In the last decade, ridership on Manchester Transit Authority (MTA) buses fell by 38.6%, yet city taxpayer spending on the MTA increased by 38.2% above the rate of inflation, an analysis by the Josiah Bartlett Center for Public Policy shows.

As Mayor Jay Ruais and city aldermen search for savings in a stressed city budget, the MTA offers an agency that could be scrutinized for possible spending reductions.

From 2013–2022, data from the MTA reported to the Federal Transit Administration show that city bus ridership peaked in 2015 at 500,575.

Ridership fell each subsequent year, with the exception of 2021–2022, to 279,948 in 2022—a drop of 44.1% in just seven years. While this includes a steep 13.5% decline during the pandemic (2020–2022), the drop of 18.2% before the pandemic (2015–2019) was even larger. The decline over the entire decade was 38.6%. 

While ridership fell, the amount of money spent on Manchester public transportation only increased. From 2013–2022, MTA’s total operating expenses rose from $3,613,280 in 2013 to $5,219,813 in 2022, an increase of more than $1.6 million, or 44.5%, in nominal dollars. After adjusting for inflation,* the increase is still $940,802, or 22%. 

(*The inflation calculation uses Personal Consumption Expenditure (PCE) Indices from January 2013 and January 2022.)

This steep rise in spending includes a 62.4% increase, or a 37.1% inflation-adjusted increase, in funds from the federal government and a 63.6% increase, or a 38.2% inflation-adjusted increase, in local government spending. 

Meanwhile, Manchester public transportation has become less profitable, as fare revenues have dropped 23.9% since 2013. 

In 2013, MTA’s cost per rider was $7.93. The lowest point it reached was $7.51 in 2016. Since then, the cost per rider has skyrocketed, hitting a peak of $25.96 in 2021 before falling to $18.65 in 2022, still more than $10 more per rider than a decade earlier. All told, the last 10 years saw a jump of 135.1% in Manchester’s cost per rider. 

The huge increase in costs per rider was not just a matter of falling passenger numbers. As ridership fell during the past decade, the MTA aggressively increased service. 

Since 2013, MTA’s total miles driven have increased by 52.3%, going from 536,627 total miles in 2013 to 817,081 in 2022. Total hours driven have seen a similar increase as well, jumping 59.3% from 46,159 total hours in 2013 to 73,521 total hours in 2022. 

The MTA’s service area population and total square miles covered have expanded too. 

From 2013–2019, MTA served 135,366 residents and covered 63 square miles. Since the 2020 census, MTA has been serving 248,263 residents and covering 235 square miles, increases of 83.4% and 273%, respectively. 

The official 2023 MTA ridership and expenditure numbers won’t be publicly available until later this year. Although the city has figures showing 328,976 riders and $5,420,475 in total operating expenses for FY 2023 (cost per rider of $16.48), that time frame of measurement is different from what the Federal Transit Administration uses. Therefore, an apples-to-apples comparison can’t be made now between 2013 and 2023. The 2023 numbers won’t be added to this database until the official figures are released. 

The MTA plans to return to upwards of 400,000 annual passengers. But the current numbers and trends show a public service that yields a poor return on taxpayer spending. 

And the poor financial picture is not due solely to the COVID-19 pandemic, as the problems began years earlier. The pre-pandemic years of 2013–2019 saw MTA ridership plummet too. 

The numbers strongly suggest that MTA is hauling more taxpayer dollars than what is required for public transportation in the region. City leaders could find some budget savings by paring back MTA services to pre-pandemic levels, eliminating or curtailing underused routes, and seeking ways to enhance revenues. 

Enticing people to buy electric vehicles does not fit comfortably into the core duties of state government. And yet it’s among the list of pet causes legislators will consider subsidizing with other people’s money. 

The latest effort comes in House Bill 1472. The bill, as amended, would confiscate $1.5 million that belongs to electric utility ratepayers in New Hampshire and give it to people who buy or lease electric vehicles. The money would come from Regional Greenhouse Gas Initiative (RGGI) funds currently rebated to ratepayers. 

The bill would facilitate this wealth transfer by creating a program through which EV buyers could claim rebates of $2,000 per fully electric vehicle and $1,000 per plug-in hybrid vehicle. Eligible vehicle sticker prices would be capped at $50,000 for cars and $80,000 for trucks, SUVs or commercial vans. 

Rebates would be available to individuals making no more than $75,000 a year, heads of household making no more than $112,500, and married couples making no more than $150,00 a year. The median household income in New Hampshire, according to the U.S. Census Bureau, is $90,845. So HB 1472 would create a program through which moderate-and lower-income Granite Staters subsidize pricier-than-average car purchases for higher-income households. 

The idea behind this subsidy plan, as with most subsidies, is to use some people’s money to manipulate other people’s behavior. The beneficiary group in this case is middle-income car buyers. The victim group is everyone who uses electricity. To give middle-income car buyers up to $2,000 toward the purchase of a car that runs on electricity (mostly generated by nuclear fission or natural gas in New Hampshire), the scheme takes about $2 per year from the average residential electricity user. 

