01046851

Component

As U.S. urban transit systems continue to experience year to year financial difficulties associated with an industry characterized by relatively flat demand and rising costs, earmarked or “dedicated” sources of funding are becoming increasingly popular as a form of financing ongoing operating deficits. As past research as shown a tendency for subsidies themselves to have an effect on fares, unit costs and service levels, a fair question to ask might be whether the level of dedicated taxes used to support transit operations has a similar effect. Using a sample of medium-sized U.S. public transit firms, the author estimates a simultaneous equation model to predict the effect of dedicated taxes on fares, costs, and service. An example from the Minneapolis-St. Paul metropolitan region illustrates that increases in dedicated financing sources (measured as the share of total operating costs covered by state and local dedicated taxes) have only slight influences on fares, costs, and service levels. However, it is argued that adoption of new taxes dedicated to transit are more likely to be designated to finance major capital improvements than to provide additional service on existing networks.

01042056

07-3340

English

17p

2007

Transportation Research Board 86th Annual Meeting

CD-ROM

Figures (1) ; References (27) ; Tables (3)

Fares; Financing; Government funding; Mathematical models; Operating costs; Operating subsidies; Performance measurement; Public transit; Sales tax; Taxes; Urban transportation policy

Finance; Public Transportation

Transportation Research Board Annual Meeting 2007 Paper #07-3340

BTRIS, TRIS, TRB

Feb 8 2007 8:01PM