Privatize or Contract Out?

The Metropolitan Atlanta Rapid Transit Authority (MARTA) spends $50 million more than its peers on employee benefits, says KPMG in an audit of the agency. Reducing benefits to national average levels (easier said than done) and contracting out some services such as cleaning would allow MARTA to erase a $33 million deficit in its annual budget.

Comparing a transit agency’s efficiency to its peers is like criticizing a bank robber for stealing more than home burglars. The fact is that they are both ripping people off, and just because some are a bit less rapacious doesn’t make them any more morally correct.


Private jitney in direct competition with MARTA bus.

So I suggest a more aggressive agenda: complete privatization. Atlanta is one of the few cities that doesn’t outlaw private transit in competition with the public agency, and as a result it has a number of private jitneys that operate without subsidies and often charge riders less than MARTA. The jitneys even stop at MARTA’s bus stops.

Many of the jitneys serve Atlanta’s Hispanic communities. One curiosity: according to one report, most MARTA drivers speak only English while most jitney drivers speak only Spanish.

Given that private operators provide transit service without subsidies, how can MARTA justify spending $400 million a year in taxpayer funds on transit? One reason is that MARTA spent $4 billion building a 52-mile rail system that serves a tiny fraction of the Atlanta metropolitan area. When counting amortized capital costs, this rail system costs about 50 percent more to operate, per vehicle mile, than MARTA buses, which themselves cost far more than private buses.

Construction of the rail system aimed to attract middle-class commuters out of their cars, but was done at the expense of limiting bus service to working-class neighborhoods. Although greater Atlanta’s population has grown by more than 150 percent since it started building rail transit, MARTA has done very little to expand bus service. As a result, transit’s share of Atlanta-area commuting declined from 11.0 percent in 1970 to 4.1 percent in 2010, which is hardly an endorsement of rail transit.

Contracting out and the other actions proposed in the KPMG audit can save a little money, but that savings will probably just be wasted on some other part of the transit system. In the long run, such reforms do little more than rearrange the deck chairs as the boat is sinking. Complete privatization would save Atlanta-area taxpayers more than a billion dollars every four years and still result in decent transit service to Atlanta neighborhoods that want and need it.