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Light Rail—Cost is not the same as Price

October 25, 2012

The Arizona Republic October 23 headline stating that the “Cost of public transit may rise” from $1.75 to $2.00 is misleading. “Cost” is an accounting term that includes all of the various pieces of a given item. In the case of Light Rail, when you include all of these various pieces (construction, maintenance, power, etc) the actual cost of each person who takes the Light Rail is around $13. Since the “price” (the proper name of the increase you were describing) has been $1.75 person, this means that someone other than the rider (in this case it is we taxpayers) is paying the balance. Dividing 11.25 (the taxpayer portion) by 13.00 (the total cost) yields approximately an 86% taxpayer subsidy. With the rise in price to $2 the taxpayer subsidy drops all the way down to 84%.

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