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Americans spend over 15% of their budgets on transportation costs—these US cities are trying to make it free

Boston City Councilor At-Large Michelle Wu canvasses on the MBTA Red Line in Boston to rally against fare hikes that go into place on Monday on June 30, 2019. Councilor Wu joined other politicians and volunteers to bring awareness to the increase in rail fare.
Erin Clark for The Boston Globe via Getty Images

Americans are spending more timeand money — commuting than ever before.

According to the U.S. Census Bureau, the average American spends 25.9 minutes a day traveling to work one way — that adds up to just over four hours every week spent in transit for work. They're spending around 15.9% of their typical budgets on transportation costs, according to the Bureau of Labor Statistics, and married couples with children spend closer to 17.1%. And as more Americans migrate to larger cities, public transportation use is up. Since 1997, public transportation ridership has increased by 21%.

These are just some of the reasons why advocates across the country are starting to call for free public transportation.

The New York Times estimates that 100 cities around the world offer free public transit, with many of them in Europe. But recently, cities across the United States have begun to consider it as well.

Here's how a few U.S. cities have rolled out fare-free programs, and why the free transportation movement is picking up speed:

A fare-free bus in Olympia, Washington.
Courtesy of Intercity Transit

Pilot program adds 60,000 riders in one month

Olympia, Wash., embraced free bus service this year, which previously cost $1.25 for a typical adult ride and $3 for an express bus from Lakewood to Tacoma.

The "Zero-Fare Demonstration Project," which involved two-and-a-half years of strategic planning, went into effect on Jan. 1 this year and will last for the next five, at which point the city will re-evaluate the project's impact.

Clark Gilman, Olympia City Council member and local transit authority board member, says the slogan of the campaign was to be "bold and unafraid." After a ballot measure was passed to approve an additional sales tax for public transportation purposes, going fare-free was actually the most cost-effective option for Olympia for several reasons.

First, the cash boxes that collected fares on Olympia city buses were no longer being produced, he says. This forced city procurement specialists to use eBay to bid on old cash boxes from surplus and decommissioned buses from other cities.

Additionally, the cost of the plastic fare cards already in use was rising, due to trade tariffs imposed by the Trump administration.

Olympia Transit rider, Billy Clark
Courtesy of Intercity Transit

And while there was public support for high-tech cashless systems using a mobile app, they were deemed too expensive to implement, Gilman says.

"We were looking at fare collection options that cost more to collect and process the fare than the amount of the fare," he adds. "Fares in many transit systems are less than 10% of the revenue. And we were no exception."

Revenue for public transportation operations typically comes from a combination of fares and federal, state and local financial assistance. Many cities like Olympia have local sales or property taxes dedicated to funding transportation projects.

So Gilman and his colleagues looked to Corvallis, Ore., home to Oregon State University, where a recently implemented fare-less public transportation system resulted in a two-thirds increase in ridership over time, according to Gilman.

"So that gave us confidence," he says.

Passengers on Olympia Transit.
Courtesy of Intercity Transit

After just one month of the program, Olympia saw a 20% increase in ridership compared to the previous year — an equivalent of over 60,000 more riders.

"We're very pleased with that increase in ridership. It's almost as if we had a brand new transit system that just launched," says Gilman. "Even though most people had a dollar and a quarter in their pocket and they could have ridden the bus before, there are a lot of new riders and people who hadn't ridden for a long time — because of that difference of just getting on and off and not messing with coins."

The first large U.S. city takes action

In December of 2019, Kansas City, Mo., became the first large U.S. city to implement a universal, systemwide fare-free scheme after a unanimous City Council vote. The bus system previously cost travelers $1.50 per ride or $50 for a monthly pass.

The move was a top priority for Kansas City's recently-elected Mayor Quinton Lucas, who relied on a combination of public and private funds to make his "Zero Fare Transit '' program a reality. In a recent speech, he detailed that the Kansas City Area Transportation Authority contributed nearly $5 million, and Blue Cross and Blue Shield of Kansas City contributed nearly $1 million to the project.

"Public transportation would allow Kansas Citians to access opportunities for employment and education — which lead to better quality of life and, therefore, better health for our community," he said.

Boston City Councilor At-Large Michelle Wu canvasses on the MBTA Red Line in Boston.
Erin Clark for The Boston Globe via Getty Images

"A way to solve all of our deepest challenges"

Many other, larger cities have considered zero-fare public transportation in recent years including Los Angeles, Salt Lake City, Denver and Boston.

