In recent weeks, the "train driver crisis" once again brought to light a problem that resurfaces every fall, right before state budget negotiations begin. The funding model for public transport, which leans heavily on taxpayers' wallets, stands on shaky ground and even the slightest ripple threatens a service that is critically important for many people. In the near future, the need for funding will rise sharply and no minister has been able to put forward a long-term plan to keep the service running.

Bus companies operating county routes with state subsidies have for years tried to explain to the government that the current funding model is unsustainable and that it is often unclear in September whether there will be enough money for buses to continue bringing people from rural areas to cities by November.

This year, state-owned rail carrier Elron used a far more forceful tactic to illustrate the issue: train departures were canceled one after another due to an alleged shortage of drivers. Unsurprisingly, the government rushed to the aid of the commercial company and allocated the missing €450,000. Then, as if by miracle, Elron suddenly found train drivers and service was restored in a single day.

Bus drivers' wages are also below the national average and labor shortages remain a constant headache for companies. Still, bus firms have not yet used a similar blackmail tactic to push their problems into public consciousness and onto politicians' desks.

The reality, however, is harsh: in the near future, public transport funding must grow significantly. During last year's budget negotiations, €121 million was earmarked for public transport funding in 2025, though the actual need is about one-third higher. By 2028, the subsidy requirement will reach nearly €200 million. A few years beyond that (in the early 2030s), the budget costs of keeping public transport running will leap ahead by another giant step.

One factor that will raise funding needs is the gradual implementation of the new collective agreement in the bus sector, which will bring drivers closer to the reasonable wage level already enjoyed by their counterparts behind the controls of steel locomotives. If we want anyone at all to keep driving buses, decent pay for drivers is critically important.

Another reason subsidy costs are swelling like yeast is the poorly thought-out and oversized investment decisions made by politicians and officials in the rail sector. Estonia has behaved like a classic resource-dependent developing country — except here the money does not come from the ground, but from the EU's coffers. European Union subsidies have allowed politicians to invest freely, without thinking about how those investments will be maintained in the future.

Specifically, Estonia faces a major expansion of its state-owned train fleet purchased with EU funds. In reality, every train running on the rails requires about €1 million a year in state subsidies. Decision-makers have failed to consider whether increasing rail traffic — or, in the case of Rail Baltica's domestic services, connecting remote fields and groves to Tallinn — is even reasonable or necessary. Because of this poorly considered policy, taxpayers' money will burn on the railways to the tune of €20–25 million more each year than at present.

Essentially, the state has three options, the first of which is the easiest for politicians: simply dig deeper into taxpayers' pockets. So far, the government has shown no hesitation in doing just that. But anyone who takes a more realistic view of the state budget should recognize that this is unsustainable. The state must push harder and demand that operators of partially subsidized services generate more ticket revenue.

The third option is simply to reduce the volume of service. Bus companies fear that this would hit the most vulnerable hardest — those who depend on buses every day. After all, it is much easier for politicians to take away Aunt Maali's weekly Tuesday trip to the city for shopping and a doctor's visit than to cut the half-empty midday train between Tartu and Tallinn.

First, the government needs to understand where all the subsidy money actually goes, because in part it is just being shifted from one state pocket to another. The most visible example is infrastructure fees — railway usage fees, airport charges and port charges — which already make up nearly one-quarter (€37 million) of the subsidy total. If these costs were excluded from the subsidy budget and instead covered directly from the Climate Ministry's budget, the state could set clearer revenue goals for the companies providing the services.

In the bus sector too, a large part of the subsidy flows back into the state budget as tax revenue, mainly through fuel excise duties and social taxes on drivers' wages. To ensure that state funding benefits bus passengers as much as possible, operators need certainty in the form of longer-term service contracts and efficiently functioning funding indices.

Passengers choose public transport for convenience and quality, not because it is cheap or free. In any case, during the upcoming state budget process the government must now answer uncomfortable questions: how to avoid public transport bankruptcy and how to fund the looming subsidy race?

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