If timing is everything, then this bill is a party guest who arrives not three hours—but three years— late. The wealth transfer scheme comes amid a rapid decline in EV prices. 

Cox Automotive and Kelly Blue Book reported this month that EV prices fell 10.3% between January of 2023 and January of 2024. Prices for the Tesla Model Y, the best-selling EV in America, fell by 21% last year, from $63,000 to less than $50,000. 

EV prices are rapidly approaching price parity with conventional gas-powered vehicles. The price gap between EVs and conventional vehicles fell from 15% in 2022 to 8% in 2023 to just 4% at the start of 2024, according to industry news site CarEdge. At this rate, average EV prices could reach parity with conventional vehicle prices this year, which undermines any argument in favor of a subsidy. 

Federal subsidies and policies so distorted the EV market that automakers have built far more electric cars than consumers wanted. Though demand for EVs is rising, supply has risen far faster, leading manufacturers to slash prices to move excess inventory. Pushed to generate more EVs than consumers want at the moment, auto makers are losing billions of dollars on these government-favored vehicles. 

“Buyers looking to get a bargain on a new car might want to consider an electric vehicle,” The Wall Street Journal wrote in a news story on EV prices last November.

As a JD Power auto analyst explained to Newsweek in December: “Eventually manufacturers will achieve scale and profitability, but they are being pressured to accelerate the production of EVs at an unnatural rate due to various government initiatives.”

This is a cautionary tale about the unintended consequences of market manipulation. As lawmakers consider proposals to add a state subsidy for EVs, and subsidize other favored products or activities, it’s one worth heeding. 

The January, 2023, draft of the state’s Capital Corridor commuter rail study contains nothing that commuter rail boosters should like. The financial analysis, prepared for the state Department of Transportation by AECOM Technical Services Inc. of Manchester, envisions a nearly $800 million railroad serving fewer than 100 Manchester commuters per trip, at an operating cost of $17 million per year. This represents a dramatic increase in costs and a devastating collapse in ridership since the DOT released its first Capital Corridor study in 2014. 

The report’s own dismal numbers show that Manchester-Boston commuter rail would squander hundreds of millions of dollars to serve only a few hundred riders per day, making it a colossal boondoggle. 

Failing its own goals

“The purpose of the Nashua-Manchester project (the Project) is to diversify mobility options that connect the southern New Hampshire region with the population, employment and commercial centers in the Greater Boston area, reduce congestion, emissions and travel time, and provide mobility options that promote equity and support demographic trends and preferences in the study area corridor,” the analysis states.

The report’s own numbers show that the Capital Corridor project would fail to achieve four of its five stated goals. 

  1. The Manchester ridership projections are so low (between 38-65 riders per trip by our favorable estimates) that the line will produce no noticeable impact on congestion.
  2. Low ridership numbers call into question whether the rail line will produce a worthwhile reduction in emissions. And the trains will be pulled by diesel engines that will begin operation just as auto manufacturers accelerate the switch to electric vehicles, which already account for 10% of auto sales. 
  3. The analysis projects that a trip from Manchester-Boston will take 1.5 hours by train. It currently takes one hour by car. Instead of reducing travel time, it will lengthen commute times by 50%. 
  4. Demographic trends and commuter preferences show that Boston-area employees would rather work from home or drive a car than commute into the city via mass transit. No data supports the creation of a new rail line to feed commuters into and out of Boston.

Rising costs, falling ridership

The 2023 draft financial analysis projects a total construction cost of $792 million. That is a 222.5% increase over the DOT’s original projection of $245.6 million in 2014. 

Adjusted for inflation (using the national Consumer Price Index), the original $245.6 million price tag would equal $312.9 million as of January, 2023 (the date stamped on the draft study). Yet the projected $792 million cost is 150% larger than that.   

The analysis projects annual operating and maintenance costs to be $17.27 million, a 60% increase from the 2014 projection of $10.8 million. Adjusted for inflation, the 2014 price tag would come to $13.76 million. The new projection is $3.51 million, or 25.5%, higher than that. 

As projected costs soar, projected ridership collapses. 

Both the 2014 and 2023 studies assume 16 commuter rail trips per weekday between a downtown Manchester station and Boston. The 2014 study projected a baseline average weekday ridership of 3,120 passengers on this line. That comes to 195 riders per trip.

The 2023 analysis does not project riders per weekday. Instead, it offers annual totals, which mask the collapse in projected daily ridership. 

The 2023 report projects an annual Manchester-Boston ridership of 271,538. That can be divided by 52 to get 5,221 riders per week. The report assumes some ridership on weekends, at a lower rate than weekdays, but it doesn’t break down the averages by day. If we generously include all weekend riders as daily commuters (which inflates the daily commuter numbers) and simply divide the weekly ridership by five, we get a mere 1,044 riders per weekday. That’s a 66% drop from the 2014 projections. 

Since 2014, the baseline assumption for ridership has fallen by 66% while the cost of building the line has increased by 222.5% and the cost of operations and maintenance has risen by 60%. 

That 66% decline in ridership comes before the study attempts to account for the effects of COVID-19 and its aftermath.