The person leading the push to make Boston public transit free is city councilwoman Michelle Wu.

"In Boston, public transportation has the potential to be a way to solve all of our deepest challenges: climate change, closing income inequality gaps and addressing racial disparities, intense traffic and congestion problems," Wu tells CNBC Make It. "But what we see is that without a functioning system that is reliable, affordable, and accessible to all, transportation is actually a barrier to all of those opportunities."

In early 2019, Wu wrote an op-ed in the Boston Globe pushing back against a proposed 6.3% fare increase on Boston's public transportation, referred to as the "T."

Her piece "Forget fare hikes — make the T free" solidified her spot as one of the most vocal and prominent leaders in the fight for free public transportation.

Wu said Massachusetts' legacy as the birthplace of public parks and libraries makes it a natural place to help lead the charge for free public transportation. "Mobility really is a right," she says.

Wu's first goal is to make the bus system fare-free "because the bus lines tend to serve communities that are least connected to transit and historically have been marginalized populations: communities of color and low-income residents."

She says the first question she typically faces when talking about free public transportation is about costs. "It actually costs more than most people think to collect the fare, and so you're saving much of the operational costs by moving towards a fare-free bus system. And you're also speeding up the boarding time in ways that lead to even more cost savings averaged across the system," explains Wu.

Approximately, 60% of the MBTA's operating revenue comes from state and local funding. During the 2019 Fiscal Year, the MBTA received roughly $1.032 billion from a sales tax and the 175 cities and towns in the MBTA service area contributed about $170 million in local taxes. An additional $78.5 million in revenue is generated through non-fare-related means such as advertising.

The second concern that Wu typically hears is that eliminating fares will lead to overcrowded trains and buses.

"That would be a wonderful problem to have because our streets are very clogged right now," she says. "Boston's rush-hour congestion is the worst in the country, and the more people we can get leaving their cars at home and taking public transportation, the better for everyone, including people who are still driving."

Can fare-free be done at scale?

Perhaps the biggest question facing the free public transportation movement is whether it can be done at scale in the country's biggest cities — such as New York.

"It's too big of a program. It's too big of a system," Suraj Patel, an attorney and former Obama White House staffer, who is currently running to represent New York's 12th Congressional District, tells CNBC Make It. "Unfortunately, it's got to be paid for, and it needs to be extended and be modernized, and so it seems unrealistic to go fare-free in a place like New York."

Patel says New York City should instead work on expanding the existing Fair Fares Program, which gives low-income New Yorkers at or below the federal poverty level half-priced subway fares. To qualify, single household riders must make less than $12,760 per year, two-person households must make less than $17,240, three-person households must make less than $21,720, four-person households must make less than $26,200, and so on.

But in the meantime, conflict over enforcement of subway fares continues to heighten.

In recent months, thousands of protestors have taken to New York's streets following a $249 million plan proposed by New York Governor Andrew Cuomo to increase police presence in the New York subway by 20% over the next four years.

The governor's plan adds 500 additional police officers to the subway system, in part to crack down on fare evasions that state officials estimate lead to $243 million per year in lost revenue.

Both Patel and Wu disavowed this kind of police crackdown and both independently described it as "criminalizing poverty."

CNBC Make It reached out to Governor Cuomo's office for comment but did not receive a response.

Since the increased police presence, there have been several recorded incidents of police aggressively confronting black and Latino riders for low-level offenses including, but not limited to, evading subway fares.

In one instance captured on video, nearly a dozen police officers held a 19-year-old Adrian Napier at gunpoint on a crowded subway train.

With his arms in the air, Napier can be heard saying "Call my mom."

Representatives for the NYPD say officers were responding "to an alert for a male with a gun" when they saw Napier jump over a turnstile.

After tackling Napier, officers determined that the young man did not have a gun but arrested him on theft of service for not paying the $2.75 subway fare.

Some groups protesting increased police presence on New York subways are calling for, among other things, removing police from public transit, increasing accessibility for riders of all physical abilities and free public transit.

While current actions from New York legislators would indicate that city leaders are far from embracing a fare-free transit system, imagination about what is possible may be an important step.

"We're used to being told that it's impossible," says Wu. "But now is the time when our problems are so urgent and so big that we have to aim to fix them with the scale and urgency that matches."

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