Understanding the Real Economics of Transit with Tri-Rail Finance Director, Jeremy Baker

Stop Requested. Welcome to Stop Requested, the podcast where we discuss everything transit. I’m your co-host, Levi McCollum, Director of Operations at ETA Transit. And I’m your co-host, Christian Londono,

Senior Customer Success Manager at ETA Transit. You’re listening to Stop Requested. Hey, Levi, how you doing today? Man, I’m doing very well. We’re at Transport Ticketing

North America 2025. It’s a great event so far. It’s a great event. It’s exciting here in Chicago. And, uh, we have our first guest that we’re interviewing at Stop Requested. Our guest today is Jeremy Baker. He’s the Director of Finance at the South Florida Regional Transportation Authority, SFRTA, uh, which happens to be an ETA Transit customer.

Jeremy has worked with different transit agencies, helping them rethink revenue, optimize funding and strategies, and navigate public finance. So, Jeremy, welcome to Stop Requested. First up, how are you do- how are you enjoying the conference? Well, thanks for having me, Levi and Christian.

Uh, having a great time here at the conference. First time here. Um, oddly enough, I was able to meet some old friends that, uh, from other conferences and already been able to meet some new contacts that I think are gonna be beneficial relationships going forward. Excellent, yeah.

You know, uh, I, I know that Christian and I know you pretty well. We worked with you at Palm Tran, but for our audience, can you let them know about your background, how you got into public transportation, and how you got to be the Director of Finance at SFRTA? Uh, thanks. So, uh, much like The Beatles, it was a long and winding road.

Uh, started out in, uh, private sector, went into nonprofits, then went into higher education, somehow worked my way into government, which led to my position at Palm Tran.

um, Uh, found that transportation was something I really had an interest in. Um, opportunity came up and I moved over to SFRTA for rail. Um, so able to bring a lot of, uh, information from a variety of different areas together, um, and see how they can all improve rail. Yeah, absolutely.

Uh, so, you know, working at Palm Tran, now at SFRTA, you see the differences between bus and rail operations, you know, an- anything that just stands out to you, like something that’s glaringly obvious that you maybe didn’t have to look at on the bus side and now you have to look at on the rail side? Well, everything on rail has an extra digit in it.

Okay, that’s fair. Um, so bus is very complex because you have a lot of pieces going in a lo- lot of places all at the same time.

Rail’s pretty straightforward. You, you go up one way and you come back the other way. Um, so there’s a lot of similarities, but you, you run into those challenges where, like, you’re dealing with the same people and they have the same challenges in the same area, and how do you meet their needs to get them from where they are to where they need to be and then back to where, you know, where their destination is? That’s the same both for bus and rail. I think that’s why the two of them work well together. I see. Okay.

Uh, what do you think is a, a common frustration that, that agencies experience? What, what’s something that, you know, both from the, uh, your Palm Tran days and now at the

SFRT- RTA experience, you see that, you know, the agency just struggles with or has a, a difficult time, uh, with maybe communicating to the public?

Is there something that stands out? So, since I’m, I’m a finance person, um, a lot of my things are kind of jaded by that, and one of them is, you know, we’re, we’re held to the standard of, “Why aren’t you making enough money?”

Well, you know, “Why aren’t you just paying for yourself?” And it’s, it’s not really not what we do. We are a, a public service. fair. That’s And we want to, you know, help move people, and there’s a lot of economic benefits to doing that.

Um, but w- you know, there’s this standard that we should be like a private industry and we should cover all of our own costs, and it’s, it’s not really fair, because that’s, that’s not really what transit’s purpose is. It’s not to make money.

It’s to really move people from one place to another. And y- just a, a followup on that, because we, in our backyard, we’ve got Brightline, right, that kind of runs parallel to, uh, Tri-Rail.

You know, what if someone were to say, as a counter to that argument, that, you know, “Well, Brightline does it.” Wha- what would you say there? Um, are you gonna compare a cruise line to an airline?

They’re two completely different animals. Um, there’s a lot of stuff that Brightline does that I would love to be able to do.

I would love to have food and beverage cart on all of our trains. It’d be a great revenue source, source for us. they’re able to,

Um, to move their passengers, but, uh, you know, there, it’s kind of an unfair comparison, too, because Brightline is moving people city to city, you know, similar to what Amtrak does on a national scale, and we’re moving them within our region. Um, that’s, that’s our purpose with commuter rail.

So, you know, I’d, I’d love to do more, and, and we want to get some of the amenities that Brightline have. We wanna have, you know, obviously we, we’d love to have 100% on time performance.

