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LTD Should Use Windfall to Build Ridership

July 30th, 2018 by dk

Only two transit systems in Oregon have received payroll tax revenue until this summer. Now all of them will. All wages across the state are being assessed a dime for every hundred dollars earned, to support transit systems in Oregon.

Only Portland and Eugene are getting a second bite from this funding apple. Property taxes are most common elsewhere, forcing transit to compete with other government services for adequate funding. Corvallis residents pay a “Transit Operations Fee” on their utility bill each month — it’s roughly the cost of one gallon of gasoline.

Local employers have come to accept the payroll tax as the cost of doing business in Lane County. Lane Transit District mollifies large employers by offering a very attractive group pass program. If your employer has given you a free bus pass, it’s probably paying only about six dollars for that pass each month — less than the cost of two days’ commute.

Small firms and the self-employed do not receive this same benefit. LTD’s payroll tax is assessed on all wages paid, but the group pass program is available only to businesses with at least 20 employees.

No Oregon transit system is sustained completely by fares, but LTD relies on it less than Portland. Passenger revenue in Portland hovers around 40 percent of its payroll tax revenue. LTD’s fare revenue amounts to less than 20 percent of its payroll tax revenue. Corvallis used its Transit Operations Fee to become a fareless system in 2011.

The new state-mandated transit tax should bring in $2.5 million over the next 12 months — a 14 percent increase over last year’s payroll taxes collected for LTD.

The state legislation requires LTD to form an advisory committee to develop proposals for how to spend this windfall. LTD’s Board will receive the committee’s suggestions and then make their own proposals to the Oregon Department of Transportation for review and approval.

What can LTD do with the extra funding that will increase ridership? The additional revenue isn’t enough to eliminate fares altogether, but it’s tantalizingly close. If the University of Oregon followed Oregon State’s lead, or if residents were willing to pay a TOF, we could have a free system. But there are smaller steps LTD could take in that direction.

  • LTD could eliminate fares on weekends. Eugene’s two largest parking garages are free on weekends to promote shopping and tourism. If business sales rose across the region, it could produce additional payroll tax revenue for LTD.
  • LTD offers an inexpensive bus pass for school-aged children to cover the summer months. That program could be expanded to include all ages. The cost of the summer pass — currently $50 — could be lowered or eliminated.
  • On the other end, LTD doesn’t charge fares for senior citizens, once they turn 65. If they lowered that threshold to 55, would the good will that comes with easy mobility outweigh revenue losses?
  • Portland offers free bus service in its urban core. Fareless Square encourages tourist exploration. It also helps restaurants attract customers who can’t walk there and back on their lunch hour — or in the rain. LTD tried The Breeze years ago, but it wasn’t completely free.
  • LTD’s group pass program could be expanded to include smaller firms — or all employers and the self-employed. Our region must attract more employment opportunities. This perk could become a major selling point for any business or entrepreneur seeking to expand an economic footprint, but not an ecological footprint.
  • Since fare revenue already contributes so little to LTD’s financial picture, its leaders might want to learn exactly how much ridership would grow if fares were eliminated. Promoting a different route each month as temporarily free — perhaps with a corporate sponsor — would allow them to compare ridership levels.

Removing fare collections produces additional benefits. The job of the bus driver changes. Hopping on a bus requires nothing more than an impulse. Curiosity can unexpectedly lead to changes in lifestyle. Good will grows when a service is provided without cost. Future expansion plans will meet less resistance.

We’re not there yet, but we’re closer. And the trip could be quicker than we expected.


Don Kahle ( writes a column each Friday for The Register-Guard and blogs at

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