Feds devote another $19 million to save declining Manchester bus service

From 2013–2022, the Manchester Transit Authority (MTA) increased spending by more than a third and rapidly expanded service offerings to try to increase ridership. It was a colossal failure, as we highlighted in April. Instead of acknowledging the failure and changing course, the federal government this week announced a massive infusion of additional resources. 

Washington has committed $19.9 million to build a new city transit center (after the original closed due to a shortage of riders) in an effort to reverse the government’s previous failure to induce ridership through additional spending. 

New Hampshire’s congressional delegation announced Tuesday that the money would be used “for the construction of a new transit center which will replace the city’s outdated facility and enable an expansion of transit services in the region,” according to reporting from Manchester Ink Link. 

Yet the city has already spent a decade trying to induce ridership by financing additional services, with terrible results. As we documented in our own study back in April, ridership on MTA buses fell by 38.6% from 2013–2022. 

That sharp decline in ridership coincided with soaring MTA funding. Local taxpayer spending alone on the MTA increased by 38.2% above the rate of the inflation from 2013–2022. Over the same period, funding from the federal government jumped by 37.1% after adjusting for inflation. 

Overall, the MTA’s total operating expenses increased by more than $1.6 million from 2013–2022 in nominal dollars, or 22% above the rate of inflation. 

A lot of that spending was dedicated to expanding services to attract new ridership, just what the new federal grant is intended to achieve. 

Total miles driven by the MTA went from 536,627 in 2013 to 817,081 in 2022, an increase of 52.3%. Similarly, the MTA’s total hours driven jumped 59.3%, from 46,159 total hours in 2013 to 73,521 total hours in 2022. 

Additionally, from 2013–2019, the MTA’s service population was 135,366 residents with coverage over 63 square miles. Since the 2020 census, the MTA’s service population grew to 248,263 residents with coverage over 235 square miles, increases of 83.4% and 273%, respectively. 

But despite all these increases in its scope of service, ridership on MTA buses continued to plummet. As a result, the MTA’s cost per rider went from $7.93 in 2013 to $18.65 in 2022, an increase of 135.1% in just 10 years.

Nevertheless, U.S. Sen. Jeanne Shaheen hailed the new funding as a huge win for Granite Staters. 

“Transportation helps drive growth for local economies and connects communities and Granite Staters to opportunity and to one another,” Shaheen said. “This federal funding will provide crucial updates and upgrades to the public transit systems in Manchester and Durham, supporting continued economic growth in these regions while making progress toward our clean energy goals.”

There are several problems with this line of thinking. First, just throwing more money at a problem doesn’t fix any of the underlying issues, especially in this case. If anything, the last 10 years have shown how throwing increasing sums of local and federal dollars at the MTA hasn’t done anything to reverse the continued drops in ridership. 

Moreover, Shaheen’s premise is wrong. Transit does not drive growth. The federal government’s own research has shown that this theory doesn’t stand up to scrutiny. As we’ve pointed out before, the Federal Transit Administration itself has concluded that “(r)ail transit investments do not stimulate real economic growth; rather they only influence where already-committed growth takes place.”

In other words, the federal government would be spending nearly $20 million not to induce new growth, but to induce people to choose one part of Manchester over another. And that’s the best-case scenario, if the spending has any effect at all. 

The reality is that the underlying issue afflicting the MTA is one that no amount of public funding can solve: Public transit is a declining service nationwide because people prefer other options. 

It’s no coincidence that major news outlets, from CNBC, NPR, and Axios to Bloomberg and Vox, have all reported over the past year on America’s declining public transportation systems. 

COVID-19 certainly spurred declining ridership across the country, but for the MTA at least such problems predated the pandemic. 

This conundrum can be explained with basic economics. Public services, insulated from the competitive forces of a free market and protected by continued public funding, don’t need to adapt to changing consumer demands and preferences to survive. If they’re at risk of going under, politicians will propose additional public subsidies to keep them afloat. 

As The Economist noted a year ago, that’s exactly what state and federal governments have been doing for public transportation systems. And here in New Hampshire, local and federal taxpayers have been bailing out the MTA for years now too. 

It’s notable that the federal government’s proposal, backed by New Hampshire’s congressional delegation, is not to offer consumers different services. It is simply to spend more money on the services consumers have already rejected.

This is a big reason why public transportation will always be at a disadvantage compared to the growing options out of the private market. According to the Foundation for Economic Education and a report from TransitCenter back in 2019, more people were leaving public transit behind and becoming full-time drivers. As access to private cars was beating out public transit in most U.S. cities, alternative private services like Lyft and Uber were also gaining popularity at the same time. And this was all happening before the pandemic, which only accelerated these trends from 2020 to today.

Given these underlying circumstances, nearly $20 million from the federal government won’t fix the MTA’s hemorrhaging of passengers. What it will do, though, through updates and expansions, is cost taxpayers even more, inflating the MTA’s already exorbitant cost per rider and putting upward pressure on the city budget.