The city of Philadelphia faced a budget crisis in 2003. Politicians were committed to reducing tax rates, but a general economic slowdown had already slashed city finances. Services would have to be sacrificed unless the city found some way to reduce costs.
A solution emerged from a brainstorm among city officials working in various departments: the city could reduce its costs significantly by changing the way it dealt with transportation.
The Fleet Department oversaw the city's 6000 vehicles. Most were trash compacters, police cars, and other specific-use vehicles. But passenger vehicles, which were rarely used, made up 30 percent of the fleet. Nearly half were driven less than 150 miles per week, and virtually all were idle during evenings and weekends.
The Managing Director of Philadelphia saw a chance to cut costs while addressing another pressing problem. A culture of entitlement had grown in Philadelphia's civil service, resulting in sub-optimal work and inefficiencies that contributed to the budget deficit. Many workers had come to expect use of a car, even if their jobs rarely required it. Changing transportation would change this culture, resulting is greater savings in the future.
The city teamed up with PhillyCarShare (PCS), a local nonprofit that provided rental cars by the hour. PCS had much to recommend it. Per-hour vehicle costs were far lower than the maintenance costs of little-used vehicles. And there was a savings to the environment; 40 percent of its fleet comprised fuel-efficient hybrid vehicles.
Philadelphia saw significant savings immediately after switching its routine transit to PCS. Three-hundred and thirty vehicles were eliminated from the city fleet, resulting in a one-time budget injection of $263,000 from the sale of the vehicles at auction. Reductions in maintenance, fuel, parking, and acquisition costs resulted in a projected savings of $1.7 million annually.
The city budget also benefited from increased accountability. PCS documented each trip taken, allowing city officials to analyze transit patterns and think of ways to improve cost effectiveness. Since individual employees had to sign for the rental cars, frivolous vehicle use went down.
The savings to Philadelphia went beyond the city's budget. Data suggest that PCS acquired only one car for every 50 to 60 sold by the city government, reducing traffic and making Philadelphia more livable. Further, with significant money coming from the city government, PCS was able to expand its services, providing vehicle access to many more citizens and encouraging them to remain car-free.
The innovation was so successful that Berkeley, California, and Portland, Oregon, and Wilmington, Delaware, have already adapted the program for their own use.