Free bus transit comes at a cost, Fresno officials say. Will the community support it?

Before the pandemic, Fresno’s bus system, FAX, had made huge strides in ridership, even as other transit agencies were struggling.

In the past five years, the agency doubled-down on improvements to service, with bus rapid transit on Blackstone/Kings Canyon, 15-minute service on Shaw and Cedar avenues, expanded night and weekend service. A new route is planned along Herndon Avenue, where many medical clinics are concentrated.

As a result, FAX clocked nearly 1 million new rides between 2017 and 2019.

Fresno city officials are questioning whether a new proposal to make transit free could jeopardize these gains.

City Councilmember Tyler Maxwell and co-sponsors Councilmembers Esmeralda Soria and Nelson Esparza rolled out a free bus proposal this month. The idea is bold: a universal free fare for every rider. No income levels or age cutoffs, no paperwork to fill out. Just hop on the bus and go where you’d like.

And with 25% of Fresnans living below the poverty level, the proposal could help a lot of people.

The current proposal directs FAX to use COVID-19 relief funding to cover costs lost from fare collection in the interim, until a more permanent solution can be developed. The resolution also restricts FAX from reducing service or cutting bus driver salaries and benefits, without city council approval. The council will deliberate the proposal at their meeting on Feb. 18.

City officials are worried that a future without fare revenue could end up costing FAX more than a third of its total operating budget, inevitably leading to deep cuts in service as well as layoffs of personnel who are essential to its success.

Show me the money

FAX fares brought $6.5 million annually in revenue in 2018 and 2019, including $1 million in discounted fares from arrangements with the Fresno County Department of Social Services, Fresno Unified School District, State Center Community College District, Fresno State and a handful of other local agencies.

(FAX charges $1.25 per bus ride, while seniors, veterans/military service members, and people with disabilities ride for 60 cents, with a valid ID. A monthly pass costs $48.)

Income from fares represents about 10-14% of the agency’s total operating budget; the rest comes from a combination of federal and state grants, and revenue from Measure C (the local sales tax for transportation).

Eliminating fare revenue can create a cascading effect, if a substitute source of funding isn’t found.

“It’s kind of like a ball of yarn,” Belinda Haener, an operations manager with FAX, said about the agency’s operating budget. “You can’t just pull one thread and expect it to all stay together. It’s all intertwined.”

The agency’s grants from the state come with a catch: FAX must demonstrate the ability to match 20% of the grant amount with local funds. So the revenue from fares plays an important role in meeting the match — along with Measure C transit funds, which cover the difference from whatever fares can’t pay for. The state has temporarily suspended the match requirement through June 30th.

“There’s not enough Measure C transit funds to make up the difference,” said Greg Barfield, assistant city manager who was former director of the city’s transportation department. FAX anticipates receiving a total of $10 million in Measure C transit funding this year — already pledged toward current service.

After COVID-19 relief funding dries up, unless FAX can find an alternative source of local money — around $5 million to $6 million per year — to match the state grants, it will be losing close to $30 million to $40 million per year, Barfield said.

It is difficult for transit operations to find grant revenue because many funders award money for capital projects — like new buses, trains, tracks, or shelters — but not to keep the buses running. Even some operating grants request that an agency focus on developing “new” service, rather than subsidizing existing routes. (Many city managers like to jest, “You can’t cut a ribbon on maintenance!”)

Mike Leonardo, executive director of the Fresno County Transportation Authority, said that Measure C includes other sources of funding that could be spent on transit — namely, the new technology, local flex, and transit-oriented development programs — but only for capital improvements, not operations.

Maxwell said he is optimistic that whatever revenue is lost from fares can be made up from a combination of savings from eliminating costs associated with fare collection and police patrols for FAX. He’s also depending on public agencies, who currently buy discounted passes, to continue and possibly grow their financial support.

According to Barfield, fare collection costs can vary, but generally come around $500,000 annually — not including the costs to maintain the ticket vending machines along the Blackstone/Kings Canyon bus rapid transit line. Selling those machines — something Maxwell would like to see — could possibly force the city to refund some of the federal funds used to purchase them, potentially jeopardizing the agency’s standing with the Federal Transit Administration.

So how are other cities making it work, exactly?

Small agencies that have been able to go zero-fare usually have far less reliance on fare revenue to support their agencies’ operations, according to a 2019 report from Transit Center, a transportation think tank.

Clovis and Visalia went fare-free in 2020, amidst the pandemic, but these cities have far smaller transit systems than Fresno. Visalia reinstated fares earlier this month, according to its website.

Kansas City’s zero-fare proposal was rolled out with a lot of national press, but the funding to replace fare revenues hasn’t come through yet, according to Ben Fried of Transit Center, the New York-based think tank.

