Commuter Rail Transit Price Elasticity of Demand: An Assessment for the New Mexico Rail Runner

The New Mexico Rail Runner (NMRX) has been in operation since July 17, 2006. Current annual operating expenses for NMRX are approximately $24 million. Although the federal Congestion Mitigation and Air Quality (CMAQ) program provided NMRX with $6.8 million in annual funding in FY10, these Funds were reduced by $1.2 million in FY12. CMAQ restrictions will phase eliminate these funds by FY13. Due to the need to attain a balanced budget, the Rio Metro Regional Transit District (RMRTD) is exploring a variety of options for raising revenues and reducing operating expenses, including advertising, exploring other state and federal funding sources, schedule changes, fare increases, and using buses for less popular routes. The Bureau of Business and Economic Research (BBER) was asked to assess the potential effects of an increase in fares?and in particular the impact of fare increases on ridership ? by conducting a literature review and examining NMRX?s peer transit systems.