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VIA Public Transportation in San Antonio, Texas
Transcript of VIA Public Transportation in San Antonio, Texas
On the Road to Equality
PAD 5393-Economics for Public Affairs
Professor Esteban G. Dalehite, Ph.D.
April 27, 2015
Overview of Presentation
The Need for Public Transportation in San Antonio
San Antonio is considered the seventh largest city in the nation. It has had a rapidly growing population, therefore a need to expand structural trade, an increase of barriers to wealth creation and economic inequality as transportation of those who remain dependent on public transportation. According to the 2000 census, San Antonio ranked number 30th in population in the U.S. with 1.6 million people. Despite the fact that public transportation provides an affordable alternative to driving for some, for others it is a necessity in this city.
Concerns for Public Transportation
• Service fails to meet the needs of the citizens
because the service is not equally distributed
• Underfunded program
In Figure 1, U.S. Census Bureau,
How People Commute to Work
, the second widely used method of commuting is public transportation.
VIA Metropolitan Transit in San Antonio fails to offer an “equal” service to its citizens. “Studies show that is not [only] because it excludes low-income groups from accessing opportunities in the suburbs (Figure 1,
VIA limited routes around San Antonio
) leaving them in the declining inner-city areas with few transportation choices;” but, because it affects the need of revitalize business districts, employers to tap into larger workforces, economic revenues and decreases property values (Barker, 2005).
VIA limited routes around San Antonio
The purpose of this research is to explore San Antonio’s public transportation by providing an overview of an economic analysis to explore whether the program is more efficient if it’s administrated by a private sector and/or increase taxes.
Economic Analysis Findings
1. The Pareto improvement is defined as, “a change which makes some individuals better off without making anyone worse off” therefore, achieving Pareto Improvement is nearly impossible when the program is run by a government agency.
2. In the case of VIA, this program does not constitute Pareto improvement as it involves tradeoffs associated with taxation that creates cross-subsidies.
3. In addition, there is no Pareto Improvement as there is an increase in consumer surplus and enhanced equity which creates inefficiency—making some better off and others worse off.
4. These inefficiencies make it impossible to achieve Pareto improvement as they offset the mechanisms of economics (Stigliz, 2000).
1. In the case of VIA, it is more efficient for the government to produce this private good because the marginal cost for a private agency would be extremely high.
2. VIA can provide this service at a lower marginal cost than a private agency. Figure 2 illustrates
1. The government produces a private good with a minimal user fee, which impacts consumer surplus and creates a substitution effect that directly affects prices in the economy.
2. VIA provides lower prices than other transportation avenues; those who purchase this good are better off as they can arrive to their location without having to pay more money if they had purchased this good through a taxi service or another transportation avenue.
3. In this sense, VIA impacts the economy as citizens may choose to opt out of purchasing any other means of transportation for example, purchasing a car which would impact the business and gas industry.
The local government created VIA to provide the transit service themselves. VIA provides the transportation, the city buys the buses and pays the employees. By providing these services themselves, this government agency has undertaken services that could be produced by a private agency and therefore, has eliminated the competition. This eliminates the need to keep its costs as low as possible making it inefficient. This inefficiency provides a burden on taxpayers as the costs associated with providing this service is levied on tax paid by the citizens of San Antonio.
1. There is a tax associated with transit costs; the Texas Transportation Code, states that funding for public transportation may only receive up to one cent of sales tax. In San Antonio, VIA runs its program with “one half cent” of the collected sales tax (Barrow, 2009, p. 34).
2. The inefficiency of this tax occurs because everyone who pays for sales taxes does not reap the benefits of public transit. Barrow, found that two of the wealthier districts in San Antonio refused to have their “one half cent” used on public transit and opted out of the program.
3. In addition, several of the Northeastern Districts of San Antonio protested about providing for transit costs as VIA does not offer many routes in their location making this an inefficient tax (Barrow, 2009).
4. In addition, this tax associated with collecting revenue for VIA also creates distortions in the economy.
5. Stigliz writes, that a sales tax can impact the cost of labor as prices increase and also encourage individuals to seek cheaper prices elsewhere therefore, causing an economic inefficiency.
Thus, consumer surplus gains versus consumer surplus losses and other costs, VIA, enhances consumer welfare by providing a private good that would not have been produced by a private company at such a low rate.
Based on our findings, the more a tax system redistributes income, the greater the inefficiency it introduces.
There is a trade-off between efficiency and equity. The way the VIA tax system is designed, the increase in both efficiency and equity will result with little or no trade-off.
Many would suggest raising taxes for this service or be administrated by a private sector, would eliminate the issues that the program faces.
However, the transaction cost are sufficiently high, it may be more efficient to supply the good publically than to have good supplied by private markets.