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The zero-fare public transit movement is picking up momentum



Passengers boarding a Metrobus in downtown Washington, Wednesday, Dec. 7, 2022.

Pablo Martinez Monsivais | AP

Washington, D.C., is on the verge of eliminating bus fares for city residents, joining other U.S. cities that are working to make metro bus and rail systems free to ride.

Already, Boston, San Francisco and Denver are experimenting with zero fare. In late 2019, Kansas City, Missouri, became the first major U.S. city to approve a fare-free public transit system.

The “zero-fare” movement has garnered support among business groups, environmental advocates, Democratic leaders and others who say that public transit boosts local economies, mitigates climate change and is a basic necessity for many individuals. The idea gained traction during the pandemic, which underscored the critical role public transit plays for essential workers who don’t have the luxury of working from home.

But despite the zero-fare movement’s growing popularity, it has drawn political pushback in some areas where the policy doesn’t easily fit in with budgets or local laws.

D.C.’s zero-fare bill was proposed in early 2020 about two weeks before the Covid-19 pandemic triggered a downward budget spiral for transit agencies nationwide.

“I don’t charge you when you need the fire department, but yet we’re going to make sure there’s a fire department when you need it. That’s how you need to think about this,” Charles Allen, one of the D.C. city councilmembers who introduced the bill, said in an interview with CNBC.

The D.C. measure aims to get rid of the $2 fare to ride the bus starting in July. The city council unanimously approved the measure, and it’s awaiting a formal response from Mayor Muriel Bowser, who can either approve, veto or return the bill unsigned.

Bowser initially expressed reservations about financing a zero-fare system that would also serve Maryland and Virginia without receiving funding from those states. The mayor’s office did not respond to a request for comment. In any case, the council’s unanimous support is enough to override a mayoral veto.

The bill would allocate $43 million a year to make the D.C. Metrobus free to all riders and to add a dozen 24-hour bus service lines. The money will come from surplus tax revenue. The D.C. Council is still considering whether to add a $10 million subsidy program, which would provide every city resident with $100 of credit monthly to spend on the D.C. Metrorail.  

The public transit crisis

Kansas City’s bus system, called RideKC.

Source: Kansas City Area Transportation Authority

In many cities, the coronavirus sent ridership on subways and buses to historic lows, largely because white-collar workers were working from home instead of commuting into the office. That left essential workers, who are typically middle to low income, as the primary riders of public transit.

As fare revenue plummeted and transit agencies watched their budgets erode, state and local government subsidies along with federal Covid relief funding became necessary to preserve transportation for essential workers.

Zero-fare transit has since also become a cause among environmental groups that want to get cars off the road, labor unions that want to keep transit drivers socially distanced from riders and business groups that want to draw more customers.

Alexandria and Richmond in Virginia have successfully integrated fare-free transit into their annual budgets. Boston, Denver and others have tested pilot programs. Boston’s zero-fare experiment will stick around until 2024 for three of the city’s bus routes.

Meanwhile, Denver introduced temporary fare-free holidays like “Zero Fare for Better Air” in August and “Zero Fare to Vote” on voting days in November.

Zero-fare trendsetting

Kansas City’s bus system, called RideKC.

Source: Kansas City Area Transportation Authority

In Kansas City, zero-fare transit has become a hallmark of life.

“It feels like much more of a community space and I think that’s because it’s something you can freely enter and exit,” said Matt Staub, a founding member of Kansas City’s fare-free streetcar and a marketing business owner, who used to spend between $60 to $70 on monthly bus passes.

Kansas City first experimented with zero-fare transit in 2016 with the launch of its streetcar, a two-mile fixed rail line in the city’s downtown where riders can hop on and off, free of charge. The city is investing $400 million to expand the streetcar route to more than six miles by 2025.

Since the streetcar began construction in 2014, $4 billion has been invested into downtown development, including hotels and restaurants. Downtown’s residential population has grown from roughly 21,000 in 2014 to about 32,000 in 2022.

“The streetcar, at least from our perspective, is more than a mode of transportation. It’s more than just getting from point A to point B. It’s an economic driver,” said Donna Mandelbaum, a spokesperson for Kansas City’s Streetcar Authority.

