Characteristic high energy demand, high construction and equipment costs, significant maintenance and operational costs combine to challenge the long term financial viability of subway transportations services. Debt service on initial construction and equipment may be compromised by significant maintenance and operational costs over the life of the system.
Ridership levels are critical to financial sustainability. While initial construction and equipment costs may be largely defrayed by one time federal and state expenditures and grants, unpaid construction costs and ongoing operation and maintenance costs must be financed by annual and long term debt service. Shortfalls in operating revenues, due to low ridership or subsidized fares, tend to be transformed into long-term debt or offset by reductions in other transit operations and services.
Costs of the substantial amounts of electrical power required to operate subway systems are constant, and tend to increase as electricity rates rise. Few, and limited alternatives to the amount and cost of electrical power exist for subway and electric train systems. Significant maintenance costs, as well as limited serviceability of subway equipment are likely to increase operating costs over time.
The immense costs associated with construction of subway tunnels and underground facilities, at $540 million per mile for the Los Angeles subway system, have thrown the budgeting and allocation of transit development funds out of any semblance of balance. Driven by subway advocates on the Los Angeles County Metropolitan Transit Authority Board of Directors, efforts to fund a 12-mile extension of the LA subway have warped the entire long range regional transportation infrastructure and service plan.