RISING DEFICITS AND THE USES OF TRANSIT SUBSIDIES IN THE UNITED STATES.

THIS PAPER EXPLORES UNDERLYING CAUSES OR EXPLANATIONS OF THE INCREASE IN TOTAL U.S. URBAN MASS TRANSIT OPERATING LOSSES BETWEEN 1970 AND 1982. BECAUSE FINANCED ENTIRELY BY DIRECT GOVERNMENT PAYMENTS, THE RAPID INCREASE CAN ALSO BE INTERPRETED AS THE PURPOSES OR ACTIVITIES FINANCED BY GOVERNMENT TRANSIT ASSISTANCE. A COMPARATIVE STATIC MODEL IS USED TO ESTIMATE THE CONTRIBUTIONS MADE BY RISES IN THE UNIT COSTS OF OPERATING TRANSIT VEHICLES, EXTENDING SERVICE DURING A PERIOD OF DECLINING DEMAND, AND REDUCING AVERAGE FARES. ALMOST 70% OF INCREASED GOVERNMENT ASSISTANCE SIMPLY FINANCED RISING UNIT OPERATING EXPENSES. INCREASING SERVICE LEVELS AND CUTTING FARES ABSORBED ANOTHER 8%; 25% FINANCED THE SERVICE EXTENSIONS AND FARE REDUCTIONS THAT INCREASING ASSISTANCE LEVELS WERE INTENDED TO PROMOTE. DECLINING DEMAND FOR URBAN TRANSIT SERVICE, AND CHANGES IN TRANSIT FARE STRUCTURES, PRODUCED THE FALL IN AVERAGE FARE REVENUE. THE PERFORMANCE OF U.S. TRANSIT OPERATORS IS COMPARED TO A SAMPLE OF EUROPEAN AND ASIAN OPERATORS. IMPLICATIONS FOR GOVERNMENT SUBSIDY PROGRAMMES TO SUPPORT URBAN TRANSIT ARE DRAWN.(Author/publisher).