The zero-fare bus started in December 2019 as a pilot program. Then after Covid hit, the city’s bus authority kept it in place permanently as a safety measure, since it reduced physical interactions between bus drivers and riders.

How to go zero fare

Making a U.S. city zero fare takes a combination of funding and political support.

Kansas City had both. Fares made up only 12%, or about $8 million, of the buses’ operating budget, according to Richard Jarrold, vice president of the Kansas City Area Transportation Authority. Meanwhile, the city was spending $2 million to $3 million annually on fare collection, according to Morgan Said, chief of staff to the mayor.

Similarly, D.C. fares are under 10% of the district’s transit budget, according to the Washington Metropolitan Area Transit Authority. In Richmond, Virginia, where fare-free buses have been in place since the start of the pandemic, fare revenue was just 8% of the overall transit agency’s budget.

“For some smaller transit agencies that don’t really collect much cash anyway … they’re almost spending more to collect the fare than they’re actually receiving in revenue,” said Grant Sparks, a director at the Virginia Department of Rail and Transportation.

That made the economic argument in those cities an easier sell. Still, Allen, the D.C. councilmember, ultimately wants “to move towards a fare-free system for all public transit.”

Why fare-free is not for all

Kansas City’s bus system, called RideKC.

Source: Kansas City Area Transportation Authority

Even as the idea gains traction, zero-fare transit in America is the exception, not the rule.

In New York City, where a subway ride currently costs $2.75, officials have piloted ways to make fares more affordable. The city started the Fair Fares program in January 2020, which provides transit discounts to eligible low-income residents who apply.

But the city’s transportation infrastructure relies on fares for around 30% of its operational budget, a difficult sum to subsidize.

“Until a new plan emerges for funding public transportation in New York that would allow the MTA to be less reliant on fare revenue, there is no way to consider eliminating a vital revenue stream,” said Meghan Keegan, an MTA spokesperson.

Even in places like Virginia, which has had zero-fare success in individual cities, scaling the system to a statewide level has proven difficult. Virginia law limits how much the state can pay to WMATA, the transit agency that runs bus lines throughout Virginia, D.C. and Maryland.

Denver also plans to stick with fares for the time being, even as it deploys occasional fare holidays.

“In the absence of a significant new funding source, fares will remain an important component of RTD operating revenue,” said Tina Jaquez, a spokesperson for Denver’s Regional Transportation District. Denver’s 2023 transit operating budget is composed of 10% fares.

The conversation is happening at the federal level, too, although the debate has been split along the aisle.

As part of its spring 2020 Covid relief package, the federal government provided $25 billion in public transit funding. That summer, Democrats tried to rally support to extend the federal support. In June 2020, Sen. Ed Markey and Rep. Ayanna Presley, both Democrats of Massachusetts, introduced the Freedom to Move Act, which would provide federal grants for states and cities to institute free-to-ride public transit. It was referred to a Senate committee in April 2021 and hasn’t advanced.

Republicans have not been as bullish on the idea of going zero fare. A budget proposal in Republican-heavy Utah that would make the state’s transit system fare-free for a year met opposition from the state’s Republican House Majority Leader Mike Schultz. He said that the transit system was already subsidized enough and “nothing’s free,” according to local station KUTV.

Zero-fare transit has also drawn criticism from advocacy groups like Transit Center, a New York City nonprofit. The organization found in a survey of 1,700 public transit riders that people would rather have better transit reliability and frequency rather than zero fare.

The split debate means that a federal zero-fare policy likely won’t be established soon.

“There may be some European countries that are doing it at a national level. I don’t think we’re going to do that in the U.S., with 50 states and many more local jurisdictions,” said Virginia state Sen. George Barker, a Democrat. “We’ve got a long way to go to get into that league.”

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Lucid to cut 1,300 workers amid signs of flagging demand for its EVs



Lucid Motors CEO Peter Rawlinson poses at the Nasdaq MarketSite as Lucid Motors (Nasdaq: LCID) begins trading on the Nasdaq stock exchange after completing its business combination with Churchill Capital Corp IV in New York City, New York, July 26, 2021.

