Guest Commentary: No on Measure I, SMART too expensive to operate

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Now that SMART’s tax extension measure (Measure I) is on the March ballot, the hype from rail proponents, SMART board members and SMART’s general manager is in full gear.

SMART was an uneconomic dream in 2008 when voters approved a quarter cent sales tax to fund the agency through March 2029. Nothing has changed in 11 years. The SMART board and its followers continue to make claims and promises about SMART on their websites and public proclamations, in direct contradiction of two economic fundamentals:

(1) Trains that fail to serve a high density employment center have zero chance of impacting peak hour traffic. They simply don’t and can’t carry many commuters close to jobs that are dispersed across suburban counties.

(2) Trains are expensive to operate. When they serve high density employment areas and generate significant ridership, those costs are distributed across a lot of riders and so operating costs per rider are low. When ridership is tiny, the operating costs per rider are high.

The board’s failure to accept these realities comes with consequences: It has to hide ridership data from the public and avoid discussions of how much it costs to operate the trains. That’s why ridership data wasn’t provided to the public long ago. That’s why multiple Public Record Act (PRA) requests for this information were refused, including a PRA request filed by the Press Democrat.

Big mistake.

SMART staff has been caught red-handed, stonewalling relevant public information that confirms less than 2,400 riders rode SMART trains on the average weekday in 2019. The released data also demonstrates total ridership is declining, as declines in weekend ridership are overwhelming minor increases in weekday ridership that isn’t that high to begin with.

The financial consequence of this low ridership is that SMART’s high operating costs are spread over few riders, resulting in high operating costs per rider. In fact, SMART is so cost-ineffective, its operating costs per rider are higher than any other rail system in the entire country, and by a lot.

SMART’s CFO reported this fall that operating and maintenance costs this year would be $41.3 million. That’s over $50 per passenger or $100 per round trip. No other rail system in the country has operating costs per passenger that are close to this figure. By comparison, Caltrain’s operating costs per passenger in 2018 were less than $7 per passenger.

While touting “transparency” with the release of daily ridership data, SMART continues to hide other information that it has at its fingertips: Ridership by train. This information would demonstrate that local taxpayers are paying to transport an enormous number of empty seats. Some trains are well used. Most are not. Taxpayers are footing the bill for this gross inefficiency.

If trains were cheap to operate, running 38 trains per weekday would not be a financial burden. The reality is there’s nothing cheap about SMART staff nor operating SMART trains. They are so expensive that according to SMART’s own financial plan adopted this fall, the agency is now operating in the red. It is costing more to pay staff and operate the trains than the revenues the agency receives through sales taxes, fares and other sources.

How are they paying for expensive staff and 38 trains on weekdays? They are draining their financial reserves to cover up the red ink.

Most of the SMART board know that using financial reserves to fund services when there is no emergency is imprudent and irresponsible. Win or lose in March, the agency will begin to reduce expenses. They’ll have to. Measure I doesn’t change their revenues for nine years and the bonds can’t be refinanced for three years.

If they were as transparent as they claim, SMART would come clean with the voters. They would accept the economic constraints it faces and disclose to voters before the election that they can’t afford to operate 38 trains on weekdays.

Before voters approve another penny for this agency, SMART needs to be transparent rather than just claiming it’s transparent. Operating costs need to be managed prudently. After all, every other transit agency is managing its costs. Why shouldn’t SMART?

After two and half years of operating trains, it should be obvious to all observers that this agency can’t reform itself. Voters must hold SMART accountable. The only way to do it is to vote against Measure I on March 3.

(Mike Arnold is an economist from Novato.)

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