Fare Free Buses Memo | Cameron Dougal

Fall 2023

Background: Boston Mayor Michelle Wu, using the power of her position as mayor of the state’s capital city, persuaded the MBTA to initiate a two-year pilot project for fare-free unlinked travel on three of its bus routes within the city of Boston. This pilot will expire in March 2024.

Assignment: You have been hired by the city as a transit planner and charged with providing the Mayor and her Chief of Staff with a plan outlining what should happen when the pilot expires. Write a thoughtful and informed memo to the Mayor offering the pathway on free bus transit in Boston (and possibly the region) going forward.

To: Mayor Michelle Wu and Chief of Staff Tiffany Chu
From: Cameron Dougal, Transit Planner, City of Boston
Date: November 6, 2023
Subject: Pathways towards a fare-free MBTA bus system

Executive Summary

The City of Boston Fare Free Program should be expanded to every route in the MBTA system to maximize impact and ensure political support from state stakeholders. Evidence from the three-route pilot and research from initiatives in the Commonwealth, across the country, and internationally have shown that fare free systems can provide meaningful benefits to low-income residents and raise ridership beyond pre-pandemic levels. Equity and economic benefits should be the major selling points, not the reduction of car trips. Without fares, ridership will rise, meaning service increases should be bundled with any funding strategy to maintain levels of service. The Fair Share Amendment is the most viable major funding source, though other possible sources are explored. To garner political momentum and utilize state funding resources, a statewide elimination of bus fares across all fifteen state Regional Transit Authorities (RTAs) should also be considered.

The Data: A Fare-Free System Advances Equity and Ridership (But Not Climate)

Evidence from the Fare Free Program Mid Program Report [1] demonstrates that the fare-free pilot on routes 23, 28, and 29 has resulted in meaningful benefits for Boston’s transit-critical residents. In October 2022, 42% of passengers reported saving money, with 26% saving more than $20. Over half of the riders on these lines are low-income, with many relying on bus service as their primary mode of transportation. When surveyed, riders reported being able to reallocate the fare money to buy food and build up their household savings for long-term goals. However, unless the pilot is expanded to the entire MBTA bus system or beyond, financial benefits will be unlikely to reach the 58% of respondents who reported not saving money because they already had a 7-day or monthly pass or had to transfer to a paid bus route or subway line.

The Mid Program Report also highlighted the impacts of the pilot on ridership, which has increased on the three routes faster than the rest of the MBTA bus system. With all-door boarding, travel time on the three routes has remained constant (or has reduced slightly) despite increased ridership, and bus drivers have reported fewer conflicts with passengers, allowing drivers to “serve as better ambassadors for the system,” address disruptful passengers, and “spend more time answering passengers’ questions and focusing on safe bus operation” [2]. Variation in travel time has also decreased, improving the reliability of the system.

These findings line up with broader research on the impact of fare elimination policies on equity and ridership. Transit fares are generally considered regressive, meaning “they claim a larger share of income from people with low- and middle-incomes than from higher-income people” [3]. Eliminating fares can have transformative effects on low-income residents. An experiment led by MIT where MBTA bus riders were given cards that enabled a 50% discount, riders took 27% more trips than the control group, increasing access to necessary but otherwise hard-to-reach healthcare and social services [3, 4]. Importantly, these trips were disproportionately taken during off-peak times, demonstrating that system efficiency need not suffer. Other studies, such as one completed in NYC, have shown that riders taking advantage of free trips almost always travel to “leisure destinations such as restaurants, shopping centers, parks, and other places where they spent money or connected with their communities” [5], highlighting community-wide economic benefits. MBTA fare enforcement policies also disproportionately target riders of color, even though a majority of riders of the MBTA are white [3].

Additionally, strong passenger growth is observed everywhere where free public transport is introduced [2, 6], including the Worcester Regional Transit Authority, where ridership has reached 140% of pre-pandemic levels with their system-wide fare-elimination pilot [7]. Removing fares on every route will also improve approachability of the system as a whole for both residents and visitors.

Empirical evidence is unable to support the ability for fare-free bus systems to significantly reduce car trips (and therefore tailpipe emissions and other negative externalities of automobile use) and further expansion of the fare-free program should not rely on these claims. The Mid Program Report reported that out of all bus riders during the pilot, 8-13% would have otherwise walked or biked while only 4-5% would have used a vehicle. Research on other systems globally has found that, at best, trips are equally diverted from motorized and non-motorized means [2, 6, 8]. For car drivers, convenience and access are far more important considerations than fare price. However, diversion of walking and biking trips does not need to be a negative headline if equity remains at the forefront. Because accident rates are substantially higher for walking and cycling than for public transport, modal shift from biking and walking to the bus is associated with a reduced number of bike and pedestrian accidents [2]. Fare elimination gives the city’s poorest residents a safer, faster, and more dignified transportation option if they need it. Though the inability to honestly leverage climate benefits is politically unfortunate, especially within the context of the state’s new Climate Chief, this presents an opportunity to instead focus wholeheartedly on equity, economic, and ridership benefits when negotiating with key stakeholders with the MBTA and the state. Other measures, such as congestion pricing, should be given the political spotlight when considering how to reduce miles traveled by single-occupancy vehicles in the state.

