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Take the Bus May 25, 2008

Posted by truthspew in Uncategorized.

I came across this on Yahoo’s news titled “High gas prices? Take the bus instead”.

RIPTA is the dominant carrier her in Rhode Island. But one thing they’re getting killed by is fuel costs. So much so that a monthly pass is going to $55 from $45, regular one way fare is going to $1.75 from $1.50 as well as increases on most fare products.

One of the primary problems that RIPTA has is that the fare paying public is only 10% of their riders. The other 90% get subsidies, freebies, etc. For example, college students at universities enrolled in the uPass program can present their student ID and not have to pay a fare. The schools chip in for this but you can be sure it’s not full fare.

RIPTA walks a fine line with fare structure. They know that if they increase too much people will simply walk or bike or drop out of the transportation game all together. But they’ve seen enormous gains in number of riders over the past few years, mostly the years of [dripping sarcasm mode on]President Bush’s great economy[dripping sarcasm mode off]

Another big part of RIPTA’s budget is provided by a few cents of the state take of the gasoline taxes. But as consumption of gasoline goes down, so too do RIPTA’s revenues. There is talk of eliminating the fixed tax on gasoline and going to a percentage basis.

That way as the cost of gas rises so to does the tax collected. As it stands now Rhode Island takes 32 cents of that per gallon cost. Actually if they did a percentage basis and used the 7% state sales tax they’d remove the 32 cents in tax so that gallon becomes $3.68 and then apply the tax to that which would bring the per gallon tax to 28 cents. Let’s say gas is $4.50 a gallon before tax, that’d net the state about 32 cents.

In reality a percentage tax is a losing proposition for the state and would have to be much higher than the state sales tax rate.

Let’s try the same experiment at 12%. The $3.68 gallon would net the state 44 cents in tax, and if gas rose to $4.50 it’d be 54 cents.

So if we do change the funding scheme for RIPTA expect to pay a lot more for gasoline. That’ll further depress gasoline usage. It’s a vicious circle.


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