The Honolulu City Council is urging the city administration to repeal a decades-old cost recovery policy for the city’s bus system to stave off service cuts and potential fare increases for low-income riders on Oahu.
The Council on Wednesday adopted Resolution 262 by a vote of 8-0, with Council member Scott Nishimoto absent for that portion of the meeting. The resolution effectively calls on Oahu taxpayers to subsidize more of the cost to run TheBus and other forms of public transit in coming years.
But city officials, while acknowledging waning ridership for mass transit since the pandemic, assert the over-$10 billion rail line to downtown Honolulu could boost revenues to cover future operational costs for transit options like TheBus.
Others remain skeptical, however.
Introduced on Sept. 15 by Council member Tyler Dos Santos-Tam, Resolution 262 claims the city’s current farebox recovery ratio — which measures how much of the transit system’s operating expenses are covered by the fares passengers pay — has consistently missed targeted goals.
“The Council believes that subsidizing the transit system is a worthwhile use of city funds, and would like to repeal the policy on funding the operating cost of the city bus system with specific farebox recovery ratios,” the resolution states.
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The resolution notes in the year 2000 a prior Council established the city’s farebox recovery ratio of not less than 27% and not more than 33% of operating costs.
By 2019, the Council established that the transit recovery ratio should not fall below 25% nor exceed 30% of operating costs.
According to the city administration’s annual reports, Honolulu initially complied with its farebox recovery ratio policy for many years.
But the city has not complied with that policy from 2017 through 2024, according to the legislation.
“It is anticipated that the city will not comply with the farebox recovery ratio policy for fiscal years 2025 and 2026,” Resolution 262 states. “The Council finds that adherence to a predetermined farebox recovery ratio hinders
efforts to expand and improve public transportation services, particularly in times of unforeseen circumstances or economic downturns.”
In other jurisdictions in the U.S., public transit farebox recovery policies have been repealed, including at the Maryland Transit Administration and the Denver Regional Transportation District, the resolution states.
Before the Council’s vote, no one from the public testified on Resolution 262, but the legislation garnered mixed reviews in submitted written testimony.
UNITE HERE Local 5, which represents 10,000 hospitality, food service and health care workers statewide, supported the resolution.
“Decisions about fares, adding or removing routes, or changing the frequency of routes should be made based on need rather than cost to the greatest extent practicable,” the labor union stated in writing.
Hawaii Kai resident Natalie Iwasa opposed Resolution 262.
“As noted in the resolution, the city has not met the policy, mostly in recent years. Some of this period was due to COVID-19. The pandemic also likely plays a continuing role in reduced ridership due to the move toward remote work,” she wrote. “That does not mean, however, that a fiscal policy such as this should be removed. A better solution would be to ask what should be done to boost ridership and therefore revenues.”
“Repealing the recovery ratio would be taking a que-sera-sera attitude and should have no place in government fiscal policy,” Iwasa wrote. “This is an irresponsible action.”
During the Council’s Infrastructure, Transportation and Technology Committee meeting on Sept. 24, Dos Santos-Tam called on the Blangiardi administration to abandon Honolulu’s transit recovery policy.
“It’s basically a policy that says, ‘for the amount of money that we spend on TheBus, that percentage … is the goal to have generated from passenger fares,’” Dos Santos-Tam said. “And since 2000, we have not met this policy. Then, in 2019, because we weren’t meeting that policy … we lowered the percentage, to 25% and 30%.”
Roger Morton, director of the city’s Department of Transportation Services, said he couldn’t dispute the claims. However, he told the committee in September that he supports similar policies, especially given the major challenges facing public transit such as the impacts of COVID-19, the migration to ride-share, and the high costs of an incomplete rail system with low ridership and revenue.
Morton didn’t oppose Resolution 262, but said the city’s public transit revenue models will likely change when Skyline’s third phase reaches Kakaako by 2030. Skyline’s Segment 2, which runs past the airport, opened for public revenue service on Oct. 16.
Morton said rising transit costs and lower ridership after the COVID-19 pandemic contributed to the city missing its farebox goals.
The call for changes to the city’s transit farebox recovery policy follows the Council’s postponement of a plan to increase fares for riders of TheBus, TheHandi-Van and Skyline for the first time since 2022.
On Oct. 14, the panel’s Budget Committee voted unanimously to defer Bill 54 — a measure formally requested by DTS — citing the need to further study a measure that calls for a new fare structure for the city’s public transit system.
Previously, DTS said the proposed fare hikes were necessary due to rising operational and maintenance costs across the system.
As initially proposed, Bill 54 could increase the annual adult fare from $880 to $990; and the monthly adult fare would rise to $90, up from the current charge of $80 — a 12.5% price increase for both.
In November 2024, Morton told the Honolulu Rate Commission that annual costs to run the city’s buses were $244.8 million; for TheHandi-Van, $53 million; and for Skyline, about $76 million.
Morton also told rate commissioners a proposed fare increase to DTS could generate about $4.4 million in additional revenue for the city’s transit system.
