It's common in North America for transit networks, whether they are focused primarily on bus or rail, to have their most of their capital and operational costs funded by tax money. For those unfamiliar with the difference between the two, capital costs are the funds used to build, expand, and improve transit networks. This can be everything from excavating a subway tunnel to adding a sign to a bus stop that shows when the next bus will arrive. Operational costs, by contrast, are money required to run and maintain the system that's been built, including paying the drivers, maintaining and storing buses and trains, and so on.
I'm going to start by talking about operational costs. In particular, I'm going to focus on something called the farebox recovery ratio: The amount of operational cost that is covered by passenger fees. I'll start with the table that follows, sourced from the wikipedia page on the same subject, which in turn cites its own sources. I've taken the liberty of labeling which transit systems we're talking about, since there could be more than one in a city (Seattle, for example, is served by multiple transit agencies).
The table is ordered by farebox recovery ratio, from highest to lowest. I'll continue talking about this after the table. Take a look at it first. Disclaimer: The data is not perfect and some of it is old, but I still feel we can do a decent bit of analysis on this.
|Hong Kong (MTR)||186%||Distance based||2012|
|Tokyo Metro||170%||Distance based||1991|
|Osaka (OMTB)||137%||Distance based||1991|
|Singapore (SMRT)||125%||Distance based||2008|
|Osaka (Hankyu Railway)||123%||Distance based||1991|
|Taipei (MRT)||119%||Distance based||2011|
|Toronto, Hamilton and area (GO Transit)||82.2%||Distance based||2011|
|Amtrak||71%||Distance & demand based||2009|
|Berlin (BVG)||70.3%||Zone based||2010|
|San Francisco Bay Area (BART)||64.5%||Distance based||2008|
|Toronto (TTC)||63.2%||Flat rate||2010|
|Washington, DC (WMATA)||62.1%||Distance based||2010|
|Philadelphia/New Jersey (PATCO)||61.4%||Distance based||2002|
|Beijing Subway||59.5%||Flat rate||2012|
|Philadelphia (SEPTA)||58.6%||Flat rate||2002|
|Montreal (STM)||57.1%||Flat rate||2006|
|Las Vegas Monorail||56.0%||Flat rate||2006|
|New Jersey (NJT)||56%||Distance based||2001|
|New York City (MTA)||55.5%||Flat rate||2009|
|Chicago (CTA)||55.2%||Flat rate||2010|
|Copenhagen (service not specified in source)||52%||1991|
|Ottawa (OC Transpo)||52%||Flat rate||2011|
|Vancouver (TransLink)||51.9%||Zone based||2010|
|San Francisco Bay Area (Caltrain)||51.3%||Zone based||2011|
|London Underground||50%||Zone based||2004|
|Vienna (Service not specified in source, presumably Wiener Linien)||50%||Flat rate||1991|
|Calgary Transit||50%||Flat rate||2011|
|Helsinki Regional Transit Authority||49%||Zone based;||2011|
|Brampton (BT)||46%||Flat rate||2012|
|Mississauga (MiWay)||46%||Flat rate||2011|
|Boston (MBTA)||43.7%||Flat rate||2002|
|Munich Transport and Tariff Association||42%||Zone based||1991|
|Amsterdam Metro||41.3%||Zone based||2007|
|New York/New Jersey (PATH)||41.0%||Flat rate||2002|
|Edmonton (ETS)||39.4%||Flat rate||2007|
|Quebec City (RTC)||39%||Flat rate||2011|
|Stockholm Lokaltrafik||37%||Zone based||2007|
|New York/Connecticut (Metro North)||36.2%||Distance based||2009|
|Harrisburg, PA (CAT)||35.0%||Flat rate||2005|
|Atlanta (MARTA)||31.8%||Flat rate||2007|
|Minneapolis - St. Paul Metro Transit||31.4%||Flat rate with rush hour and express surcharges||2008|
|Los Angeles (LACMTA)||30.6%||Flat Rate||2004|
|Dallas (DART)||28.4%||Flat rate||2008|
|Milan Transportation System||28%||1991|
|Long Island Rail Road(MTA)||26.6%||Zone based||2009|
|Orlando (Lynx)||25.7%||Flat rate||2012|
|Puget Sound Region (Sound Transit)||22.2%||Zone & Distance based||2007|
|Portland Metro Area (TriMet)||22%||Flat rate||2010 2012|
|Cleveland (GCRTA)||21.5%||Flat rate||2002|
|Canberra (ACTION)||21%||Flat rate||2007|
|Puget Sound Region (King County Metro)||19.1%||Zone based||2006|
|Staten Island Railway(MTA)||15.2%||Flat rate||2002|
|Detroit (DDOT)||13.9%||Flat rate||2002|
|Tacoma (Pierce Transit)||13.0%||Flat rate||2009|
|San Antonio (VIA)||12.8%||Flat rate||2012|
|Austin (CMTA)||9%||Flat rate||2007|
The first thing you probably noticed is that Asian cities dominate in farebox. American tend to be on the lower end of the spectrum, generally below 50%. Granted, there are scant few Asian cities listed here, but they all tend to be very high on the scale. Only Beijing falls below 100% farebox recovery on this list.
So, why is that? There are three main factors at play: density, land use, and mode of transportation. Asian cities tend to be much more dense than American, which naturally leads transit becoming more cost effective. Land use is also a factor in this: You are unlikely to find homes and places of business built around the car, nor are the cities dominated by acres of highway and parking lots. It is more difficult to get around by car, so people will travel with transit to avoid the hassle.
Finally, there's the mode of transportation: The Asian cities, Tokyo most famously, are based around rail transit, which scales extremely well with use. Many American cities, particularly those on the low end of the spectrum, are based around buses, which aren't nearly as cost effective (particularly when you run buses that are peak-commute oriented, which are very inefficient).
But I think the real question we need to be asking is this: Is it bad if a transit agency has less than 100% farebox recovery?
This is more of a philosophical question, and your answer may be different than mine depending on your viewpoint. My answer is no: while 100% farebox recovery would be nice, it is not a necessity, nor should it be a priority. You'll notice that no city on the list outside of Asia has reached 100%, so apparently it's very difficult for most cities to reach it.
That being, said, I do support certain policies that would lead to higher farebox recovery. Examples include building rail transit, buiding transit oriented development around areas served by frequent high-capacity transit, and going with driverless vehicles where possible.*
But I support these because they make transit more useful, and making transit more useful is generally what will lead to better performance and better farebox ratio.
We'll revisit this topic in the future. There's much more to say about it.
*You'll notice Vancouver's TransLink has a higher farebox ratio than Portland or Seattle. Part of this is lower operational cost of the SkyTrain, which uses driverless trains.