Free Public Transit: The best fiscal stimulus:

Thursday, January 24, 2008

The best fiscal stimulus:

Free public transit is the best fiscal stimulus. Tax cuts/rebates have a multiplier of 0.7, unemployment benefits are 1.7, whereas public transit investment has been estimated to have multiplier of 9.0.

Free public transit as a stimulus package would:

grease the wheels of commerce
have the effect of a minimum wage increase
reduce the need for expensive oil wars

Free is Cheaper

How is free transit cheaper? Don't you have to make up for lost fare revenue? The answer is that your city will save so much money in other areas, and quality of life will improve so much that you will get back much more than the lost fares. Some examples are listed below. If you want to see specific numbers, see our spreadsheet here.

Increased return on investment. Public transit involves large fixed costs. When fares are gone, there are more riders per vehicle, getting more value from the investment.
Reduced parking costs. With free transit, fewer people will park downtown. City parking authorities can cost $180 million a year, paid by fines, which are just a tax on customers and delivery services.

Reduced traffic congestion. Studies have shown that the time lost in traffic costs urban economies hundreds of millions of dollars.
Less money exported for gasoline. A medium sized city can export 1 million dollars a day in gasoline money for cars. Free buses will reduce this considerably.
Better quality of life, priceless. In Hasselt, Belgium, when fares were removed, people in hospital started receiving more visitors.