In response to my post on Tallinn, Estonia's experiment in free transit for all city residents, a freelance reporter asked me:
The idea I'm most interested in exploring from your post is your proposal that smart farecard systems can be used to easily subsidize fares and "opening up a huge range of subsidy possibilities for any entity that sees an advantage in doing so." I'd like to get more of a sense of what you mean by that and whether this is possible even in today's austerity-obsessed environment.
What I mean is that as long as the transit agency sets a price for an unlimited ride pass — with appropriate discounts for bulk purchasers — anyone can buy those passes for anyone. Universities can buy them for their students, companies for their employees, and as in Tallinn, cities can even buy them for their citizens. Any other entity can also buy them for any group of people it cares about, yielding possibilities that we can barely envision now.
Is this realistic in an age of austerity? It depends on what the alternatives are. The alternatives may include building wildly expensive parking, or losing out in a competition for the best people.
Urban universities with constrained sites often subsidize transit because without it they would need unmanageable amounts of parking. One common reason that universities get into transit subsidies is that they want to build on their surface parking lots, and the cost of structured parking (and its impacts) turns out to be higher than the cost of buying transit passes for many years. So it can be a logical business decision.
We're used to the idea that companies leave the cost of commuting to their employees, but companies that are competing for the best talent don't have that luxury. Witness the huge fleets of shuttles that ferry employees to Silicon Valley giants like Google and Apple from as far away as San Francisco. Companies that compete for talent can find transit subsidies to be a reasonable part of a total compensation package. And of course, corporate campuses can have expansion crises much like those of universities, where they'd like to build on their parking lots and look for alternatives to expensive structured parking.
City governments are the hardest to imagine financing free fares in the US, if only because of how broke most of them are. But if it goes well in Tallinn the idea will spread. One problem in much of America, and notably in California, is that residents are net consumers of government services while employers are net subsidizers of them; this motivates cities to minimize their populations and maximize their employment. (This explains many odd shapes of city boundaries that seek to include jobs but exclude residents.). In those distorted tax environments, cities don't want people to live there so much as to work there, so subsidies to residents don't make much sense. But of course residents are the voters, and wealthy cities that value green credentials may sometimes see merit. And of course cities aldo benefit if it can reduce their parking requirements, which may increasingly be the nexus that makes fare subsidies make sense.
Remember, though, that massive fare subsidies don't just require the replacement revenue for the fares but also the revenue needed to add service to handle the crowding that the free fares will generate. I will be interested to see how this plays out in Tallinn. This has been the barrier to free transit in big cities that have studied it, and the main reason that only small towns — especially university towns — have made large scale fare subsidies work.