We’d love to have new equipment, um, new train tracks, new everything. And we’re working towards that. A lot of investments that we’re making for those things. you know, those, those all take time. Ye- and also, uh, price-wise, there’s, there’s a big gap, right? Like, they’re,

But, they have to be priced at a place where they can get consumers, uh, at the same time being profitable. but ele- And that’s something that is not necessarily the same, situation for, you know, public transit in general, you know, for bus systems or even a commuter rail system, to uh, just say, “Hey, we’re just gonna price it as high as we need to to make it profitable.”

I’d say looking back at my past, it’s almost the com- you know, the change that I had to make mentally when I moved from working in the private industry to the nonprofit sector.

Like, the private industry has a motivation of profit. Like, their sole purpose is to make money for their shareholders, you know, whether it’s, uh, an individual or, or stockholders.

A nonprofit has a completely different goal. They’re focused on how do they make the world a better place, how do they, they improve society, you know, and they’re not driven by profit. So it’s, it’s kind of an unfair comparison between the two, um, to say, well, you know, Brightline does have to make a profit. They, they have bondholders and shareholders that they report to, um, but, you know, uh, public transit agencies, they’re not there for that profit motivation. They’re there to provide a, a social benefit, um, which, oddly enough, also creates an economic benefit to that same, uh, area by providing that public transit.

Apta says that every dollar invested into public transportation translate into five dollars of economical return. So there’s a lot of other things that are, you know, are not directly seen in the revenues that the agency is collecting, but are taking place in the community. Like you said, it’s being able… Uh, people get to work or get to school, and, you know, those, uh, universities selling those tuitions, and, you know, those employments being able to, uh, staff their jobs and being able to sell their goods and services, uh, in the community. But it… So for a, a company like Brightline, you know, fair revenue and fair collection is very important for them, uh, because, of course, it’s a big part of how they pay for their operations.

But let’s talk about how, uh, transit agencies are funded today. Uh, what are the most common revenue sources transit agencies are reliant on today?

The big one, um, for most agencies, um, are either contributions from their government entity that oversees them if, if, like, they’re part of a county government.

Um, if they’re an independent authority, um, generally it falls into two broad categories where either, uh, they are funded by sales taxes or property tax.

Um, there’s some other sources of funding, um, other types of, uh, consumption or use taxes, like fuel taxes, things like that. Um, obviously, the, the fare revenues are, um, a big part of what that agency does, and there’s some, some minor things of other bits of money that you might be able to get. But the, the big ones are the tax dollars, whether they’re, you know, whether that agency can, uh, assess their own sales tax, their own property tax, or they receive it from- Hey, how are you? … another government entity that’s transferring it to them. Uh, so just to break that down a little bit more, because I, you know, I have property and I pay property tax, I go to the grocery store and I pay a sales tax. I’m, I’m familiar with those concepts at, at that level.

But how does that, you know, aggregate up in a, into paying for public services? Uh, y- you know, in other words, like, what, what are some of the trade-offs here between having a property tax that funds your public transportation service versus a, a sales tax? Can you give us kind of the pros and cons? So, I’ll start with one part, which is, um, when it comes to taxes, the, some of these questions are, do you wanna take money out of your left pocket or your right pocket?

Um, either way, the money’s coming out of your pocket. And that’s a big part for any of us in the government, uh, ecosystem to understand is that ultimately, it’s a taxpayer that is paying this money no matter what the mechanism is.

Now, the d- the difference between the mechanisms, you know, property tax is, um, widely been viewed as a very stable, uh, revenue source.

It is not subject to a lot of whims of the market. you know, Um, you don’t have as much of an issue if there’s, say, a recession or, you know, hyperinflation.

You know, of course, we do remember, you know, back to the early 2000s, there was the anomaly with, uh, the whole housing market that caused issues with property tax.

But, you know, I’d say through the course of history, other than that, property tax has been incredibly stable. Sales tax is sometimes a little bit more palatable to some, um, and it’s, you know, spread out to a, a wider audience of people that pay that tax. You can, uh, receive it from, you know, something with us in South Florida, you know, tourists that are coming in, they’re also paying that sales say, tax because they’re getting the benefits of, uh, what this government provides for them. You know, police, fire, roads, water, all those things.

So they, they can contribute a part of that share, but sales tax has shown a lot more volatility over the years. Um, you know, if there is a recession and all you have is sales tax funding, if you don’t have a proper amount of reserves, you are stuck and your only solution then is to, uh, cut expenses. And when it comes to public transit, there’s really only way to cut expenses, and that is to cut service.