Success in Montana

There are some success stories, like the Missoula, Montana, transit system that went fare-free in 2015. According to its website, service levels have stayed strong, and ridership has grown by more than 70%. Missoula is home to the University of Montana.

Michelle Poyourow, a consultant with Jarett Walker and Associates, a Portland-based transit firm that has worked with the Missoula Urban Transit District, said the agency’s success can be attributed to strong relationships with several key partners in the region who were willing to financially support the agency.

The list of partners is long: health care agencies, credit unions and banks, the university and local school system, the housing authority, business associations, even local news.

Missoula voters also approved a property tax in November of 2020 to support and expand their free transit system.

“You really have to read your relationship with the community, and ask: will going fare-free build community support that can help you cross over into financial support in the long-run?” Poyourow said.

Maxwell is optimistic the proposal will generate a lot of community support, but he’s also aware that partnerships with local institutions, while critical, need to be bolstered by the voters.

“We’re going to pull the trigger on this when we feel comfortable that we have enough money to pull this off for five years,” he said.

Why five years? Last week, a committee met to begin negotiations on what proposal to put forward to the voters on the November 2022 ballot for the next authorization of Measure C. Even if it passes, it wouldn’t go into effect until 2027. The current Measure C tax expires in 2026.

Impacts on ridership

Maxwell and his co-sponsors have touted zero-fare as an opportunity to increase ridership in Fresno — getting more people out of their cars and improving air quality.

Transit Center produced a 2019 study showing ridership increases of about 20% in cities that have gone zero-fare. But Ben Fried, communications director for Transit Center, said cities lose the opportunity to increase ridership if going zero-fare results in service cuts.

“Making the system fare free is definitely going to remove some barriers. But if the bus is coming once an hour, a lot of people aren’t going to choose that option with a fare free system,” he said. “In American cities, most poor people don’t opt for transit because the service is so sparse and inconvenient.”

That has certainly been the case in Fresno, where only 1.8% of all commuters take public transportation to get to work; the majority of transit commuters face more than 45 minutes in commute times — double the time for those who drive — according to 2018 census data.

Barfield said that ridership has grown in Fresno because FAX is listening to its customers, who have prioritized reliability, frequency and trip time in a 2018 customer survey by the agency.

The first cuts would probably hit night and weekend service, according to Barfield. Students and lower-wage service workers tend to use this service the most.

Some experts are concerned that going fare-free, even if service cuts don’t immediately occur, could create some unintended consequences.

If riders flock to free service, the buses could experience overcrowding. Without fare revenue — the most flexible source of income the agency has — FAX would have less ability to increase the amount of buses and drivers available during high-demand hours to alleviate crowding on the system, Poyourow, the transit consultant, explained.

“Crowding is a good problem — but an expensive problem to have,” she said.

“If you limit fares, it becomes harder to do expansions if you don’t have revenue coming in. Every dollar doesn’t go as far if you don’t have that revenue,” Fried said. And transit expansion “is the most cost-effective and equitable way to improve the transportation system now.”

There’s also the question of safety. While eliminating the $2 million spent annually for Fresno police officers to patrol FAX could provide some cost savings, other cities have found a continued need for security, even if only to resolve conflicts. Federal grants require that transit agencies spend 1% of their operations budget on safety, as well.

Another problem that arose in Missoula included more people wanting to hang out on the bus all day. “They definitely had to increase their management of people on the bus,” Poyourow said.

But safety doesn’t necessarily mean armed police officers.

BART, in the Bay Area, is experimenting with unarmed ambassadors, who are trained in de-escalation and anti-racial bias tactics. But they cost money, as well. Maxwell acknowledged that some personnel trained in mental health may be needed.

Will the general fund back up transit?

The city could dip into its $400 million general fund to avoid service cuts, if it came to that. City officials call FAX an “enterprise department” — meaning that it relies on user fees and grants to sustain itself, rather than local property tax revenue, which goes to the general fund. The department would likely find itself in a crossfire against a variety of special interests vying for a larger piece of the general fund — police, fire, parks, community organizations and residential and industrial developers.

It’s an unlikely outcome, given the uncertainty of COVID-19 on the city’s financial situation. With the shifting dynamics and priorities of the City Council, it’s not off the table.

Regardless, Maxwell is moving full steam ahead and has shown no interest in what other large transit systems like Seattle, Pittsburgh, or Los Angeles are attempting — to make zero-fare possible for students and low-income people while eliminating their need to go through bureaucratic hoops to access a pass.

“I was elected to make hard decisions,” Maxwell said. “It needs to be universal, and it needs to be immediate.”