OPS Funds Blog

May 15, 2010

About 84% of US transit agencies are cutting service and/or raising fares due to reductions in transit operating support. While the recession is the main culprit especially among transit agencies with dedicated funding sources, a number of transit agencies faced the prospect of cutting service, sometimes severely, well before the recession hit. Some of these agencies were able to obtain new or additional funding to avoid making drastic cuts while others actually carried them out. Even if every agency could maintain the status quo, and accounting for differences in the local transit market (e.g. density, presence of a major university, demographics, etc.) levels of transit service are very uneven throughout the US.

This post is not about addressing the short term problem - the cuts brought on by the recession. It is about a long term approach that begins to address the need for increased and sustained transit operating support. (In an earlier post I argued for emergency federal transit support. While the issue is getting much more attention, the only way in the short term that service cuts can be re-instated and new cuts be prevented, is for the US government to come forward with additional emergency support over the next two or three years.)

We absolutely need to grow transit ridership. The US population is estimated to grow by 120 to 140 million by 2050. If we are to accommodate this growth at the same time we need to reduce per capita vehicle miles traveled (VMT) in order to reduce carbon emissions, improve air quality, reduce energy consumption and control sprawl; we need to increase transit market share. APTA's Vision 2050 calls for doubling transit ridership from the 2008 high mark by 2028 and quintupling ridership by 2050. Even the highway guys at AASHTO call for doubling transit ridership in 20 years. This will only happen by providing more transit service and that requires more transit operating funding support. Successful transit - that which generates high ridership needs several ingredients to succeed, but even if all of the ingredients align perfectly for transit, without proper levels of service - frequency, long service spans, direct routes and good coverage; high transit ridership will not result. The operating investment that sustains transit operations is to transit what water is to human survival.

Should the federal government restore transit operating assistance (eliminated for all but transit agencies in metropolitan areas with a population of less than 200,000) or provide more flexibility in existing formula transit funds designed to meet capital needs? (Transit agencies in all size metropolitan areas are allowed to use federal capital dollars to cover preventative maintenance which typically comes out of an agencies operating budget.) Many in the transit industry and in congress are opposed to this. There are three primary reasons for this.

1. Funding directed to operations could compromise capital needs and in some cases lead to higher long term costs due to deferred capital replacement (not keeping capital assets in a state of good repair)

2. Additional federal capital dollars could result in states and local governments reducing support for transit, resulting in no gain of funding.

3. Additional federal dollars could go to increased wages instead of increased or better service.

However if it is in the national interest to grow transit and if even before the recession many areas were underserved and levels of service are inconsistent from place to place; then federal transportation policy needs to address this issue. How can it do so while addressing the concerns expressed above.

The suggestions that follow are not the end all. They only begin to address the problem - begin being the operative word here. But they are steps that can begin to take us down the road toward sustained growth in transit nationally. They are proposals that should be included in the next federal transportation authorization bill. The first proposal is the stick; the second is the carrot that should work together.

Condition new transportation funding on maintenance of transit service

It is very likely that the next Authorization Bill will have new funding programs (e.g. Metropolitan Mobility and Access Program and Projects of National Significance) and/or increases in the funding available in existing programs above the historic growth rate.

In order to receive new federal surface transportation funding (funding from a new program or an increase in funding from an existing program above the historic growth rate) the aggregate level of transit service provided within the recipient's geographical area must meet a minimum standard – The aggregate per capita service hours must be greater than or equal to the highest annual per capita service hours achieved between federal fiscal year (FFY) 2000 through 2009 or 5% higher than the previous FFY.

Applying this condition to the receipt of new highway, mode neutral and intercity rail transportation programs will have the best impact. Doing this will also help break down "stove piping" as the health of transit will need to be considered on par with the health of the overall transportation program.

Providing the choice between matching the best year between 2000 and 2009 or showing growth over their previous fiscal year prevents discrimination against states/regions that experienced significant reductions during the recession but are making an effort the rebuild service levels.


Incentive for Increased Transit Investment

Create a new funding program of not less than $1 billion to be distributed in the first year of the program and to grow by not less that the Consumer Price Index in each successive year to provide incentives to states and/or regional governments where the level of service exceeds the base levels of service required to be eligible for additional funding in the above proposal.

For example the aggregate per capita service hours must be at least 5% greater than the highest annual per capita service hours achieved between FFY 2000 through 2009 or 10% higher than the previous FFY. (These percentages can be adjusted as long as they represent more service hours than needed under Proposal #2.)

The incentive funds should be truly flexible – that is they can be spent on all eligible transportation uses – transit capital, transit operations, highway repair or intercity rail. Allowing the use of these funds for highway purposes may seem contradictory, however the intent is to increase state and local support for transit. Therefore allowing highways as an eligible use of the funds could result in more states or regions actively competing for these funds.

For both proposals, in later years per capita ridership can substitute for per capita hours (either meet both criteria or substitute ridership for hours). However during the first 2-3 years service hours should be used exclusively since service needs to be in place before the ridership is expected to develop.

Also for both proposals, if there is a disruption in service due to act off nature, terrorism or labor dispute the hours (or riders) expected to have been carried had these events not take place can be added to the actual numbers in both the base years (2000-2009 or previous year) and the current year.

Allow any transit system with 100 or fewer peak pull out buses used in fixed route service the flexibility to use formula funds for operations

The main rationale is that smaller transit agencies have lower capital needs and preventive maintenance costs are below the amount of capital funding eligible for this purpose. This condition is driven by system size and not the population of the urbanized area. Furthermore transit systems often lose this flexibility due to changes in the definition of the urbanized area and not due to actual population growth. Ideally all formula funds could be flexed but a percentage of not less than 50% would be acceptable. Also "Maintenance of Effort" language would be necessary. In order to receive this flexibility the total non federal dollars supporting operating expensises can not fall below the previous year.

Everyone concerned about the future of transit needs to be active, constantly letting elected officials know the importance of properly funding transit. There is a need for a strong federal commitment to transit but we need to be cautious in what we ask for to make sure the outcomes we desire for transit will indeed be delivered by the ideas we advocate.