So, it- it- it, you’ve gotta balance out those challenges of, you know, who’s paying what part, what becomes equitable for the people paying it, and how stable do you want it to be, and what can you do to, you know, kind of offset instabilities. Is there a hybrid approach there that some agencies take, or is it usually just one or the other? So, again, it depends on what kind of agency you have.

Um, my experience with, like, the independent authorities, especially in Florida, they usually have one type of funding. Either they, they can get a millage rate, which is a property tax or they have sales tax.

rate, Um, if you’re funded by, like, a local government-They have the discretion as to which pot of money they have to use to fund you, ultimately, it’s, but you know, taxpayer dollars.

But in- in- you know, in that instance it’s the government’s at risk of any volatility, whereas a- an independent authority, that’s part of the risk that they bring on with being independent. So, um, in terms of, uh, fares, right? If we talk about sales tax, we talk about appropriate tax and being the major sources of funding for the transit agency, right? Because the- the moment that you start charging for the service, right? A transit agencies charge a fare for people to access the service, then automatically there’s a misconception and we see it in the public where sometimes the public thinks that that fare they’re paying to get into the transit system is paying for the operation of the transit system.

So the- the- the question is, is farebox recovery still relevant or should agencies rethink how much they depend on fares since, you know, the majority of the funding is really, you know, through taxes, some sort of taxes?

So I think that farebox recovery does remain a relevant metric.

Um, it is an objective way to compare different agencies at a certain level, as long as you take into account the differences that might be between different agencies.

You know, a- a- a larger agency might be able to recover more, uh, fares because they’ve got a higher volume and… Whereas maybe a- a much smaller, um, you know, different type of agency may not have as much, you know, um, fare recovery.

But that’s gonna go with anything that you compare two agencies from. You- you can’t compare, you know, a- a major entity like a- a WMATA, an MTA, a CTA to, you know, some small county bus agency that’s running 10 routes. Like- like, y- y- you can’t compare them on any way, so you most certainly shouldn’t compare them, you know, w- with the fare recovery rates.

But it- it’s a good place for, like… I use it for my agency and my purpose, and even when I was with Palm Tran to say, “How are we doing? Are we doing better this year than we did last year? Are we doing better this month than we did last month?

Over the last five years, how have we done? Are we, are we making progress?” And a bigger part is it does show some of the decision-makers that we’re making an effort towards offsetting the cost.

You know, a- and, we can’t you know, discount the fact that it is a political environment that we operate in as government, sometimes we’ve gotta be able to- to sell our case and say, “Look, and we’re- we’re doing our part.”

You know, if it was free, then, you know, that works, and some agencies have gone that way and there’s a lot of, you know, pros to that. There’s some cons also.

But then collecting that money says, “Look, you know, people are contributing to this. They’ve got some skin in the game, it matters to them,” both from the riders, the agency, and- and it sends that message to those decision-makers. I think that, hey, having a level fare helps to regulate the use and not abuse, you know, people just when it’s free tend to, uh, get creative and, you know, sometimes you get maybe a lot of homeless just like almost living in your transit system because it’s so free, uh, and easy to- to- to use. But, uh, my question now since you mentioned, we talk about this metric farebox recovery ratio, there’s a good way of showing the contribution of the transit agency and the community to offset the cost of, uh, running the transit system, but, uh, also in- in public transit you see, um, other types of revenue such as, you know, wrapping buses and doing advertising and- and doing all that.

What’s your take on that? Wh- wh… Do you think transit agencies should be doing more of that to try to bring, you know, a little bit of revenue to offset cost, especially in this climate today? Or you think that the transit agencies should focus more on running transit and not trying to go after the- a few dollars here and there?

So I’m gonna say that that’s a tough one because it’s going to depend on that agency and the community they’re in because there’s some communities that say, “We’re not so worried about that money, we’re…” You know, they’re willing to pay that extra and they want you to focus on running the best service that you can run, and that’s it.

There’s other communities that say, “Hey, we want you to do everything you can to maximize the revenue you bring in,” because it lowers the- the taxes that have to go to that agency, which then get distributed to some other purpose in that community.

Um, I will say this from my experience, all of those things are wonderful, as a finance person I want to generate as much revenue as I can, but the reality is all of that extra revenue is…

does not move the needle on our agency. Um, if- if I doubled, tripled, quintu- quintupled the revenue of- of the other revenue that comes in, it would not change anything with my agency.

Um, it- it… We might- we might be able to put in a couple more electrical outlets that get broken, but, you know, i- it’s not gonna be the thing that puts another train on the rails a day, it’s not gonna buy us another piece of equipment.

but again, the value there is just showing to the decision-makers and the taxpayers Um, we’re doing everything we can to- to lower the burden ultimately to that taxpayer.

