ANNAPOLIS — State transit officials used bad math in setting new bus fares and, as a result, those new fares should be reduced, according to a review conducted by legislative budget analysts.
Steven D. McCulloch, a transportation analyst for the Department of Legislative Services, said the new fares imposed in July were not based on a simple reading of a 2013 law that requires the Maryland Transit Administration to adjust fares ever two years based on the consumer price index. Instead of using the simple calculation, the agency based the increases on the index as well as rounding up fares or adding additional costs to maintain price differences in different zones.
“If you do the simple calculation, the structure may not be as rational as it used to be but that’s not what the statute was indicating should be done — to keep a rational structure,” McCulloch told legislators Wednesday. “It just indicates that it should be increased by CPI.”
State Transportation Secretary Pete K. Rahn disagreed and said the budget analyst and legislators were only reading parts of the law and ignoring requirements that the agency derive more than one-third of its operating revenue through money taken in at the fare box.
McCulloch recommended that the MTA reduce it’s base fare by 10 cents to $1.60 — the base cost of a one-way trip prior to July 1. The last previous increase was in 2003.
In 2013, as part of the legislation that increased the gas tax, lawmakers required the agency to increase fares to the nearest 10-cent increment based on the two-year inflation index. McCulloch explained that the formula calls for a rounding to the nearest dime. In this case, the projected increase was less than 5 cents. McCulloch said that meant that the fare should remain at $1.60 with the additional 4.5 cents carried over into the next two years, where it would then be picked up.
A second provision requires that the agency recover at least 35 percent of its operating expenses for core services through the fare box.
McCulloch called the two requirements “obvious contradictions” and said legislators may want to attempt to clarify the law.
“While there is a requirement that mass transit recover 35 percent in fare box (revenue) there are provisions, such as for the core services, that say you can’t modify or increase above CPI. If core services is not meeting fare box now, increasing by CPI is never going to allow it to get to the fare box recovery [requirement],” McCulloch said. “So those two provisions are antithetical to each other.”
Rahn disagreed with the characterization of the fare increase and said the legislature and analysts misinterpreted the two-year increase requirement and did not take into account the fare box recovery rate requirement.
“The fare box recovery rate after the 10 cent increase is less than 26 percent,” Rahn said. “Ambiguities cannot be interpreted in a nonsensical way. Interpreting that we shall increase to the nearest 10 cents in any other way than a mandate to raise fares by 10 cents every two years would be nonsensical. You cannot raise fares down.”
Rahn told legislators that those mandates left the agency with no options.
“We had to increase transit fares and we had no choice in the matter,” Rahn said.
“If the General Assembly wishes to introduce legislation in the next session to clear up any alleged ambiguities in the law, MDOT would be supportive of those efforts,” Rahn said.