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Transportation Funding & Financing

Fares

Fares are a user charge for public transit exclusively collected at the local level. They account for about 14 percent of local surface transportation funding.

Like tolls for turnpikes, fares are one of the oldest means of collecting revenue for transit services. From mass transit's very beginning with privately operated coaches, omnibuses, and streetcars, transit operators have charged fares to cover the costs of their service.

Today, the majority of the nation's transit systems dedicate fare revenue to covering operating costs. It is extremely rare, however, for a passenger service to be self supporting. Nationwide, farebox receipts (in 2004) cover only 35 percent of operating expenses, and for many smaller transit systems, the proportion is significantly lower. In many cases, fare revenue is now viewed as the means of closing the gap between the costs of a given amount of service and the revenues from governmental support. Additionally, farebox revenues may be used to back bonds issued to finance transit improvements. Revenue bonds backed by farebox receipts are discussed further in the Clearinghouse section on Bonding and Debt Instruments.