So in the- in the news lately there have been many articles about, you know, this death spiral for certain transit agencies like, uh, Pittsburgh being one, uh, just, uh, off the top of my head.You know, I, I know that obviously this is related to the, a larger funding conversation, you know, the federal funding that’s coming into those agency as well as the, the sales tax that they’re, they’re generating.

Uh, y- you know, how, how should we understand that? Maybe as a non-financial professional. You know, finance is not my background, probably for a lot of our listeners it’s not either.

How, how do we make sense of that? We’re past the beginning ’cause we didn’t make the finance time to do it. We didn’t hear the beginning of it.

Oh, okay. Okay. All right. So, yeah, I’ve been reading a lot in the news lately about this death spiral for certain agencies, and, you know, the, the death spiral is the, the fiscal cliff, right? At a certain time, there’s going to be a point where we don’t have any money. How, how does, there’s, how does that happen? Like at, at Pittsburgh

Regional Transportation, you know, they, they’re experiencing something- I’m not familiar with Pittsburgh. So I do think we’re not breaking up with my old agency. … agency for that.

Um, this is a conversation that we’ve had since before I started there with my agency. Um, so it’s something that comes up for those independently funded organizations. Um, some of them had these issues prior to COVID and they were working through it.

Um, my agency was one of those. Um, COVID obviously, you know, shifted everything for everyone, uh, in particular in, in transit.

Um, so we’re coming back to that now and we’re, we’re having those conversations. We’ve been having it with our board, with staff, uh, with decision-makers about, “Okay, when this funding goes away, what are we going to do? Because we don’t generate enough money and we don’t get enough of a, of a tax contribution from our funding partners.”

Uh, my agency in particular doesn’t have its own independent funding source. We don’t have a sales tax or a millage, uh, property tax, so what are we going to do?

And what does that mean? And so you get into this thing and it, it’s separate from my job. My personal opinion on this is, to look at it and, and a lot of agencies will go, “Well, we don’t have money, so let’s cut service a little bit.

And then let’s cut it a little bit more,” and I think that’s your death spiral. Right. Is that it’s, uh, the, the finance analogy’s always death by a thousand paper cuts, and that’s what it would feel like. And again, separate from my job responsibilities, my personal belief is just if that’s the decision we’re gonna make, let’s just be honest and upfront and make the decision and say, “You know what?

Transit doesn’t matter.” And just call it a day and move on to whatever we’re going to do next. Because to say that we’re gonna cut it and cut it, you, you’re not gonna improve service. The cuts that you make are gonna impact your ridership, and then you’re gonna have less people, and then you’re gonna have the same thing, more of the same questions as to, “Well, why are we contributing these tax dollars to this service that’s not serving as many people?” Well, it’s not serving as many people because you’re not providing a service.

Um, and, and that’s where it gets really challenging. You know, much bigger organizations I think have a different set of circumstances because they’ve got the volume of people, but then their service is so expensive, and then how do they raise all of that money?

So even the large systems are having some of these challenges with, “How do we, we fund ourselves on an ongoing basis?”

I, I wish I had an answer as to how to do it. Um, if I did, I would be implementing it in my agency right now. Um, but I can say that, yeah, this is a big thing and, and my personal belief is you’re never gonna get there by cutting and cutting and cutting.

You, you really just have to say what is your priority as a society? Either we’re gonna invest in transit and we’re gonna pay the cost for it, or we’re not. And, you know, you would do the same thing with a police department, with a fire department, with your libraries, with your roads and your bridges.

You know, uh, the city that I grew up in, they didn’t want high taxes. Most of their roads remain unpaved.

Uh, 30 years after I’ve left there, there’s a bunch of dirt roads. And the people there are willing to pay for damage to their tires, new suspensions, all the damages to their car because they don’t wanna pay to pave the roads.

It, that’s the decision that community made. It’s the right decision for them, and, you know, but it,

I choose not to live there. I like my, my nice well-paved roads. Sure. Sure. Uh, and just, uh, an extension onto that question. Uh, can you give us, uh, the m- maybe a primer on the federal funding situation? Like, what is that looking like under the Trump administration and what, what can we expect? The…

I’m not as involved in that. Um, that is more of an executive issue, so m- my standpoint is what I see as, as kind of a, just a regular citizen taxpayer.

it does seem like there continues to be bi- partisan support Um, for transit, um, but some of the priorities have changed with the new administration.

I think it’s Um, been a, a much more of a dramatic change than what we’ve seen in the past, and a lot of people are adjusting to what this means.

Um, what is it gonna mean, you know, through the next political cycle, through the term of this presidency? You know, what’s it gonna mean

10 years from now? 15, 20 years from now? We’re just trying to, to kinda take it all in and, and figure it out.