Improving Service Is Important - Eliminating Fares is a Pathway Towards It

A legitimate critique of eliminating fares is that it distracts from the improvement that bus riders want the most: more frequent service. This was a widely-cited comment from the Mid Program Report and is generally the biggest factor contributing to transit dissatisfaction and car preference nationwide [9]. The question is whether additional funding is better spent on increased service instead of eliminating fares.

The MBTA generated $97 million in fare revenue across all bus routes in 2019. Unlinked MBTA bus trips, trips that are not paid for with a pass and do not include a subway connection, generated about $60 million of revenue [4]. Once the costs of fare collection are subtracted, the deficit generated by a fare-free bus system is estimated to be as low as $36 million annually [10]. Though the potential cost of increasing service could vary, the largest component of the bus system’s operating expenses is wages. To give only a ballpark comparison, wages across all MBTA modes amounts to $684 million in the FY 2024 budget [11]. Service increases will require a linear increase in wages. Without even considering other costs, it is clear that meaningful service improvements will require significantly more funding than what is required of a system-wide elimination of fares. In addition, improving system performance hinges on better dedicated bus infrastructure, which is similarly expensive and will take years to be built out across MBTA communities as streets are redesigned incrementally.

A fare free system should be seen as a first step towards service improvements, not as a replacement for it. Increasing ridership will help build public support for funding further system improvements and give the MBTA a concrete metric to base future campaigns for increased funding.

Conducting an FTA Title VI Equity Analysis

This system-wide fare change would likely require a Title IV analysis to be conducted, following the guidance of the FTA Circular 4702.1B. Title IV requires transit agencies to “conduct equity analysis before changing services or fares… to determine whether a proposed service or fare change would have a ‘disparate impact’ on residents or riders of color” [12]. As exemplified in the Mid Program Report, the City of Boston currently employs strong data collection practices, even serving as an example for other cities to strengthen their public engagement processes past what Title IV requires. The city should continue to actively seek out engagement with minority and low-income populations (through focus groups and in-person surveying) and ensure “mechanisms are in place to ensure that issues and concerns raised by low-income and minority populations are appropriately considered in the decision making process” [13]. This may require investigating whether service increases will need to be bundled with the fare change to ensure that transit-critical riders are not burdened by overcapacity.

Another element that may need to be explored through a Title IV analysis is whether fares for The Ride would also need to be made free. The Ride fares amounted to $6 million in 2019 [14]. Without fares, on-demand paratransit trips may increase significantly, which provides both an equity opportunity and funding challenge.

Means Testing Misses Out on Many of the Benefits

An alternative to a completely fare-free system, while still attempting to progress equity goals, is to expand the reduced or free fare programs to include low-income residents in some capacity. However, administering such a program to verify incomes would incur significant costs [7]. In addition, any verification process will result in many low-income riders who do not have the time or knowledge to participate to miss out on benefits. This approach would also not benefit from reduced travel times, better system approachability for first-time system users, or diminished racial equity outcomes surrounding discriminatory fare evasion enforcement. Some consider the practice to be “a public attestation of poverty” that is in itself a form of racial discrimination [15].

Given that no US city as large as Boston has attempted to permanently fund a fare-free bus system, novel funding approaches will be required. A combination of the following potential sources, listed from most to least viable, may be necessary:

The Fair Share Amendment (FSA), ratified by Massachusetts voters in November 2022, provides tax revenue each year to fund public education and transportation initiatives through a new tax bracket for people with annual incomes over $1 million. These funds are placed in a new dedicated fund called the Education and Transportation Fund instead of the General Fund to protect the use of FSA revenue. Fiscal Year 2024 was the first year with funds appropriated from FSA, with spending capped at $1 billion. It’s projected that Fair Share revenue will exceed $1 billion, with mechanisms in place to devote additional revenues. Of the $1 billion, $301.5 million was dedicated to public transit, broken down as follows: MBTA Capital Investments ($180.8 million), MBTA Means Tested Fares ($5 million), Regional Transit Funding and Grants ($90 million), Water Transportation ($5.7 million), and MBTA Workforce/Safety Reserve ($20 million) [16]. Without the need to take money away from education initiatives, it is feasible for the $36-60 million annual cost of eliminating MBTA bus fares to be covered partially or fully by the transit component of FSA funds, especially if the mechanism for allocating surplus funds is leveraged. The use of FSA funds is ideal because it requires no new lawmaking, though political maneuvering would still be required to secure the funds, and funding the program may come at the cost of less funding for MBTA capital investments.