The study offers a low, medium, and high COVID impact analysis. Using the same method as before to convert those numbers from annual to weekday riders, we get the following:

Low COVID impact daily ridership: 835

Medium COVID impact daily ridership: 824

High COVID impact daily ridership: 612

When COVID’s impact is factored into ridership projections, the $792 million rail line is projected to transport 612-1,044 riders per weekday between Manchester and Boston. That comes to an average of 38-65 riders per trip, at a cost of $17.27 million per year. 

The analysis includes ridership projections for a Manchester-Boston Regional Airport station and a Nashua station. Those projections are higher than its projections for a downtown Manchester station. But those figures still represent significant declines in ridership from 2014 projections, with one possible exception. The projected ridership at a South Nashua Station could be slightly higher than the 2014 projections for a hypothetical “minimum commuter rail” option in Nashua, depending on how many weekend riders the new study anticipates. As mentioned above, we had to lump weekend riders into the weekday calculations since the study used only annual totals. But the bottom line remains that the study’s own projections show huge declines in ridership under most scenarios, and all Manchester scenarios, including the 2014 report’s “Manchester Commuter Rail” option that featured 20 trips per day. 

Unusual revenue assumptions

In addition to astronomical costs, the 2023 draft report assumes that fares (and some advertising) will cover an astronomical share of operating and maintenance expenses.

“The primary long-term source of O&M funding is fare revenue,” the report states. “This is a relatively unusual situation,” the analysis concedes. It claims its numbers can be justified because trains will be based in Manchester, thus ending the practice of starting and ending each trip with an empty train emerging from or returning to Boston.

In the study’s “medium ridership scenario,” which serves as the basis for its revenue projections, fares cover 81.5% of operating and maintenance costs. Its low COVID impact scenario assumes that fares would cover 93.4 percent of O&M costs. Its high COVID impact scenario assumes fares would cover 58.4% of costs. 

To get a sense of how realistic these figures might be, one can look at MBTA commuter rail revenues and expenses. In fiscal year 2019, the last year before the COVID pandemic, operating revenue covered 43% of MBTA commuter rail operating expenses, according to the MBTA’s audited financial report. In fiscal year 2022, revenues covered just 14% of MBTA commuter rail operating expenses, according to that year’s audited financial report. 

Such large declines in fare revenues and ridership have occurred nationwide. In San Francisco, fares covered roughly 2/3 of Bay Area Rapid Transit’s operating expenses for the 2019 fiscal year. By the 2021 fiscal year, fares covered just 12% of operating expenses, The Wall Street Journal reported last week.

In January, Mass Transit Magazine reported that “commuter ridership is disappearing.”

“Transit ridership across the U.S. has been sitting steadily at about 65 percent to 70 percent of pre-pandemic ridership across transit networks, according to data from the Transit App. This is an improvement from a year ago, when ridership hovered around 55 percent of pre-pandemic ridership.

“These sorts of headwinds, driven by significant changes in the way workers and others move around urban areas, will prompt transit agencies to rethink service delivery and other aspects of their operations, say experts.”

The DOT’s 2023 financial analysis assumes that fares will cover nearly all the operating costs of the Lowell-Manchester line even as subsidies cover nearly all of the MBTA’s existing commuter rail operating costs post-COVID.

MBTA commuter rail costs rose by 5.8% from 2019-2222 while operating revenue decreased by 66%, agency audits show. This has led to a rethinking of the MBTA’s offerings.

“We’re going to have to figure out a way to operate with lower fare revenue, and it remains to be seen how much lower it’s going to be,” MBTA General Manager Steve Poftak told The Wall Street Journal last March.

The state’s projected operating subsidy totals $25.2 million during the first three years of operation, as ridership is scaled up. After that, it is projected to settle at $200,000 per year. But if fare revenue doesn’t materialize as planned, the state subsidy would remain high, potentially consuming millions of dollars per year. This backup state subsidy ultimately makes state taxpayers the default financier of the rail line’s ongoing operations. If ticket revenues don’t materialize, the state would be stuck either covering those losses or ending service. 

Local station costs

“The financial analysis assumes that the cities of Manchester and Nashua fund the construction, O&M, and renewal costs of their respective downtown stations,” the report states.

It anticipates construction of a Manchester station at an estimated $51 million, including financing costs, and a Nashua station at an estimated $31 million, including financing costs. 

It assumes that Manchester will use meals & rooms tax revenue and Nashua will use local property tax revenue to pay for most of the construction. If taxpayers and elected officials refuse, then what? 

The report states that the Manchester-Boston Regional Airport would pay to build the proposed airport station. It does not explain how Nashua’s second station would be funded. 

Population density

Any study of commuter rail viability should start with population density. It’s considered a rule of thumb that a city needs a core population density near 10,000 people per square mile to make commuter rail successful. Yet nowhere does the financial analysis mention population density, on which a rail system’s financial viability depends.

That’s a serious omission. As we’ve noted before, Boston has a population density of 13,967.7 people per square mile, and Lowell ’s density is 8,489.8 per square mile. Manchester’s density is just 3,496 people per square mile. It doesn’t have a single zip code with a density of even 4,000 per square mile. Nashua’s density is just 2,961.7 per square mile. 

