By Ryan Whisner
Funding the taxi service in the city of Fort Atkinson for 2023 is a bit tenuous.
A reduction in riders has decreased the city’s annual revenue from fares by nearly $100,000. Combined with a driver shortage, the contractor, Running Inc., known commonly as Brown Cab, has been unable to staff drivers to fulfill the 15,900 hours of service they are supposed to provide each year.
For 2022, the company is on track for approximately 8,000 hours of service, or about half of what is currently contracted. Pre-COVID, if a Fort Atkinson resident called for a cab it would arrive in 15 to 20 minutes, and now a caller might have an hour wait.
Fort Atkinson Public Works Director Andy Selle said the shortage of hours and availability has impacted overall service for those who need it.
“The consistency in the cab being reliable and the expectations change dramatically for those users of the cab as a significant part of their transportation,” he said. “They’re not out there for half the hours that they should be.”
To offset the funding issue, the Fort Atkinson City Council unanimously approved increased fare rates and a modified contract to only 9,000 hours of service which would eliminate the late-night Friday and Saturday services.
“Our goal in adjusting rates is to ensure that there is a service,” said Chris Scherer, council president. “Not that we again willingly want to go out there and raise rates on any of our constituents, but to have a service is better than to not have a service.”
Council members expressed their frustration with the situation, but said they saw limited options available to them. All agreed that the taxi service was a vital service to those among the vulnerable in the community.
“This has been a conversation for years about the struggles and concerns with the cab service and there are a lot of different community coalitions and organizations working together right now to try to see what could be done or if they can start getting their vehicles to have their service available for their clients,” said council member Megan Hartwick.
She noted that no one is excited about any sort of fare increase for individuals who need the service.
“When the main factors playing into the quality of the service are things that the city has ultimately no control over, in terms of retaining and recruiting staff and having cars available, then it’s just a matter of making sure that, yes, this is a vital service, but we also have to make sure it’s not a service that isn’t all of a sudden costing 150,000 on budgeted dollars for the city,” she said. As past executive director of United Way of Jefferson and Walworth counties, she said she is hopeful that bringing together other community partners that rely on the use of the cab service may assist in coming to some other solution.
The cab service in Fort Atkinson is subsidized and has been for quite some time. Selle said 56% of the cost of the taxi contract is paid for by the federal government and 44% is paid for by the city. The 44% is offset by revenue generated by the taxi fares. Like the pilots using Fort Atkinson Municipal Airport, those that are using a taxi are paying for the service.
“We’ve been able to successfully manage it in that way as basically no net cost to the city for quite some time,” he said. “There have been years where it’s been, a few $1,000 short where city funds have been used to make up for that, but, by and large, the contract, which is well over $300,000 a year, is operated at no net cost to the city.”
Without adjustments, that would change in 2023. Through the peak pandemic years, 2020 and 2021, the federal government took care of 100% of the contract. For 2022, it was reduced to 74% and Brown Cab was only providing about half the required hours in the contract.
Selle said in 2023, the federal subsidy is set to return to 56%. With the reduced service hours and reduced fares, that problem creates a significant projected shortfall in funding the taxi service for 2023.
In 2024, the service will go back out to bid, and he is anticipating a significant increase in the hourly cost. The contracts are put out for bid for five years, encompassing three guaranteed years and two option years. 2023 is the second option year concluding five years. City staff is looking to hold some meetings in the first quarter of 2023 to look at the longer-term aspect of the taxi service in Fort Atkinson.
“We’ve had one bidder, and we’ve had that I’m not sure for how many successive five-year contracts,” Selle said. “They’ve been the only game in town.”
It leaves the city’s options for possible solutions very narrow.
“Should we put forward something to Brown Cab saying: ‘hey, you guys need to pay your folks $15 (per) hour, or you need to make up your service contract to 15,900 as stated,’ they can walk away, and we don’t have another alternative,” he said.
Nothing is budgeted in 2023 to cover the taxi service, although the other alternative would be to dip into the city’s general fund. The other option is to generate revenue through fees, or in this case, fares.
Council member Eric Schultz said he believed the cab company provides an essential service for the vulnerable within the community.
“This does open up an opportunity for the after-hours, whether it’s another business or gig workers like Lyft, or Uber, or the non-profit organizations filling the gap where a need is,” he said. While not pleased with subsidizing a business, Schultz felt the proposal was a reasonable middle ground for all parties involved.
Council member Mason Becker said he appreciated the recognition by the city staff, residents, and council members that the taxi service is essential to some of the city’s most vulnerable residents.
“I’m glad that everybody’s trying to come together and come up with a solution,” he said. “I don’t like the fact that we’re raising rates. Everybody knows we’re in a recession right now and everything’s expensive for everybody. I think the plan that Andy and other members of our city staff have put together at least guarantees we have a service for one more year because, at the current rate we’ve been going, we all know that’s been at risk.”
As approved, the contract hours will be reduced from 15,900 hours to 9,000 hours, reducing the city’s overall obligation by about $101,000. The number of contract hours is determined by multiplying the number of cabs on the road over a given year.
