Maryland lawmakers have voted to scrap a state requirement that bus and rail systems cover at least 35 percent of their operating costs through ticket revenue.
Supporters of the change say the “farebox recovery ratio” mandate, which has been in place since at least the 1990s, discouraged the state from investing in transit systems to make them more appealing and, in turn, increase revenue. It particularly hurts bus and light-rail service in Baltimore, supporters said.
It’s unclear whether Maryland Gov. Larry Hogan (R) will sign the bill, which has passed both chambers of the General Assembly.
Despite the requirement, most state transit systems don’t cover 35 percent of their operating costs. Fares for Baltimore-area buses, light-rail and the city’s subway system cover about 28 percent of their cost. The MARC commuter rail system, which covered 44 percent of its costs in fiscal 2016, is the only one that meets the requirement, according to a state report.
The 35 percent mandate was designed to encourage the state to establish reasonable fares and contain expenses. However, those who favored abolishing it said it ended up discouraging the Maryland Transit Administration (MTA) from expanding service, increasing frequency or making trains and buses more reliable — the kinds of improvements that would cost money but ultimately increase ridership and, in turn, fare revenue.
“It’s a disincentive for MTA to do anything that would increase the expense side of the ledger even if it would grow ridership and revenue over time,” said Brian O’Malley, president of the Central Maryland Transportation Alliance, which supported the bill. “It doesn’t guarantee MTA will do anything [to improve transit], but at least it gets a barrier out of the way.”
O’Malley noted that all public transit systems require government subsidies.
“It’s not profitable,” he said of transit, “but it’s essential for an economically competitive region and essential for growing an economy without choking on your own transit congestion.”
The legislation originally included five performance standards in lieu of the farebox recovery requirement. However, committees in both the House and Senate removed the performance standards, which the MTA had opposed being written into state law.