You know, I believe that we, we understand the value of transit. Um, we know that you know, across the board what it’s, generates our economy.

It’s what pushes it. You know, whether it’s commuter rail or bus rail, interstate commerce, whatever it is, it’s all in that same big bucket…. um, and that we’re just going to have conversations about, well, do we put a little bit more over here or a little bit more over there? And, and what’s our priority? Do you have any pieces of advice for, you know, transit professionals that may be listening in right now, or even just, you know, transit enthusiasts or advocates?

Uh, you know, what, what’s something that, that you would like to, to share with a broader audience about, you know, maybe how to understand the current financial times that we’re in? The finance people are always right.

I like it. I like it. No. Um… Be cognizant of the information that you’re getting and who it’s coming from, and think about what their motivations are in providing that information to you.

Um, you know, not just my time in transit, but even in government, um, and I think just society in general, you have to be aware of, like, what are people’s motivations when they’re going to do something?

You know, somebody that’s really in love with transit like we are, they’re going to do everything they can to support transit. Somebody who just hates transit for whatever reason is going to take the same kind of information that we have to support transit and find a way to twist it to make it look as, as if transit is inefficient.

So, do your research, take a step back from it, and, and maybe that’s the benefit of the finance person, you know, the numbers don’t lie, but how you interpret the numbers can really change.

Um, and take a look at it and, you know, be aware of your own biases, be aware of other people’s biases, and, and try to look at it from different angles to see what you’re getting to.

Um, it’s helped me, I think it, you know, when I’ve, I’ve run into challenges to even question my own thoughts to make sure that either I’m making the right decision or to stop me from continuing to make a bad decision.

Yeah, I, I love that advice. I mean, just be skeptical, right? A, a healthy skepticism is, is very important in life in general. You know, uh, you, you, you walk down the street and people are just handing you stuff.

Um, y- y- you need to be aware of what they’re doing. You know, it’s… Maybe they’re a kindhearted person that’s giving away gifts. I’ve been that person before.

Maybe they’re just somebody that’s got some other motivation. Right.

Well, so you’re presenting here tomorrow at Transport Ticketing North America. Right. Uh, can you give us, uh, a bit of a sneak peek into what you’re gonna be talking about? So, uh, yes. I am gonna be presenting tomorrow. I’m part of a panel discussion about tackling the cost challenges of, uh, fare collection projects.

So I’m gonna be taking my experience, uh, at Palm Tran and what we went through there. I’m also looking at some of the conversations we’ve been having at SFRTA about a new fare collection system that we’re pursuing, hopefully providing that wisdom to others that might be a little bit, you know, further behind than we are, so that they can learn from my mistakes.

And, uh, you know, no, I’ll take it for, for what it is. Everybody makes mistakes in what they do. Hopefully they can learn from those, make the changes so that they don’t make the same mistakes.

Um, there were people that did that for me. I learned a lot from seeing other people, and that’s a great thing about being at a conference like this. Um, people are really open about the information.

They wanna share it, um, and they’re not going to hide from something that went wrong just as much as they, they want to go out and sell all the things that went right. Um, the vendors have been good about it. The, speakers have been good about it. The attendees are good about it.

um, I lo- I love that part about these kind of So in-person, uh, conferences. Yeah. And I, and I think that session is, it’s gonna be a lot of fun. And, and for them, uh, it’s a privilege to have you because that project that was implemented at, at Palm Tran was very, uh, ambitious. You’re looking at several pieces of fare technology being implemented at once, replacing a very archaic system.

And, you know, when I’ve hear about fare technology projects and, and I’ve heard th- people speaking, they’re talking about implementing one piece of fare technology and, you know, all the efforts and everything that went into that.

But, you know, that project for Palm Tran, again, was a very ambitious project with a lot of facets, a lot of pieces of technology. And yes, I’m pretty sure you’re gonna share some challenges and some things that, you know, could have been done better, but it’s still a very successful project, and I think the audience are gonna really appreciate it. Yeah. It, it was. And it continues to, to show the, the fruits of our labors, um, and the changes that it’s made for the riders and for the agency.

Um, I think it’s, it’s improved a lot, um, from the old system that they had to what they have now in, in all aspects. so,

And I’m excited about, you know, my presentation tomorrow. I’m excited about my new fare collection system that I’m getting, and I’m, I’m proud of the fare collection system that we implemented. Well, Jeremy, this has been great. Thank you for stopping by Stop Requested.

Uh, enjoy the rest of Transport Ticketing North America 2025. And thanks again for being part of the show. Thank you, Jeremy. Appreciate it.