U.S. Census data put Manchester’s population density at 3,310 per square mile in 2010. In the decade from 2010-2020, the city’s density grew by just 186 people per square mile. At that rate, Manchester will reach 10,000 people per square mile in 350 years. If the city’s growth rate somehow doubled, it would still take 125 years to get to 10,000 people per square mile.

The report makes no effort to explain how a commuter rail line could be viable over the long term while serving such low-density cities as Nashua and Manchester.

Shifting work-life patterns

In addition to the density issue, there are numerous questions regarding the suitability of building a commuter rail line from a sparsely populated state into a shrinking city at a time when technology is changing the way we work. 

Suffolk County, Mass., which includes Boston, lost 28,000 people from 2020-2022, Census data show. Boston commercial vacancies early this year hit their highest rates in a decade, as demand for office space fell.

Several studies of Boston and Massachusetts commuters and employers (see here and here) have found significant declines in both mass transit use and the desire to commute via mass transit to offices in Boston. 

Most people want to work from home at least part of the week. People are fleeing many large cities, including Boston, in search of a more suburban lifestyle. Transit agencies around the country are factoring these shifting preference into their future plans. If these shifts represent a permanent change in American work and commuting patterns, as polls and changing behaviors suggest, now would be a particularly bad time to build a new point-to-point commuter rail line. 

Opportunity costs

The 2023 study proposes that the state would cover between $147.6 million and $185.4 million of the anticipated construction costs. If spent on commuter rail, that money could not be used for other state transportation priorities, of which there is no shortage. 

For comparison, Exit 4a in Londonderry is projected to cost $61.6 million to build, and the benefits are concentrated entirely in New Hampshire. This exit on I-93 is expected to boost economic development in Derry and Londonderry, reduce congestion and improve safety on local roads. The state could finance almost three projects of this scale for the high-end cost of the Capital Corridor rail line. And the benefits would be spread among a large share of  New Hampshire’s population, rather than split among employers in Manchester, Nashua and Boston.

The state’s current 10-year Transportation Plan dedicates $151.49 million to bridges this year. Bridge repair costs over the next decade exceed $900 million. When that level of need exists, it’s hard to justify spending more than a year’s worth of bridge repairs on a new rail line that would serve few people.

If the state were to create a list of the best possible ways to spend $185 million in transportation dollars, a rail line for the dwindling percentage of people who want to commute daily between Manchester and Boston would not make the top ten. The state has much higher transportation priorities.


The DOT’s own analysis shows that there is no scenario in which building a $792 million commuter rail line in the near future makes financial sense for New Hampshire. Construction and operating costs are rising much faster than inflation, while projected ridership is collapsing. Commuter rail does not extend from Lowell, Mass., into New Hampshire for good reason. It’s too costly and would serve too few people. This draft study confirms that.

Download a pdf copy of this policy brief; DOT Capital Corridor 2023 Brief

Editor’s note: Some of the percentage increase figures in the initial post contained typos. They have been fixed.

When considering commuter rail in New Hampshire, here’s thought experiment that offers a great place to start. Should the Massachusetts Bay Colony have built commuter rail in Revolutionary-era Boston?

Assuming the technology had been available, would this have made any sense?

We can get to an answer by looking at the primary obstacle to building a successful commuter rail line in New Hampshire today. 

Any debate about commuter rail has to begin with basic demographic data because population density is the key to successful commuter rail service.

The general rule for light rail is that cities need a population density of about 10,000 people per square mile to generate enough riders to make rail a viable alternative to automobiles. (See here and here.)

“The performance of a rail or BRT [bus rapid transit] line is directly related to the surrounding densities,” writes author Christof Spieler. “For example, the most successful light-rail systems in the United States—San Francisco, Boston, Philadelphia, Seattle, Newark, Jersey City, Buffalo, and Houston—serve large areas of over 10,000 people per square mile.

“Put transit in densely populated places. [emphasis in original] The fundamental math of density leads to an obvious rule: put transit where the people are. Successful transit needs to go where population densities are highest.”

Some cities outside of the United States have commuter rail and overall densities well below 10,000 people per square mile. But they tend to be large metropolitan areas with compact, walkable, dense downtown areas. 

For example, looking at the city as a whole, Calgary is roughly as dense as Manchester. Calgary’s density is 3,442 people per square mile, while Manchester’s is 3,496 per square mile. Calgary has light rail and a street railway. But Calgary is also a city of more than 1 million with a dense downtown of about 7,778 people per square mile. It’s the fifth densest downtown in Canada. 

Manchester doesn’t have a single zip code with a density of even 4,000 people per square mile. 

Nashua’s population density is only 2,961.7 people per square mile.

Commuter rail boosters seem to believe that Nashua, Manchester and Lowell, Mass., can all support rail because they’re fairly close in population. Nashua has about 91,000 people, while Manchester and Lowell have about 115,000 people each.

But these totals mask huge variations in density.

Lowell’s population density is 8,489.8 people per square mile, even denser than downtown Calgary. That makes it much more hospitable to light rail than Manchester or Nashua. 

Boston’s population density, by comparison, is 13,967.7 people per square mile.

