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M. Ray Perryman

The Economist: Public Transit and COVID

Business
Wednesday, February 17, 2021

With the spread of COVID-19 in early 2020, one of the vital services impacted was public transit. Ridership across the nation plummeted due to safety concerns, falling to 80% below normal early on and lingering around 60% below 2019 levels at the end of 2020. Public transit ridership in Texas was slightly more stable, ending the year at around 50% of prior rates in major metros such as Houston and Austin (hardly a distinction). 

Transit agencies find themselves in a financial “lose-lose.” Costs have escalated due to additional cleaning and protective equipment for employees. Simultaneously, revenue is down from the sharp drops in ridership and fares, coupled with lower tax revenue from state and local governments. Even with $39 billion from the two federal COVID relief bills, transit agencies could face shortfalls of over $39 billion through fiscal 2023. More funding may become available if subsequent pandemic stimulus measures are enacted, but huge deficits are likely for several years, placing future service and capital spending in jeopardy.

While some have commented that the pandemic could signal the death of public transit, it is more an opportunity to evaluate whether the current structure is assisting the populations most in need of such services. Many people using transit systems do not have other options. Some areas (especially in the South and Midwest) are not transit dependent overall, but nevertheless have sizeable populations that are. Low income and minority communities in particular tend to rely more on public transportation, and many agencies are evaluating how best to serve these groups.

The pandemic has also provided a catalyst to implement innovative methods of contactless fare collection and trip planning. Many agencies were already pursuing new technology and analytics, and the COVID situation created an incentive to bring such advances fully online, thus allowing riders to enjoy safer trip experiences. On-demand services have also been very popular over the past year; experts expect this to be an area of expansion for transit systems in the future. This structure permits an approach to providing services where they are most needed even under fiscal constraints. Targeted efforts of this nature have the potential to improve the overall value proposition, thus generating increased prospects for public-private partnerships to provide needed capital resources.

Looking ahead, many key segments of the economy will need to modify their business models in a post-pandemic world. Things will definitely be different, and transit is no exception. Efficiency is going to become increasingly important, and COVID safety measures will be needed for the foreseeable future. In the midst of these challenges, however, the essential nature of public transit for some individuals is clear, and successful programs are crucial to their wellbeing. Stay safe!

Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com), which has served the needs of over 2,500 clients over the past four decades.

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