A pilot program providing free bus and train rides for low-income riders and K-12 students in Los Angeles County recently got the green light to continue forward, but local transit leaders wonder what the move means for other operators in Southern California.

The Los Angeles County Metropolitan Transportation Authority unanimously voted last month to approve the development of the pilot program. Transit officials touted the elimination of fares as a way to help Los Angeles County emerge from the pandemic, put money back in the pockets of those who need it the most, and increase ridership.

Nearly three-quarters of Metro riders are low or extremely low-income, which is the largest percentage of low income riders in the country, Metro CEO Phil Washington said back in September 2020 when Metro leaders agreed to move forward with studying the fareless initiative.

“I believe we have a moral obligation to LA County residents to pursue a fareless system and help our region recover from the pandemic and the effects of the lack of affordability in terms of housing,” Washington said as he detailed how the elimination of fares would put money back in the pockets of those who need it the most while also promoting social equity and expanding economic opportunities. “We know that housing and transportation are the two biggest expenses for households. So, imagine if we could eliminate one of those expenses.”

No other large transit system in the world has gone entirely fareless, but Metro leaders believe the prospective 18-month pilot program would prove useful in determining how to proceed to a completely fareless transit system for all riders in the future.

The pilot would begin with free fares for K-12 students and community college students in August 2021, but Santa Monica transit leaders have already begun exploring how the proposed Fareless System Initiative would impact the region and Big Blue Bus operations.

Throughout the last several months, an FSI Ad Hoc Committee comprised of representatives from several Municipal Operators, including BBB, and LA Metro has been meeting to evaluate the effects of the proposed pilot, according to a report to City Council from Edward King, Santa Monica’s Director of Transit Services.

“The Munis have participated as they are supportive of the goal of encouraging increased ridership as life returns to normal coming out of the pandemic,” King’s report states. “In BBB’s case, 78 percent of customers would qualify as low income under the pilot program. In addition, considering all of our K-12 customers (8 percent of total ridership) and community college customers (16 percent of total ridership), the pilot could have a dramatic impact on service.” Accordingly, the Munis are concerned about the financial impacts on their operations if they were to participate.

A recent survey completed by the Munis estimated a $21 million loss in fare revenue in FY 21-22 and a $54 million loss in FY 22-23 if the program is implemented. The same survey estimated BBB would lose $3.9 million of its own fare revenues in FY 21-22 and $7.7 million in FY 22-23.

“These costs do not include potential challenges for the pilot such as paying for increased system security and funding additional service hours if demand surges,” King said, adding, “If LA Metro moves forward, the pilot program would have a significant impact on the Municipal Operators in Los Angeles County, including BBB. If the Munis do not participate, it is anticipated that large numbers of riders who now ride Municipal buses would move to LA Metro’s free fare system wherever possible.”

King noted it would be a challenge to convince residents to begin paying for transportation again if the initiative doesn’t work out. The FSI pilot would also call into question several regional partnerships and long-term funding agreements with community colleges that provide free service for the students and a consistent source of funding for the transit provider.

“During the pilot program, these agreements would be unnecessary,”King said. “This would, in effect, transfer the cost of rides from the community colleges to the transit systems during the pilot period. For example, BBB would lose $1.3 million in revenues annually from Santa Monica College.”

Washington said the agency is considering the use of grants from the state or federal government, existing revenues, such as advertising, and other sources of funding.

If successful, the FSI pilot is expected to expand to include low-income riders who meet Metro’s existing low-income qualifications sometime in January 2022 and the pilot would end in June 2023.