And that gets us back to our question about colonial Boston. 

In The Revolutionary: Samuel Adams, author Stacy Schiff notes that Adams lived in a Boston that spanned four square miles, with a population of 16,000. (Boston had about 16,000 people from the 1740s through the 1780s.) That’s 4,000 people per square mile, which makes colonial Boston denser than present-day Manchester. 

Few would argue that commuter rail would make sense in colonial Boston. But lots of people argue that commuter rail makes sense in Nashua and Manchester, which are much less densely populated than colonial Boston was. 

The hard reality is that no municipality in New Hampshire is close to boasting a population density anywhere near the level needed to support successful commuter rail. And that will be true for a very long time. 

U.S. Census data put Manchester’s population density at 3,310 per square mile in 2010. In the decade from 2010-2020, the city’s density grew by just 186 people per square mile. 

At that rate, Manchester will reach 10,000 people per square mile in 350 years.

If the city’s growth rate somehow doubled, it would still take 125 years to get to 10,000 people per square mile.

Building, or even preparing to build, a commuter rail line now makes about as much sense as telling Paul Revere to take the T to Lexington. 

(By the way, it took Revere about an hour to get to Lexington from Charlestown by horse. Today it takes about half an hour by car. By bus? About two hours.) 

If you planned to start a new enterprise and hire someone to run it, you’d probably avoid applicants who racked up disastrous safety records and massive financial deficits on their way to being investigated and placed under remedial safety orders by the feds.

The New Hampshire Department of Transportation, though, has tapped an operator with all of those problems to run its planned Manchester-Boston commuter rail line.

Despite steep declines in commuter rail ridership, the rise of remote work and the promise of driverless cars, the state is still moving forward with plans to build a commuter rail line to Boston. (The state in 2020 approved $5.4 million in federal funds to plan the line.) Those plans name the Massachusetts Bay Transit Authority (MBTA) as the operator of the service.

Sure, the MBTA has decades of experience running commuter rail. But then, the U.S. Postal Service has decades of experience delivering mail, too. 

A quick (and not comprehensive) review of the MBTA’s recent troubles should be enough to eliminate the agency as a suitable commuter rail partner for New Hampshire. A list of just some of the recent safety issues includes:

Years of poor management and questionable spending priorities have left the MBTA with inadequately trained staff, decaying infrastructure, and antiquated management systems. 

The FTA’s investigation found, to cite one example, that the authority uses a paper-based record-keeping system and has not yet transitioned to storing its records digitally. This is in 2022. 

The justification for building a costly commuter rail line from Boston into New Hampshire is evaporating rapidly, as we’ve documented here and here. 

But even if one could build a case for some scaled-down version of commuter rail, the case for letting the MBTA run it is nonexistent. 

No organization with such a dismal performance record should be given additional responsibilities, much less trusted with the lives of Granite State commuters. 

Rising gas prices have prompted calls for a state gas tax holiday. Though a gas tax holiday would provide some immediate relief from high prices, the cost would have to be paid later, possibly through higher taxes or deteriorating road conditions. 

In New Hampshire, the gas tax is not a general tax. It’s a user fee. Part 2, Article 6-a of the New Hampshire Constitution requires that it be used exclusively for road construction and maintenance.

State gas tax revenues have not kept up with inflation this century. In the fiscal year ending in June of 2000, total unrestricted gas tax revenues were $116 million. That would equal $182 million in 2021 dollars. But in FY 2009, unrestricted gas tax revenues were $131.6  million before falling back to $116.5 million in FY 2021. 

While the state’s population grew by 13% since 2000, gas tax revenues have remained essentially flat in nominal terms and have fallen in real terms. 

Because the gas tax is a user fee, a holiday would stop charging people for use of the public roads for its duration. But it wouldn’t stop the wear and tear on the roads. If that funding is not made up later, the state would have to forego repairs and maintenance, replace the lost revenue with higher taxes or transfers from somewhere else, or find some way to reduce costs. 

Given current inflation, it’s not clear how the DOT would reduce costs, leaving the other two options as the most likely long-term effects of a gas tax holiday. 

Legislators have floated the revenue transfer idea. But two proposals to do that were rejected this week in the House Finance Committee. The first would have had motorists fill out a rebate form to receive checks from the state. Motorists would have had to keep their gas receipts. 

The costs of administering that scheme prompted the amendment to be replaced with a plan to send every owner of a registered motor vehicle a $25 check for each vehicle. The cost was estimated at $40 million. The money would come from the general fund, not the highway fund, so it wouldn’t be a gas tax rebate. It would simply be a check from the state to help people cover the cost of paying for fuel. 

At this week’s prices, $25 wouldn’t cover even half the cost of filling a 12-gallon gas tank.

Such one-time tax rebates are not good tax policy. They don’t have the kind of stimulating effects that tax rate cuts do. 

“The tax code should not be used like an appropriations bill to dole out benefits, effectively putting a chicken in every pot,’” as the Tax Foundation put it in a 2001 policy brief. “The primary purpose of the tax system is to raise revenue, not to micromanage the economy with subsidies. It should create a level playing field in which individual and business decisions are made to achieve the best economic outcomes.”