2. Private partnerships with universities

Boston is home to many universities that operate private bus systems to ensure free and reliable transportation for their students and employees. Examples include MIT, Boston University, Boston College, Tufts, and Harvard through their Longwood Shuttles. Many of these services run in part on similar or identical routes to MBTA buses. If eliminating fares allowed any of these universities to scale down their shuttle operations, they may be willing to explore funding partnerships. Though this source is unlikely to provide the majority of the funding needed, it is an option to explore.

3. Gas tax increase & other taxes

The initiative could also be funded using an increase to the state gas tax of about 2 to 3.5 cents [10]. However, public attitudes towards gas tax increases have been largely negative in recent years, making an increase unlikely to pass. The tax was last raised in 2013 by 3 cents, but in 2014 voters repealed a measure that tied the gas tax to inflation. Gas tax increases are more likely to be opposed by those outside the MBTA service area (if fares are only eliminated for the MBTA) and are generally considered regressive because people with lower incomes are disproportionately burdened [17]. The rise of electric vehicle usage will also make this an inherently insatiable funding source, much like MBTA sales tax funding. As EV taxes are developed, funding for fare-free initiatives could be incorporated.

Other tax increases, such as an increase of the state sales tax, will similarly come up against public opposition.

4. Freedom to Move Act & Other Federal Grants

Massachusetts Rep. Pressley and Sen. Markey proposed the Freedom to Move Act in April of 2023 with the specific goal of supporting “state and local efforts to establish public transportation as a public good through fare-free services” [18]. If enacted, the law would establish a $5 billion competitive grant program yearly with a grant period of 5 years. However, this law has not advanced since being introduced, and even if passed would only be a temporary funding measure. Federal funds are generally unideal because they do not address long-term funding challenges.

Funding Sources and MBTA Governance Suggest a Statewide Approach

The free bus movement is supported by 61-78% of Massachusetts residents [19, 20], but any change in fare structure must be made within the context of the most viable major state funding source (FSA funds) and the makeup of the MBTA board of directors (consisting of the MassDOT Secretary, 6 members appointed by the governor, one by the MBTA advisory board, and one by the Mayor of Boston). All factors considered, an MBTA system-wide elimination of fares, instead of only select Boston routes, would allow the strongest case to be made financially and politically to ensure that as many Massachusetts constituents as possible can benefit from the change.

In fact, the use of state funds may enable (or necessitate) a statewide fare elimination program. Fare-free pilots are currently in progress by both the Worcester and Merrimack Valley RTAs, with similar measurable ridership and equity benefits and long-term funding challenges. Other RTAs in the state can even make a better case for equity benefits, as “compared to the MBTA, riders on the 15 Regional Transit Authorities’ (RTAs) bus routes tend to have even lower incomes, be less white, and dependent on public transit for travel” [3]. Many state RTAs also have fare collection costs that are as high as three-quarters of fare revenue [14, 21], meaning eliminating fares for RTAs is an even better value than doing so for the MBTA. Packaging funding for the MBTA with funding for other state RTAs would allow Governor Healey to champion the concept, would solve local fare-free funding challenges statewide, and could allow state tax increases to be a more viable funding source, though the increased cost would require more creative funding packages and could cause pushback from budget-conscious legislators.

Embracing the College Demographic

Boston is the country’s fourth-largest college town, and 26.6% of current MBTA riders are between the ages of 18 and 25 [22]. As transit-university partnerships in Chicago, Seattle, Santa Cruz, CA, and Chapel Hill, NC have shown, young adults wholeheartedly take advantage of free transit programs [7, 21]. At Boston’s scale, students have an immense potential to use free buses to mode shift from rideshare, access critical services and support businesses further from their campuses, and become transit ambassadors (and users) early in life. Beyond the context of potential funding sources, the college demographic should not be forgotten as enormous benefactors as any free bus program is further developed in the state.

If scaling the pilot up is successful, the MBTA would be the largest permanent fareless bus system in the United States [23]. A free bus program at the scale of the Boston metro area or the state could have cascading, unforeseen positive effects on the culture surrounding transit; there is no playbook, and champions of the idea will need to be bold, backed by approaches that embrace Boston’s unique context.