Text Box: Decision Making:
          Considering the Economic Impact of Cutting Metro in Buffalo
Text Box: By James Gordon
          With editorial assistance from Seth Triggs, Vice-President and
          Douglas Funke, Board member of Citizens for Regional Transit
          Prepared January, 2012

 

Huge cost to WNY in NFTA cuts

 

The economic impact of the proposed cuts is enormous, making cuts to Metro a bad deal for taxpayers and businesses.

 

The NFTA commissioners have failed to deliver the true cost figures associated with their decision to cut service rather than seek revenue. The numbers tell the story.

 

Filling seats

 

The NFTA has a tremendous following. In 2011 NFTA is on track to fill 27.1 million seats, a 5% increase in patronage during a period when gasoline prices were falling after peaking in April. There is every reason to believe that (barring service cuts) ridership would increase again in 2012 by 5% to 28,350,000 seats.

By comparison, the Buffalo Bills team had the potential to fill the 80,000-seat Ralph Wilson Stadium 5 times this season for a total of 300,000 seats.

 

Metro fills 94.5 times as many seats as the Buffalo Bills each year.

 

Although the  

Bills provide significant and positive economic impact, Metro has an even greater impact, 100 times greater as I describe later.  This needs to be considered when setting spending priorities.  Just because Metro riders don’t all sit together in a single spot doesn’t mean they are invisible.

 

Cutting seats

 

Text Box: Saving $10 million by cutting costs
          means losing $5 million more in direct revenue
          The NFTA commissioners plan to cut seats to effect an expected 18% reduction in ridership. That’s a loss of 5,103,000 seats. Not everyone pays full price, but most do. For purpose of discussion lets say we lose 5 million seats at $1.00 per seat.  That means just at the fare box the NFTA will lose an additional $5,000,000 that can’t be made up. So then additional cuts to service will have to be considered.

 

 

 

 

This starts a never-ending downward spiral. The more the commissioners cut to save money, the faster the system loses seats and revenue.

 

The people in the seats

 

Metro’s surveys indicate ridership is 80% commuters, which is consistent with the national average for public transportation. Commuters include business owners, lawyers, professionals, clerks, and workers of all types. Commuters are the people who run business and government. Let’s do a little math.

 

 

Source: http://www.simplyhired.com/a/local-jobs/city/l-Buffalo,+NY

 

The economic impact

 

If 80% of the 5 million affected seats are commuters, that means 4 million of the seats on the chopping block belong to commuters. Commuters go to and from work, so we can cut 4 million in half to represent 2 million commuter trips to be cut next year. Divide 2 million round trips by 340 working days in a year and that results in a total of 5,882 full time jobs disrupted by the service cuts.  This number becomes larger if you consider part-time workers.

 

Multiply the 5,882 jobs by $34,000, the average salary in Buffalo, and you discover that the proposed service cuts affect $200 million worth of jobs in the service area.

The proposed service cuts directly affect $200 million worth of jobs in the region.

Each cut seat causes commuters and employers disruption and money. What will come of the jobs of the 5,882 affected workers?

Š      Job loss

Š      Unemployment

Š      Stress

Š      Have to find more expensive transportation

Š      Thousands more cars on local highways

Š      More parking spaces needed

Text Box: How much economic activity are the
          commissioners willing to cost the taxpayers to save $10
          million?
          $200 million? More?

If you want to include the economic impact of non-commuters in the total, please be my guest. Having ridden #32 bus packed to the gills leaving the Galleria Mall, and seeing crowds of shoppers riding #25 on Delaware Avenue, tossing in a few million more to the total economic impact figure is not unreasonable.

 

Then add even more in lost wages for the NFTA employees who will lose their jobs in the process. And add more costs associated with closing a transportation maintenance facility.

The economic multiplier

 

Put another way, spending $10 million of taxpayer dollars to maintain current service prevents disruption of more than $200 million economic activity to our economy. Looking at this from a positive viewpoint, each year spending $10 million on Metro provides an economic impact return of 20X the investment for the taxpayer in terms of economic activity.

 

Planning for the future

 

The NFTA calls these cuts “right sizing” the system. That’s just not true. A year ago October the NFTA “right-sized” the system by following the recommendations of their consultant. The only significant change needed to the consultant’s recommendations was the restoration of trips on the #42 Lackawanna route. The service cuts and alterations put into effect then can rightfully be called “right-sizing” the system.

 

The new proposed cuts are “meat and bone” cuts. This isn’t “right-sizing” the system. It’s irresponsibly gutting the system. “Right-sizing” would mean taking further steps to increase ridership, not cutting service.

 

In 2009 gasoline prices hit $4/gallon. Metro ridership shot up 49%.

 

In 2015 (just 36 months away) gasoline prices are forecast to jump. How much depends on whose forecast you choose,

The most conservative estimates are in the $4 to $5 range, as shown on this chart from Jan-Feb 2011 Automotive Digest http://atastefortea.posterous.com/automotive-digest-retail-gasoline-price-forec:

 

While no one knows for sure what will happen in the future, any way you look at it now is the time the commissioners ought to be investing to increase NFTA metro capacity. With ridership demand increasing and with the potential for even more increased ridership due to higher gasoline prices, service cuts should be out of the question.

How much per seat

 

Text Box: Additional taxpayer subsidy per seat NFTA metro
          36 cents Buffalo Bills $120
          The commissioners need to get over their timidity and push to expand the system instead of following the path of destruction they have chosen.  No one has told Ralph Wilson he can’t have $180 million over 5 years for stadium improvements and cash to spend on the Buffalo Bills. Yet the state and county tell the NFTA “no” to their request of $10 million per year or $50 million over 5 years to fill 28 million more seats than the Buffalo Bills do. That should be enough voters to get everyone’s attention. For the Bills, divide $180 million additional taxpayer subsidy by 5 years worth of seats (300,000 x 5= 1,500,000 seats). For Metro, divide $50 million by 5 years worth of seats (28 million per year = 140 million seats). Ralph Wilson is asking taxpayers to subsidize each attendee to a Bills game an extra $120 to sit in each seat or he’ll take his franchise elsewhere. Metro is only asking for an additional 36 cents per seat.


 

Buffalo is still a bargain

 

City

Fare

Buffalo

$1.75

Cleveland

$2.25

Toronto

$3.00 CN

Portland

$2.35

Singapore

$2.40

 

Although it is difficult to compare fare rates directly, clearly transit fares in Buffalo are not as high as in some other cities known for having good public transportation systems.

What needs to be done right now

 

Š      New York State and  Erie County should commit to covering $10 million per year for the  next 5 years to avoid the planned transit service cuts, cuts that will reduce revenue by $5 million.

Š      To finance limited expansion of the system, Metro should increase fares 25 cents per ride immediately, and another 25 cents per ride Jan 1, 2013.

Š      Because rail costs less per seat to operate, actively pursue federal funds to expand Metro Rail. The most obvious routes should be considered:

o   Add service to UB North Campus

o   Add service to Airport, Galleria, and southtowns

Conclusion

 

It is in the best interest of taxpayers, commuters and businesses to invest $10 million per year in additional public financing to support NFTA Metro. Metro should increase fares to finance expansion of the system to accommodate additional demand that is reasonable to expect given recent increases in ridership and the potential for rising gasoline prices. Continuing to take steps to expand Metro Rail service is a critical ingredient in making sure Western New York’s transportation needs are met.