In this case, the general fund should not be used to dole out benefits. It should pay for necessary public services. 

If the state has a surplus of federal COVID money or other one-time revenues, it would best be used to cover state obligations that are difficult to cover with recurring revenues, such as reducing the shortfall in the state pension system. 

If the state has an ongoing surplus of recurring revenues, it should consider another tax rate cut.

As the Tax Foundation has pointed out regarding a federal gas tax holiday, it would do nothing to change the underlying causes of gas price increases and could create other problems.

Though it sounds like a nice way to give consumers some short-term relief, a gas tax holiday is not sound policy.  

A commuter rail line from New Hampshire to Boston would need increasing taxpayer subsidies to serve a shrinking number of riders, recent data on transit ridership and commuting patterns suggest. 

Health concerns are not the only reason commuter rail ridership remains a fraction of its pre-pandemic levels. Work and commuting patterns have changed, leaving public transit systems — especially commuter rail — with massive, long-term revenue shortfalls and shrinking pools of potential riders.

The New Hampshire Department of Transportation’s proposed “Capitol Corridor” commuter rail project would extend the Massachusetts Bay Transportation Authority’s Boston-Lowell line to Manchester (and possibly to Concord). It would undertake this expansion, at a cost well north of a quarter of a billion dollars, just as remote work begins to reshape commuting patterns.

Remote work and vanishing commuters

“The desire for hybrid work models, defined by part-time telework, remains strong,” a City of Boston survey of commuters found last year. 

Only 7% of Boston commuters said they never want to work remotely in the future. More than half, 54%, said they preferred to telecommute a few days a week. Sixteen percent said they wanted to telecommute every day. 

Boston employers also expect that work arrangements will not return to the pre-pandemic norm. 

A MassCompetes survey of Massachusetts employers last year found that 75% are considering hybrid work models after the pandemic, 61% reduced capacity, 59% hybrid practices, 55% hybrid physical space, and 48% staggered schedules. (Respondents could choose multiple options.)

Regarding public transit use, 51% of employers said they expect their employees’ dependence on mass transit to decline after the pandemic, 30% said they expect it to stay the same, and only 3% said they expect it to increase. 

A March 10 Upwork survey of 23,000 Americans found that 2.4% said they had already moved because of remote work since 2020, and 9.3% said they planned to do so. Those percentages translate to 4.9 million and 18.9 million people. 

“People are moving outside commutable distances: 28% of people said they are moving more than 4 hours away,” the survey found. “Another 13% said they are moving between two and four hours away.”

And this is just the tip of the trend, the data suggest.

“The effects of remote work on geography are just beginning to unfold: The number of people who have relocated is likely just the start of a larger reshuffle, since our data suggests that there are strong reasons to suspect longer-term moves will rise,” the Upwork study concluded.

Commuter rail suffers huge ridership declines

Transit officials nationwide report that they, too, see a future with fewer riders. 

As we reported in January, the DOT expects lower Capitol Corridor ridership after COVID than it had projected in 2014. Nationally, commuter rail operators expect emptier trains.

“The nation’s biggest commuter railroads are preparing for potentially permanent shifts in daily ridership, declines that in some cases could threaten their long-term viability,” The Wall Street Journal reported on March 6. 

“The changes are based on expectations that many office workers will continue to work from home at least part-time for years after the Covid-19 pandemic subsides.”

The American Public Transportation Association reports that weekday ridership counts for commuter rail are down to between 25%-55% of pre-pandemic levels.

“The MBTA commuter rail system is averaging about 45,000 weekday passenger trips versus roughly 120,000 before Covid-19, and officials don’t expect a full rebound even after companies bring most workers back to offices,” the Journal reported.

“We’re going to have to figure out a way to operate with lower fare revenue, and it remains to be seen how much lower it’s going to be,” MBTA General Manager Steve Poftak told the paper.

Lower fare revenue means larger taxpayer subsidies for an organization already dependent on taxes. 

Tying N.H. taxpayers to MBTA’s financial woes

The transit ridership collapse has put the MBTA into a dire financial situation. In December, the authority projected that its expenses would exceed its revenue until 2027, and even then fare revenues would remain below pre-pandemic levels. 

Fare revenues in 2027 will range between 68% and 93% of 2019’s numbers, the MBTA projected. 

On March 10, the MBTA projected a budget gap of between $201 million and $458 million next year, growing to between $341 million and $550 million by 2027, without one-time revenues such as federal bailouts. 

The cash-strapped MBTA is the N.H. DOT’s chosen partner to operate the Capitol Corridor commuter rail line. The state’s plan is to hand the operation of a New Hampshire taxpayer-funded enterprise to a Massachusetts organization hundreds of millions of dollars in the red, desperate for cash, and entirely reliant on growing levels of taxpayer subsidies for its survival. 

Fares cover only 9% of the MBTA’s fiscal year 2022 revenue, the authority’s March report showed. Non-operating revenue, which the MBTA itself calls “subsidy” revenue, accounts for 91%.

This revenue situation places tremendous pressure on the MBTA to increase both fares and taxpayer subsidies.

