Rider, revenue ripples seen from income-based MBTA fare

MBTA is considering income-based fare option

MEDFORD, Mass. — An income-based MBTA fare option could attract tens of thousands of new rapid transit and bus riders and could prompt hundreds of thousands more trips on the RIDE paratransit service, according to an ongoing T study.

The MBTA still does not have a clear timeline for when it might attempt to launch a pilot program offering half-price fares to low-income riders — something the T’s board endorsed in December — but the costs and potential for increased demand became clearer Monday as officials work toward implementation.

Estimates vary based on where the income threshold would be set, as compared to the federal poverty level, which in 2020 is $26,200 annual household income for a family of four. Allowing those who earn less than twice that level to acquire income-based passes would draw in roughly 50,000 to 90,000 new commuters to the bus and subway every year, MBTA Deputy Director of Policy and Strategic Planning Lynsey Heffernan told the Fiscal and Management Control Board.

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Those riders would cause the T to forgo between $23.3 million and $42.3 million in revenue each year, Heffernan said.

Both projected new ridership and costs decreased with a lower income threshold and vice versa.

A qualifying income at 125 percent of the federal poverty level could bring in about 27,000 to 59,000 new riders with between $12.8 million and $28.2 million in forgone revenue. Setting the limit at 300 percent of the federal poverty level could attract between 83,000 and 131,000 riders with $39.7 million to $62.3 million in forgone revenue.

On the RIDE, a low-income option could increase demand 29 percent — about 363,000 more trips per year — bringing with it the need for almost 200 more vehicles in the first year of implementation. That alone could increase costs $20 million to $25 million for "medium participation" and $35 million to $40 million for "high participation," the bulk of which comes from greater operating costs rather than foregone fare, Heffernan said.

The study team is less clear on what the impacts of a low-income fare would be on the commuter rail system. Based on current ridership, half-priced tickets for qualifying riders could create a $2.1 million yearly revenue loss, but Heffernan said ridership is more difficult to model.

Board members asked Heffernan to return at a future meeting date with more information on what other public transit agencies are doing with low-income fares and how the MBTA could find a partner organization, which could either help subsidize the costs or use its resources to determine which riders are eligible.

"It's a lot easier to manage and a lot easier to communicate to the public: 'if you're eligible for X, you're eligible for Y,'" Heffernan said.

While Heffernan offered ridership and forgone revenue estimates Monday, she said staff are not yet sure what administrative and operational costs will come with the potential change.

Transportation Secretary Stephanie Pollack warned that the operational costs are key to understand: if the T attracts tens of thousands of new passengers, it will likely need to increase its rail and bus output to maintain a sufficient level of service.

"No one wants a discounted fare so they can stand at the bus stop and watch a full bus go by and leave them behind," Pollack said during the meeting. "If the point of this is to make transit more affordable so people use it more, that's an important policy outcome, but then we can't pretend we're not going to have more people using it and not figure out the cost of running the additional buses or additional trains."

MBTA officials believe they have the authority to launch a means-tested fare program without prior authorization from the Legislature.

Since 2015, the T has offered discounted youth passes, which have steadily grown in popularity. About 4,300 riders participated in the youth rider program as of October 2019, a 38 percent increase over the previous year.