The Federal Transit Administration is designating $7 million for Metro operations in St. Louis, so it can increase bus services that were cut because of the lack of funding.

This federal aid is only a temporary fix for the costly Metro system. Metro has a government-subsidized monopoly that is siphoning taxpayer money: In its 2008 annual report, the Metro system earned $63.5 million in revenue while expending $307 million — operating at a $243.4 million loss, about 4/5 of its cost.

Public transit provides a great service to cities and urban areas, and usually cannot be operated on a cost level. However, there are ways to make transit more cost-effective. Wendell Cox’s study of Denver transit shows a great example of a more efficient transit system that used private competition. By having private companies bid for subsidies from the government, the government saved significantly. (Denver saved over $100 million yearly after 10 years, about 40 percent of the initial cost.)

Instead of applying federal Band-Aids that do not fix the problem, we should apply the principles of competition. Federal aid and tax increases (like the upcoming vote in 2010) are only temporary solutions.

To read more about Show-Me Institute’s different takes on the Metro system, look at David Stokes’ testimony to Metro’s Board of Commissioners and these op-ed articles.