Could the lost revenue be made up by raising fares? Automobile commuters told the City of Boston’s commuter survey that they would be most likely to switch to transit if offered a free or reduced-price commuter rail pass. They are price-conscious. Higher fares would only drive more commuters away.

That leaves additional taxpayer subsidies as the only way to keep the MBTA operating as ridership remains below 2019 levels. 

A publicly financed commuter rail line from Manchester to Boston would funnel New Hampshire taxpayer money into the financially troubled MBTA just as teleconferencing software has begun to decimate demand for city-to-city commuting. That’s not what anyone would call a wise investment.  

The case for taxpayer-subsidized commuter rail from Manchester to Boston has grown weaker, not stronger, in the seven years since the state released its major study of the proposed Capitol Corridor project. 

The New Hampshire Department of Transportation’s December, 2014, report on the Capitol Corridor project projected that a commuter rail line from Manchester to Boston would attract 3,120 riders per weekday. It predicted also that demand for commuter rail would grow as highway traffic increased in the coming years. 

In November of 2021, the department released an updated analysis of the Capitol Corridor project. It projects a peak ridership of 2,866 passengers per weekday, which is an 8% decline from the 2014 report.

That 8% decline in ridership occurs even as the number of trips per day to Manchester doubled, going from 16 in the original report to 32 in the 2021 update.

Making matters worse, as ridership falls, costs rise. 

The 2021 presentation noted that the price tag for the rail line would be higher than originally estimated due to inflation and the need for additional infrastructure beyond what was originally planned.  

The 2014 report estimated $246.5 million in capital costs, plus $10.8 million in annual operating costs. Both of those costs are expected to be significantly higher. 

Adjusted for inflation alone, the 2014 cost projections would come to $292.7 million for capital expenditures and $12.8 million for annual operating expenses.

In sum, if the Capitol Corridor project were to proceed, New Hampshire taxpayers would pay millions more dollars to transport thousands fewer people. 

Where would the money come from? The DOT’s 2021 analysis includes a breakdown of non-federal funding sources for other U.S. commuter rail operations. The largest sources of revenue are sales taxes.

The DOT projects that, if New Hampshire’s commuter rail were funded in the same way other similar operations are funded, the largest source of non-federal revenue would be a “transit sales tax” at 33%, followed by a “city/local sales tax” at 18%, a “state transportation tax” at 12%, “state other” contribution at 11%, and state “GO bonds” at 8%.

Without a sales tax, it is unclear how New Hampshire could possibly fund the construction and operation of a commuter rail line. 

As the math for the Capitol Corridor project grows worse, viable alternatives to commuter rail are expected to enter the market within just a few years, possibly before any rail project could even break ground: 

  • At the Consumer Electronics Show in Las Vegas last week, automakers announced aggressive timelines for the release of autonomous vehicles. General Motors announced it planned to make an autonomous vehicle available for the consumer market by the middle of this decade. Volvo announced that its autonomous driving system would be made available as soon as it clears safety reviews in California. 
  • Mobileye, an autonomous vehicle company owned by Intel, announced that it has teamed with China’s largest automaker to put an autonomous vehicle on the market in that country by 2024.   
  • And, to demonstrate advancements in self-driving technology, companies are already showing off autonomous race cars that compete at speeds up to 175 miles per hour.

The automobile industry is at the beginning of an autonomous vehicle revolution. It’s a safe bet that by the time any Manchester-Boston commuter rail line is completed and operational, autonomous vehicles will be available on the consumer market. 

Once the technology becomes advanced enough to allow large-scale consumer adoption, Granite Staters will have the option of taking a self-driving vehicle from their front door directly to the front door of a Boston office, restaurant, theater, ballpark or medical facility. This represents a tremendous advancement over rail, which requires obtaining transportation to a train station, taking the train along a fixed route to another station, then catching another form of transportation to one’s final destination. 

Perhaps the ultimate advantage of autonomous vehicles is that they will be made available to consumers (including as taxis and ride share vehicles, and eventually vans and buses) without the expenditure of hundreds of millions of dollars to build a new transportation system and the annual expenditure of millions more to run it.

Self-driving vehicles offer all the commuting benefits of a passenger train — the ability to work, read, or relax on the trip, rather than drive — without the taxpayer expense. Once they become widely available, the already shrinking demand for commuter rail is likely to collapse.

From an investment standpoint, it makes no sense at this moment in history to spend hundreds of millions of dollars to build and operate an increasingly obsolete, 19th-century mode of passenger transport.  

The Transportation and Climate Initiative (TCI) was supposed to kill fossil fuels by raising gas prices. Instead, high gas prices killed the TCI. 

Cooked up by the Georgetown Climate Center and pitched as an innovative way to cut carbon emissions, TCI is an old-fashioned carbon-trading scheme. The intended signatories, 13 states from Maine to North Carolina, and the District of Columbia, were to agree to cap carbon emissions from transportation fuels, then sell carbon credits to fossil fuel suppliers. 

States would decide how to spend the billions of dollars TCI’s creators projected the carbon credits would raise. The initiative’s Memorandum of Understanding states that signatories would “seek to invest strategically in lower carbon transportation options and other investments to further the goals described in this MOU.” 

