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Peter Bell: Fuel prices create a critical situation for Metro Transit

There are few options remaining other than raising prices or cutting service.

By PETER BELL

Last update: July 12, 2008 - 11:33 PM

Three years ago, the price of gasoline in Minnesota hit $2 a gallon for the first time -- and most of us were shocked. Now we long for the good old days when gasoline was just two bucks a gallon.

The skyrocketing cost of oil has been a mixed blessing for transit. On the positive side, it has helped boost Metro Transit ridership to the highest levels in more than 25 years.

But the fuel costs of Metro Transit and suburban providers have more than doubled since 2005, the last time transit fares were increased. And we buy a lot of fuel. Metro Transit uses nearly 8 million gallons of diesel fuel per year.

Labor represents 77 percent of our operating budget, and fuel consumes 9 percent. This doesn't leave a lot of places to cut as we attempt to erase a projected $15 million budget shortfall for 2009. That's one reason the Metropolitan Council is holding public hearings on a proposed fare increase.

The proposal calls for a 25-cent increase beginning Oct. 1 on all regular-route service, and a 50-cent increase on Metro Mobility service for people with disabilities. In addition, the morning rush-hour, and rush-hour fares, would start at 5:30 a.m. instead of 6 a.m.

If approved, new cash fares would be $1.75, $2.25 or $3, depending on the type of service and time of day. New Metro Mobility fares would be $4 during weekday rush hours and $3 at other times.

A possible second fare increase in 2009, at a date to be determined, could add up to an additional 50 cents to the cost of a ride.

The initial fare increase -- which would generate about $7 million a year -- won't solve all of transit's budgetary challenges. We could face a revenue shortfall of $30 million to $40 million a year in 2010 and 2011.

The primary reason is that revenues from the Motor Vehicle Sales Tax (MVST) -- one of the major funding sources for transit -- continue to fall short of projections. For understandable economic reasons, many people simply aren't buying cars.

In 2001, the Minnesota Legislature eliminated the regional property tax levy for transit and substituted MVST. And in 2006, the voters approved a constitutional change that -- when fully implemented -- guarantees transit a larger percentage of MVST revenues. So far, however, this has proven to be a larger slice of a diminishing pie.

The Metropolitan Council does not want to cut transit service. Indeed, our long-range transit vision calls for expanding service and doubling ridership by 2030. We are off to a good start with the opening of our first light-rail transit (LRT) line in the Hiawatha corridor, the construction of our first commuter rail line in the Northstar corridor and the planning for our second LRT line in the Central corridor.

Even with our proposed fare increase, riders will pay only about 30 percent of transit operating costs. The other 70 percent will come from the taxpayers -- in the form of MVST revenues and legislative appropriations.

Over the last four years, the taxpayers have contributed additional public resources to help fund transit service. It seems reasonable to ask transit users to pay a little more as well.

Peter Bell is chair of the Metropolitan Council, which operates Metro Transit and Metro Mobility.

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