Performance Impacts of Operating Subsidies in the Paratransit Sector

A multitude of studies in recent years have concluded that there are clear links between the amount of government subsidies and subsequent levels of transit performance and productivity. These studies have used data from fixed-schedule/fixed-route transit systems, largely ignoring the possibility of a different reaction of paratransit systems to the provision of operating subsidies. The effect of operating subsidies on the performance of paratransit systems is examined. The results indicate that subsidies from different sources (federal or state and local) have different directions and magnitudes of effects on the performance of different types of paratransit systems. Privately operated systems have been able to absorb and utilize subsidies in such a manner that has increased their performance, but the performance of publicly operated systems has generally decreased with the provision of subsidies. Finally, a drastic reduction in the levels of federal operating subsidies, a direction toward which the government is heading, will significantly and negatively affect the performance of paratransit systems.