That commits states to no specific carbon-reduction investments. The money would go into state general funds, to be spent at will by politicians.

By design, the TCI would achieve its carbon reductions by making gas and diesel fuel more expensive. That would serve as an incentive for consumers to take mass transit, share rides, or buy electric vehicles. Any state investments in alternative transportation systems would be gravy. 

The TCI’s own model initially predicted that gas prices would rise by between 5-17 cents per gallon as a result of the scheme’s carbon caps. A Tufts University study last year estimated price increases between 3-38 cents per gallon absent a cap on such increases. The initiative anticipated capping price increases at 9 cents a gallon. 

But a funny thing happened on the way to the compact. Gas prices shot up on their own in response to surging demand and limited supplies. By October, gas prices had risen by more than a dollar during the year, hitting a seven-year high. 

With citizens already highly sensitive to gas price increases, governors who had initially backed the TCI’s plan to raise those prices further bailed.

Last Tuesday, Conn. Gov. Ned Lamont announced that high gas prices made it impossible for his state to join.

“Look, I couldn’t get that through when gas prices were at a historic low, so I think the legislature has been pretty clear that it’s going to be a pretty tough rock to push when gas prices are so high, so no,” he said. 

Mass. Gov. Charlie Baker pulled his state out on Thursday. Then Rhode Island Gov. Dan McKee followed on Friday, just a day after announcing his intention to remain in the pact. 

To sell the scheme, TCI backers had focused on the supposed carbon emission reductions the initiative would create. But as the Josiah Bartlett Center was the first organization to point out in December of 2019, the TCI’s own model showed that almost all of its projected carbon reductions would occur regardless of whether the initiative were adopted. The initiative itself was projected to cut emissions by between one and six percentage points, not the 25 percentage points boosters claimed. 

The small reductions the proposal might be able to achieve came at an enormous cost of tens of billions of dollars. And those costs would be borne by motorists. 

Consumers would pay higher fuel prices with no guarantee that those prices would result in meaningful investments in lower-emission alternatives. The only certainty in the whole plan was that fuel prices — and government spending — would go up. 

New Hampshire Gov. Chris Sununu was the first governor to recognize this, saying in a Dec. 17, 2019 statement that he would not commit New Hampshire to the TCI because the program “would institute a new gas tax by up to 17 cents per gallon while only achieving minimal results. This program is a financial boondoggle and the people of New Hampshire will never support it.”

Just shy of two years later, the rest of New England’s governors effectively ratified Sununu’s decision. Better late than never. 

A September report from the Federal Reserve Bank of Boston found that transit ridership in New England plummeted during the pandemic. 

From March 2020 to July 2021, the Massachusetts Bay Transportation Authority lost 340,584,000 passenger trips, while the City of Nashua’s public bus system saw 339,000 fewer trips and Cooperative Alliance for Seacoast Transportation experienced a loss of 295,000 trips.  

Much more interesting, though, was how New Hampshire systems are funded vs. others in New England. 

Massive Taxpayer Subsidies

The study found that only four of the 38 New England transit systems it examined “relied on directly generated revenue to cover at least half of their operating expenses in 2019.”

That is, in 34 of 38 systems, taxpayers covered more than half of expenses before the pandemic. 

In 26 of 38 systems, directly generated revenue covered less than 25% of operating expenses, the study found. 

(Directly generated revenue includes fares, parking fees and advertising.)

A New Hampshire Advantage for Taxpayers

But in New Hampshire, those percentages were reversed.

“The smaller public transit systems in New England are, on average, less reliant than the larger systems on directly generated revenue to cover operating expenses, but there are a few notable exceptions. These include the small systems in New Hampshire, which, on average, fund 75 percent of their operating expenses with directly generated revenue. The smaller systems in the other New England states generally are more reliant on local, state, and federal appropriations.”

In other words, New Hampshire’s famous frugality affects even its municipal public transit systems. At least for the two systems included in this study, operating expenses are covered primarily by riders and advertisers rather than taxpayers.

Nationally, fares cover about 1/3 of transit system operating costs, according to the Federal Transit Administration. 

Subsidies Replacing Subsidies

The report also noted that the “combined appropriations from the three federal stimulus packages fully replaced transit systems’ lost revenues.”

But with only 12 receiving at least a quarter of their revenues from fares, fees and advertising, and only four of those 12 receiving at least half of their revenues from those sources, it appears that in most cases the federal government was replacing taxpayer subsidies with other taxpayer subsidies.

The Wall Street Journal reported in August that federal COVID relief aid for public transit agencies totaled $69.5 billion, or “$15 billion more than the country’s 2,200 agencies spent combined to run their systems in 2019, the last year before the pandemic hit.”

Note: The study covered “full-reporter” transit systems, which are those large enough that the Federal Transit Administration requires them to file monthly ridership reports. The Manchester Transit Authority and other municipal bus services in New Hampshire were not included in the study because they are not full-reporter agencies. The two New Hampshire systems covered in the report were Nashua’s city bus service and the Cooperative Alliance for Seacoast Transportation.