1. From 1979 to 1990, average US public transit agency unit costs rose 23 percent (inflation adjusted).

2. The cost escalation tended to be higher where funding increased at a higher rate.

   For each 1 percent increase in inflation adjusted fare and subsidy revenue, unit costs of operation tended to increase by 0.20 percent ("R squared" of 0.229, statistically significant at the 99 percent confidence level)

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3. Operation of the Public Spending Corollary to Parkinson's Law is illustrated below:

   US URBAN TRANSPORT AGENCIES RANKED BY UNIT COST INCREASE AND REVENUE INCREASE: 1979 to 1990 (Inflation Adjusted)
   	Percentage of Public Agencies by Funding Increase Quintile
   Change in Unit Costs (Cost per Mile)	Top 20%	2nd 20%	3rd 20%	4th 20%	5th 20%
   50% & Over	30%	9%	9%	3%	0%
   30% to 50%	27%	42%	9%	3%	0%
   10% to 30%	36%	39%	49%	49%	50%
   0% to 10%	6%	6%	18%	12%	21%
   Less than 0%	0%	3%	15%	33%	29%
   Average Change in Unit Costs	48%	30%	19%	10%	10%
   From fiscal year 1990 sample of 166 public transit agencies accounting for more than 93 percent of US transit operating costs (motor bus, electric bus, light rail & heavy rail).

   THE ROLE OF COMPETITIVE INCENTIVES

4. By comparison, in the private bus industry, which uses the same factors of production and operates in the same labor market as public transit, costs per mile declined more than 10 percent from 1979 to 1990 (inflation adjusted).

   This suggests that while limiting public funding tends to reduce unit cost escalation, tax limitation alone will not achieve the potential for cost savings.

   Where routine programs of competitive contracting have been adopted, unit cost increases have been equivalent or less than the cost increases in the private sector.

   Competitive contracting should therefore accompany tax limitation.

COST INCREASE AND NEW FUNDING INFORMATION BY NEW FUNDING QUINTILES: 1979 to 1990: Inflation Adjusted
Change in Funding for Operations	Top Qntle.	2nd Qntle.	3rd Qntle.	4th Qntle.	5th Qntle.
Mean	136.7%	46.3%	25.3%	8.0%	-14.6%
Median	110.5%	45.2%	24.8%	6.7%	-11.1%
High	432.8%	58.2%	36.1%	17.6%	-2.2%
Low	59.1%	36.3%	18.2%	-1.8%	-40.4%
Change in Cost per Vehicle Mile
Mean	47.9%	30.4%	18.5%	10.0%	9.7%
Median	35.5%	30.6%	15.5%	11.4%	10.3%
High	150.8%	68.9%	100.7%	62.9%	28.3%
Low	4.9%	-3.1%	-19.6%	-18.8%	-11.3%
Sample of 166 public transit agencies accounting for more than percent of 1990 operating costs for motorbus, heavy rail, light rail and trolleybus modes.

PERCENTAGE DISTRIBUTION OF PUBLIC AGENCIES BY COST INCREASE PER MILE 1979 to 1990: Inflation Adjusted
Change in Cost per Vehicle Mile	Number of Agencies	Top Qntle.	2nd Qntle.	3rd Qntle.	4th Qntle.	5th Qntle.
50% & Over	17	58.8%	17.6%	17.6%	5.9%	0.0%
30%-50%	27	33.3%	51.9%	11.1%	3.7%	0.0%
10%-30%	74	16.2%	17.6%	21.6%	21.6%	23.0%
0%-10%	21	9.5%	9.5%	28.6%	19.0%	33.3%
Less than 0%	27	0.0%	3.7%	18.5%	40.7%	37.0%
Sample of 166 public transit agencies accounting for more than percent of 1990 operating costs for motorbus, heavy rail, light rail and trolleybus modes.