UTA targeting new revenue generating fare plan
Growing agency wants to reduce dependence on sales tax dollars
Kristin Murphy, Deseret News
SALT LAKE CITY — Keeping trains and buses running is not cheap and the recent economic downturn has not made it any easier on the state's largest mass transit agency.
The Utah Transit Authority is now working to figure out ways to get more cash to support its growing mass transit system.
When the recession struck, the agency was among the numerous entities that lost a key source of funding as receipts for sales tax dollars fell significantly. According to UTA spokesman Gerry Carpenter, the agency lost millions in expected revenue as consumer spending on big ticket items dwindled.
"Because our revenue is so heavily dependent upon sales tax, when people stopped buying luxury items our revenues dramatically decreased," he said.
Carpenter said UTA's pre-recession revenue projections were about $90 million more than current projections. He said other transit agencies across the country are facing similar challenges.
"We had to cut service and tighten our belts across the board," he said. Ultimately, the agency hopes to increase farebox revenues through increased ridership — developing a greater share of overall revenue.
In 2010, UTA generated $35.2 million from fares of 30 million riders — accounting for a 20 percent ratio of farebox recovery. Farebox recovery is calculated by dividing passenger revenue by net operating expenses. The national average for mass transit systems is approximately 30 percent.
Carpenter said UTA hopes to improve the agency's recovery ratio to near the nationwide average by 2020. Currently, projected revenues for 2012 are just under $44 million for almost 43 million riders with a farebox recovery of 22 percent.
He said there are three primary concerns for the future viability of Utah's transit system.
"(Number) one is how to increase ridership … to maximize the community's investment in mass transit," Carpenter said. "The best way to get that is to get more people to ride."
The second priority is ensuring the financial sustainability of the system, while the third concern is increasing equity among system users.
Carpenter said the equity issue could be addressed through a distance-based fare system — one of the ideas under preliminary consideration by the UTA board.
No decisions have been at this time, and no proposals or plans have been developed, said UTA general manager Michael Allegra.
"UTA needs to finish studying the models and begin to develop distance-based fare scenarios that can be vetted with our partners and the public," he wrote in a statement. "Before any decisions will be made, there will be multiple opportunities for the public to provide input and help shape the future of UTA's fare programs."
Early studies suggest a distance-based fares system has great potential to provide greater equity for our riders, he said.
Under such a system, customers would pay for what they actually use rather than the current model in which a rider pays a $2.35 local fare whether traveling two blocks or 20 miles.
Carpenter said UTA also believes a distance-based fare system has the potential to increase ridership by encouraging riders to take more short trips.
Allegra said UTA's enhanced electronic fare system could be programmed to provide appropriate discounts or rewards for seniors, low-income and frequent riders. Traditional monthly passes would likely be replaced by a more flexible fare product if the distance-based model were ever adopted, he added.
He said UTA plans to maintain its partnership programs with educational and corporate institutions, such as the University of Utah and The Church of Jesus Christ of Latter-day Saints — two of the agency's top institutional revenue generators, accounting for more that 12 percent of UTA fares annually.
"These partnerships are mutually beneficial, and we expect them to continue into the foreseeable future," Allegra said. "Thousands of students and employees of these partners benefit daily from riding transit, enjoying financial savings and more efficient use of their commuting time. The community benefits from better air quality and reduced traffic congestion."
He acknowledged that the direct cost to a student or employee is determined by each partner, not by UTA.
"Many choose to subsidize the cost of the passes, providing them to employees or students for no out-of-pocket expense or for a nominal amount," he said. "UTA will continue to encourage this practice as we work to enhance our relationship with our partners."
With today's technology, UTA has an opportunity to develop a fare system that will provide greater options and possibilities for all of our riders, Allegra said.
The next few months will be spent developing potential fare concepts that we will share with our riders and the general public at the earliest opportunity, he said.
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