Andrew Kelly | Reuters

Struggling EV maker Lucid said in a regulatory filing on Tuesday that it plans to cut about 18% of its workforce, or roughly 1,300 employees, as part of a larger restructuring to reduce costs as it works to ramp up production of its Air luxury sedan.

Lucid said it will incur one-time charges totaling between $24 million and $30 million related to the job cuts, with most of that amount being recognized in the first quarter of 2023.

News of the job cuts was first reported by Insider earlier on Tuesday. Lucid’s shares closed down over 7% on Tuesday following the Insider report.

In a letter to employees, CEO Peter Rawlinson said the job cuts will hit “nearly every organization and level, including executives,” and that affected employees will be notified over the next three days. Severance packages will include continued healthcare coverage paid by Lucid, as well as an acceleration of equity vesting, Rawlinson wrote.

Lucid ended 2022 with about $4.4 billion in cash on hand, enough to last until the first quarter of 2024, CFO Sherry House told CNBC last month ahead of the company’s fourth-quarter earnings report. But there have been signs that demand for the high-priced Air has fallen short of Lucid’s internal expectations, and the company may be struggling to convert early reservations to sold orders.

Lucid said that it had more than 28,000 reservations for the Air as of Feb. 21, its most recent update. But it also said that it plans to build just 10,000 to 14,000 vehicles in 2023, far fewer than the roughly 27,000 that Wall Street analysts had expected.

With Lucid’s factory currently set up to build about 34,000 vehicles per year, the company has warned of continuing losses.

“As we produce vehicles at low volumes on production lines designed for higher volumes, we have and we will continue to experience negative gross profit related to labor and overhead costs,” House said during Lucid’s earnings call on Feb. 22.

Lucid hasn’t yet announced a date for its first-quarter earnings report.

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Virgin Orbit extends unpaid pause as Brown deal collapses, ‘dynamic’ talks continue



NEWQUAY, ENGLAND – JANUARY 09: A general view of Cosmic Girl, a Boeing 747-400 aircraft carrying the LauncherOne rocket under its left wing, as final preparations are made at Cornwall Airport Newquay on January 9, 2023 in Newquay, United Kingdom. Virgin Orbit launches its LauncherOne rocket from the spaceport in Cornwall, marking the first ever orbital launch from the UK. The mission has been named Start Me Up after the Rolling Stones hit. (Photo by Matthew Horwood/Getty Images)

Matthew Horwood | Getty Images News | Getty Images

Virgin Orbit is again extending its unpaid pause in operations to continue pursuing a lifeline investment, CEO Dan Hart told employees in a company-wide email.

Some of the company’s late-stage deal talks, including with private investor Matthew Brown, collapsed over the weekend, people familiar with the matter told CNBC.

Hart previously planned to update employees on the company’s operational status at an all-hands meeting at 4:30 p.m. ET on Monday afternoon, according to an email sent to employees Sunday night. At the last minute, that meeting was rescheduled “for no later than Thursday,” Hart said in the employee memo Monday.

“Our investment discussions have been very dynamic over the past few days, they are ongoing, and not yet at a stage where we can provide a fulsome update,” Hart wrote in the email to employees, which was viewed by CNBC.

Brown told CNBC’s “Worldwide Exchange” last week he was in final discussions to invest in the company. A person familiar with the terms told CNBC the investment would have amounted to $200 million and granted Brown a controlling stake. But discussions between Virgin Orbit and the Texas-based investor stalled and broke down late last week, a person familiar told CNBC. As of Saturday those discussions had ended, the person said.

Separately, another person said talks with a different potential buyer broke down on Sunday night.

The people asked to remain anonymous to discuss private negotiations. A representative for Virgin Orbit declined to comment.

Hart promised Virgin Orbit’s over 750 employees “daily” updates this week. Most of the staff remain on an unpaid furlough that Hart announced on Mar. 15. Last week, a “small” team of Virgin Orbit employees returned to work in what Hart described as the “first step” in an “incremental resumption of operations,” with the intention of preparing a rocket for the company’s next launch.

Virgin Orbit’s stock closed at 54 cents a share on Monday, having fallen below $1 a share after the company’s pause in operations.