Previously, Fort Atkinson had a schedule where Brown Cab was required to have up to five cabs on the road at peak demand times, Selle said, noting that under the amended contract, that will be reduced to two cabs on the road during those peak demand times. In addition, as part of the modified contract, the council eliminated the late Friday and Saturday night service that was supposed to be available until 2:30 a.m.
“That is a very difficult service for Brown Cab to staff,” Selle said. Also, he said, the Fort Atkinson Police Department was included in discussions about that specific issue and was OK with the contract modifications being made.
“Cabs will remain active largely during the hours they are expected to today which is roughly 6:30 a.m. to 7 p.m. most weekdays,” he said.
There is some leeway built into the modification concerning Brown Cab’s ability to obtain more drivers and staff additional cabs to meet demand.
Secondly, he said the hourly rate for those reduced contract hours would be increased.
“Now this may seem counterintuitive, but the discussions with Brown Cab were that at those contracts hours they are not able to recoup their fixed expenses,” Selle said. “The cost of the city for that increase from $35.23 to $36.73 would be about $5,900. It is an increase in the costs overall, but to be frank, they don’t have to accept the reduction from 15,000 hours to 9,000 hours. It was a little bit of a give-and-take in terms of the contract negotiations.”
The third element of the contract negotiation is an across-the-board fare increase.
Senior/disabled and student fares have not been adjusted since at least 2013 and possibly longer and the base adult fare has not increased since 2017. The after-10 fare was started in 2017 and will be eliminated under the new contract.
Selle explained that the agency fare is a fare used for the managed care organizations within the city. “There’s a lot of reasons why that fare is so much higher, and it is completely legal and expected,” he said. “We have managed that fare accurately through the years. The managed care organizations are reimbursed for those charges, and they’re required to provide transportation to their residents. That fare has been very useful for us in keeping fares low for everybody who’s not in a managed care organization”
However, he said the loss of that ridership has a huge impact on the city’s overall fares.
Base adult fares are increasing from $3.25 to $5 and student fares will rise to $4 from $2.50. Senior/disabled fares currently set at $2 will go up to $3.50.
Selle noted the agency fare would go up to $12 from $8.50.
“These numbers are real, 71% of the riders are in that senior or disabled category,” Selle said. “This affects that population which I think we would all consider being somewhat vulnerable within our community.”
Unfortunately, to keep the cab service operational in 2023, increases are warranted. Selle pointed out that there are similar increases of similar magnitude coming in from municipalities around the state.
“We’re a little bit vanguard I would say with this but certainly not alone,” he said.
Based on ridership demonstrated in 2022, under the new contract, the city would be left with an $11,000 surplus that goes back to the federal government.
City staff is not certain that the fare increase will decrease ridership and pose a risk to the revenue model.
“It’s a bit of the chicken-and-egg scenario,” Selle said. In theory, there would be a dip for a couple of months and then it would bounce back. However, it’s not clear that there is a “full” ridership currently.
“We may have folks here that just are required to ride the taxi because they don’t have any other option,” he said. “We may not necessarily see that dip. I can’t predict the future but there is cause for concern.”
Before the vote, a public hearing was held on the fare increase and contract modification. Selle presented the basic information and then members of the public and the council were able to ask questions and get a chance to speak.
Offering public comment, Ron Martin inquired whether the city of Jefferson also contracts with Running Inc. or Brown Cab, suggesting there could be cost-sharing options there. He also cited the idea of increasing the rate of pay for the drivers to encourage more people to potentially be interested in such a role. Selle noted that the city doesn’t set the pay rate for the drivers, Brown Cab does.
“It seems like increasing the fares by 60% and cutting back the hours, you’re not going to increase ridership, it’s going to have the opposite effect,” Martin said. “I know that there’s a lot of factors involved but I would urge this council along with other groups in the city to take a look at funding this or finding better solutions to provide seniors, the disabled, or people that can’t afford cars or maybe they can’t drive any longer an ability to use this service and use it effectively and cost-efficiently.”
He pointed out that the primary customers are very vulnerable people.
“We need to find better solutions rather than jacking up the fares and cutting back on the hours,” Martin said.
Hartwick asked Martin to suggest solutions.
Martin responded, saying: “If the city could provide increased funding, maybe in connection with Jefferson or other entities to increase the funding for the cab service, you might be able to pay the drivers more and attract more drivers to provide better service.”
Hartwick said that because each municipality’s contract is different and is related to intracity rides, it’s very rare that they will cover those kinds of Jefferson-to-Fort or Fort-to-Jefferson rides without being very pre-scheduled and pre-planned things.
“It’s pretty difficult based on the way that they run their business to be able to set up contracts that way,” she said.
Martin offered to come up with other potential solutions and email them to the city manager,
“I don’t have all the solutions and I haven’t really given this a lot of thought,” he said, noting that the council was likely to vote in favor of this new contract later in the agenda anyway.
Fort Atkinson Municipal Building, file photo/Kim McDarison.
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