Explainer: Understanding the costs (and benefits) of making public transportation free

Zohran Mamdani rode to victory in New York City’s mayoral election last month on a campaign centered largely around the challenges of affordability in one of the nation’s most expensive cities. Part of his message to voters included a call to eliminate fares on the city’s buses, most of which are operated by the Metropolitan Transportation Authority (MTA), a state-run agency that also manages the city’s sprawling subway system and regional commuter rail networks and is not under the control of City Hall. 

To understand why some local governments are turning to a fare-free model for their bus networks, and what implications that may have on public transportation agency budgets, we spoke with Samantha Silverberg MPP 2012, Visiting Fellow at the Taubman Center for State and Local Government. Samantha is the former Special Assistant to the President for Transportation and Infrastructure Policy and Deputy Assistant for Infrastructure Implementation in the Biden White House, as well as the former Deputy Chief Administrative Officer for the Massachusetts Bay Transportation Authority (MBTA). Samantha is also a native New Yorker who grew up riding the bus and subway to school. 

Q: Mayor-Elect Zohran Mamdani’s campaign focused largely on cost-of-living issues in New York, including offering fast and free buses. How do these two facets work together? What other arguments have been made by the campaign and proponents of eliminating fares on city buses?
First, it’s important to acknowledge that transportation is the second highest household cost after housing. U.S. Department of Transportation (USDOT) data shows that nationwide, lower income households spend up to 30 percent of their after-tax income on transportation. In New York City, transportation makes up around 14 percent of household spending, which is lower than the national average largely because of the higher utilization of public transit in the area. Even so, the average household there is spending more than $12,000 per year on transportation, which can be a significant cost when budgets are being pinched by rising costs in other areas.  

So, a focus on transportation is a smart element of any affordability agenda, and since buses are more heavily used by lower-income residents, this is a logical place to start.  I think it’s important to parse Mayor-Elect Mamdani’s promise of fast, fare-free buses. The “fast” part would require more bus priority infrastructure so transit buses can move through the city unimpeded by other traffic. The "fare-free” part would eliminate fares.  Combined, these two changes could improve service, lower costs, and potentially increase ridership. The Mamdani campaign has listed a number of benefits, including faster trips, improved safety for passengers and riders, fewer crashes, and reduced emissions, and pointed to a study that estimated $1.5 billion in potential economic benefits.   

Q: What are some of the challenges in implementing Mamdani’s vision for fast and free buses? What examples can be learned from other transit authorities seeking to tackle the affordability issue? 
The primary challenge for implementing this vision is that the MTA is a state agency not under the mayor’s control, and Governor Hochul has already raised concerns about the loss of revenue. Fare revenue from the bus system accounts for about $600 million per year and helps fund things like operator salaries, maintenance costs, and debt service on bonding for capital projects. While this is a relatively small amount in the overall MTA budget, those resources would need to be backfilled with an alternative revenue source to avoid degradation in service.  All transit agencies, including the MTA, are going through a very difficult financial moment as post-COVID-19 ridership and revenue have still not rebounded, and federal aid is drying up. Some transit agencies have had to cut service or turn to other one-time revenue sources and are still not out of the woods. So finding new money for this initiative could be difficult.

The mayor could potentially use city resources to fund a fare-free pilot, similar to the program in Boston where Mayor Wu is reimbursing the MBTA for four years of fare-free service for three bus routes in high-ridership, lower-income corridors. The Boston program, a previous pilot in New York, and systemwide fare-free policies in Kansas City, Richmond, and Albuquerque have yielded mixed results. A number of other jurisdictions also waived fares during and after COVID as a way to entice riders back to the transit. Fare-free policies certainly reduce costs for those who take transit, regardless of income level, but it is unclear if these policies attract more ridership.  

Also, we know from surveys and studies that most riders value fast, frequent, and reliable transit service. This is an important consideration in a resource constrained environment, where additional dollars toward faster service may yield better outcomes for low-income New Yorkers than using those same dollars for eliminating fares on status-quo service. 

Q: What are some other ways the mayor-elect can help lower costs of transportation for low-income families? 
A lot of transit systems – including MTA – have low-income fare programs to provide reduced or free service to those who qualify. One study found that only 33% of eligible New Yorkers have signed up for the MTA Fair Fares program, which offers a 50% discount on rides.  Across the country, the Urban Institute found that most income-based discount fare programs have participation rates below 30 percent. One approach to improving participation in New York City could be to make it easier – or even seamless – for low-income city residents to qualify for this program.  

For example, here in Boston, the MBTA introduced an income-eligible reduced fares program that allows a qualified resident to sign up in less than five minutes. The back end connects the MBTA system with the state’s databases for a number of income-based assistance programs (e.g. SNAP, Medicaid), making it seamless for applicants.  Similarly, in Philadelphia the Zero Fare program uses an autoenrollment model that leverages contact information already on file with other benefit programs and delivers cards directly to the applicants home address or to a trusted community partner. This model has resulted in a participation rate over 60 percent, compared to other programs hovering around 30 percent.  

Q: Outside of lowering costs, are there other benefits to eliminating fares?
Yes. Eliminating on-board fare collection can speed up buses by reducing “dwell time”, or the time it takes to load and unload passengers. The campaign pointed to a study that found time savings of 12 percent from all-door boarding without fare collection, which translates to millions of hours saved.

There are also potential benefits related to safety and security. Assaults on transit operators, especially bus drivers, have tripled in the last 15 years. When bus operators don’t need to enforce fare collection, there are fewer opportunities for altercations between drivers and passengers.  

If eliminating fares entices more people to ride the bus rather than driving, taking a cab, or calling a rideshare, then there are benefits to traffic congestion, carbon emissions, and air pollution.  

In addition to enabling essential trips to work, school, and healthcare, I’ll also say, from personal experience as a city kid with a student MetroCard, having low-cost or no-cost transit can open up opportunities for experiences and adventures all over the city.