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Virgin Orbit developed a system that uses a modified 747 jet to send satellites into space by dropping a rocket from under the aircraft’s wing mid-flight. But the company’s last mission suffered a mid-flight failure, with an issue during the launch causing the rocket to not reach orbit and crash into the ocean.

The company has been looking for new funds for several months, with majority owner Sir Richard Branson unwilling to fund the company further.

Virgin Orbit was spun out of Branson’s Virgin Galactic in 2017 and counts the billionaire as its largest stakeholder, with 75% ownership. Mubadala, the Emirati sovereign wealth fund, holds the second-largest stake in Virgin Orbit, at 18%.

The company hired bankruptcy firms to draw up contingency plans in the event it is unable to find a buyer or investor. Branson has first priority over Virgin Orbit’s assets, as the company raised $60 million in debt from the investment arm of Virgin Group.

On the same day that Hart told employees that Virgin Orbit was pausing operations, its board of directors approved a “golden parachute” severance plan for top executives, in case they are terminated “following a change in control” of the company.

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Historic UAW election picks reform leader who vows more aggressive approach to auto negotiations



Supporters wave signs during an address at the Time Warner Cable Arena in Charlotte, North Carolina, on September 5, 2012 on the second day of the Democratic National Convention (DNC).

Mladin Antonov | AFP | Getty Images

DETROIT – United Auto Workers members have ousted their president in the union’s first direct election, ushering in a new era for the prominent organized labor group ahead of negotiations later this year with the Detroit automakers.

The union’s new leader will be Shawn Fain, a member of the “UAW Members United” reform group and local leader for a Stellantis parts plant in Indiana. He came out ahead in a runoff election by hundreds of votes over incumbent Ray Curry, who was appointed president by union leaders in 2021.

Fain, in a statement Saturday, thanked UAW members who voted in the election. He also hailed the election results as a historic change in direction for the embattled union, which he says will take a “more aggressive approach” with its employers.

“This election was not just a race between two candidates, it was a referendum on the direction of the UAW. For too long, the UAW has been controlled by leadership with a top-down, company union philosophy who have been unwilling to confront management, and as a result, we’ve seen nothing but concessions, corruption, and plant closures,” Fain said.

Curry, who previously protested the narrow election results, said in a statement that Fain will be sworn in on Sunday and that Curry is “committed to ensuring that this transition is smooth and without disruptions.”

“I want to express my deep gratitude to all UAW staff, clerical support, leaders and most of all, our union’s active and retired members for the many years of support and solidarity. It has been the honor of my life to serve our great union,” Curry said.

More than 141,500 ballots were cast in the runoff election that also included two other board positions, a 33% increase from last year’s direct election in which neither of the presidential candidates received 50% or more of the votes.

The election was overseen by a federal monitor, who did not immediately confirm the results. The election results had been delayed several weeks due to a run-off election as well as the close final count.

Shawn Fain, candidate for UAW president, is in a run-off election with incumbent Ray Curry for the union’s highest-ranking position.

Jim West for UAW Members United

Fain’s election adds to the UAW’s largest upheaval in leadership in decades, as a majority of the union’ s International Executive Board will be made up of first-time directors who are not part of the “Administration Caucus” that has controlled the union for more than 70 years.

Fain and other members of his leadership slate ran on the promise of “No corruption. No concessions. No tiers.” The last being a reference to a tiered pay system implemented by the automakers during recent negotiations that members have asked to be removed.

The shuffle follows a yearslong federal investigation that uncovered systemic corruption involving bribery, embezzlement, and other crimes among the top ranks of the UAW.

Thirteen UAW officials were convicted as part of the probe, including two past presidents. As part of a settlement with the union in late 2020, a federal monitor was appointed to oversee the union and the organization held a direct election where each member has a vote, doing away with a weighted delegate process.

For investors, UAW negotiations with the Detroit automakers are typically a short-term headwind every four years that result in higher costs. But this year’s negotiations are anticipated to be among the most contentious and important in recent memory.

Fain has said the union will seek benefit gains for members, advocating for the return of a cost-of-living adjustment, or COLA, as well as raises and job security.

The change in the UAW comes against the backdrop of a broader organized labor movement across the country, a pro-union president and an industry in the transition to all-electric vehicles.

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