that opted out of Metro Transit bought more cars than everyone else in the entire metro area, they should be getting more money. O.K. Well, the population of the seven cities that have opted out is about 325,000 out of a metro population of over 3 million. You really think those guys are buying that many cars Joseph? Sure let’s roll the dice and see how much money the opt out’s should be getting based on car purchases instead of transit needs- and lets make sure we adjust the results properly. I know we got a lot of car dealers here in St. Louis Park and I don’t think they’re selling to people from Apple Valley.

  12. Submitted by dan buechler on 09/05/2010 - 03:45 pm.

    Thanks RS in my post that Joe Skar so overreacted to I was just asking for more info. I was trying to get beyond the urban vs. suburban labels and I think with our electronic resources now we can tease out finer distinctions.

  13. Submitted by dan buechler on 09/05/2010 - 03:49 pm.

    Thats the thing I kinda hate about 100% liberals or conservatives. I like something more like the new baseball metrics going beyond batting percentage, RBI etc. and getting to things more like slugging percentage etc. How a journalist can use this while still having some journalistic brevity may require new footnotes or linkages (but not too many).

  14. Submitted by Richard Schulze on 09/05/2010 - 04:22 pm.

    Good point regarding automobiles Paul.

    The current dominance of automobiles is due to massive subsidization by government which through most of the twentieth century competed with privately owned, privately operated railways including streetcar systems that had to pay taxes. Every conservative understands very quickly what happens when you tax one mode and subsidize the other. The taxed mode disappears and the subsidized mode becomes dominant. Nothing about our current imbalance in transportation is a free market outcome. Not in the slightest.

    The notion that the gas tax covers all highway expenses is a notion that should make anyone in state government laugh. The highways require enormous support, local state and federal, that goes well beyond what gas taxes bring in. So it’s not a question of a subsidized mode versus an unsubsidized mode.

    What should be done and what should have been done in the seventies is that the gas tax should be designed so that the price of gas goes up a predictable amount every year.

  15. Submitted by dan buechler on 09/06/2010 - 07:31 am.

    How would that work with a fungible commodity?

  16. Submitted by Janet Dalgleish on 09/06/2010 - 09:18 am.

    Of the subsidy per passenger, how much of the cost is from Met Council and how much is from the community tax base? I had always thought that the community tax base was funding the deluxe buses. Actually from my perspective, difference that I value most is the high quality drivers with SW. SW drivers are extreme courteous and announce each stop like it was the first stop of their day. I frequently take the SW bus from downtown to the University of MN.

  17. Submitted by Hénock Gugsa on 09/06/2010 - 10:11 am.

    “Conservative forces normally hostile to government subsidies have been strangely silent …”

    Oh, Smurf! They are just being preservatives as usual!!!

  18. Submitted by Joseph Skar on 09/06/2010 - 06:22 pm.

    Wow… Were to start. First, if anyone would have looked up the populations of the opt-out cities, Plymouth, Maple Grove, Eden Prairie, Chaska, Apple Valley, Burnsville, Eagan, Rosemount, Savage, Shakopee, Chanhassen, and Victoria you would get a conservative estimate of approx 500,000 people, but not everyone can fail at Google. Second the total subsidy was only 21m to the opt-outs. That is only 11.1% of the total 186m in total subsidy paid. Compared to a population percentage of 14.2% (500k/3.5m), it would appear they are already getting the short end of the funding allocation. That is without given proper consideration average purchase price and purchase frequency. If you were to consider frequency and price, the margin would only widen given that the aforementioned suburbs would be above average in the Met Council’s jurisdiction, based solely on income levels. So we will roll the dice. Maybe other posters could provide an actual statistic to support their opinions rather than understating populations and assuming that nobody drives outside of a two mile radius to purchase a automobile.

  19. Submitted by Paul Udstrand on 09/06/2010 - 09:29 pm.

    //Wow… Were to start. First, if anyone would have looked up the populations of the opt-out cities, Plymouth, Maple Grove, Eden Prairie, Chaska, Apple Valley, Burnsville, Eagan, Rosemount, Savage, Shakopee, Chanhassen, and Victoria you would get a conservative estimate of approx 500,000

    OK, 500,000 instead of 325,00. The metro population is 3.2 million. You think those 500,000 are buying all the cars Joeseph? Your the one saying the one’s paying the money should be getting it back, it’s not about population. Choose your argument and stick to it Joseph.

  20. Submitted by Pat Brink on 09/15/2010 - 03:13 pm.

    I was really disappointed with this story. MinnPost generally does a much better job in its reporting.
    Headline – Fancy Buses? No, different buses that cost less than what Metro Transit pays for the articulated buses.
    Major Service Cuts in the 70s – And when the funding came from property taxes it was VERY clear that the suburbs were not getting anywhere near the amount of service that they were paying for. That’s why the Opt-outs came into existence.
    Len Simich’s “Lengthy piece” – apparently Steve Berg either didn’t read the response or didn’t understand it. The very first point raised was:
    Missing from the article are the questions: Are all costs being accounted for? Is the same method of accounting being used by all?
    Finally, the figures used in this story and the stories in the Star Trib and Pioneer Press are from the Metropolitan Council…the group that operates Metro Transit. Is the information provided accurate? Are all costs actually being accounted for? Is the same accounting method used by Metro Transit?
    This article really is a rehash of the Star Tribune’s article (as was the Pioneer Press article.)
    Please do a much more in-depth look at this issue and don’t rely on information provided by one side…Reach out to get real answers that tell the full story.

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