Time For Feds To Fund Mass Transit Operating Expenses? 5 Responses

National Journal Online -- Transportation Experts -- Time For Feds To Fund Mass Transit Operating Expenses?

Monday, June 1, 2009
Time For Feds To Fund Mass Transit Operating Expenses?

Americans are using public transportation in record numbers -- taking 10.7 billion trips last year, an increase of 4 percent over 2007 -- yet because of declining state and local budgets, many mass transit systems are facing the prospect of raising fares, cutting service and laying off staff. Given the contribution that mass transit makes to relieving urban congestion and reducing greenhouse gas emissions, is it time to overturn rules that only allow federal funding to be spent on capital projects and not on transit systems' day-to-day operating expenses?

-- Lisa Caruso, NationalJournal.com

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5 Responses

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Responded on June 2, 2009 11:11 AM
Lisa Caruso, NationalJournal.com

Updated at 11:16 a.m. on June 2.

Under the heading of great minds thinking alike, I wanted to let everyone know that Secretary LaHood has posted an entry on his Fast Lane blog about the benefits of public transportation. Of course he isn't commenting on the policy question we're debating this week, but like us he is thinking about public transportation and the role it plays in our national transportation system. Click here to read LaHood's comments.
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Responded on June 1, 2009 4:00 PM
Ed Wytkind, President, Transportation Trades Department, AFL-CIO

Despite record ridership, mass transit systems across America are in crisis. When the cost of gas spiked last summer, ridership soared and high volumes have continued ever since. But the weak economy is causing huge shortfalls in state and local revenues. Transit agencies are facing the budget ax just when their services are in highest demand. In cities and regions across the country, mass transit agencies are being forced to not only cut jobs, but eliminate the services so many commuters need to get to their jobs. Employee and service cuts can easily translate into a corresponding number of commuters who can’t get to work. St. Louis’s Metro just laid off 550 employees and plans to eliminate a significant portion of its bus service. Cleveland’s RTA plans to cut 300 jobs. WMATA in Washington, DC is considering $13.5 million in service cuts. And in California, literally thousands of workers are at risk of being laid off and massive service cuts are imminent. The recently passed stimulus legislation didn’t solve this problem. The American Recovery...

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Despite record ridership, mass transit systems across America are in crisis. When the cost of gas spiked last summer, ridership soared and high volumes have continued ever since. But the weak economy is causing huge shortfalls in state and local revenues. Transit agencies are facing the budget ax just when their services are in highest demand.

In cities and regions across the country, mass transit agencies are being forced to not only cut jobs, but eliminate the services so many commuters need to get to their jobs. Employee and service cuts can easily translate into a corresponding number of commuters who can’t get to work.

St. Louis’s Metro just laid off 550 employees and plans to eliminate a significant portion of its bus service. Cleveland’s RTA plans to cut 300 jobs. WMATA in Washington, DC is considering $13.5 million in service cuts. And in California, literally thousands of workers are at risk of being laid off and massive service cuts are imminent.

The recently passed stimulus legislation didn’t solve this problem. The American Recovery and Reinvestment Act included funds for transit capital projects, but not for operating assistance. Unfortunately, new buses aren’t going to expand capacity if there are no employees to drive them.

We fought for a provision in the Senate’s FY09 Supplemental Appropriations Act includes that would allow transit agencies to use up to 10 percent of their stimulus funds for operational expenses. Giving transit agencies this flexibility will help address widespread budgetary shortfalls – without any additional cost to the American taxpayer.

When the House and Senate meet this week to finalize the Supplemental Appropriations bill, Congress will decide what remains in the bill – and if public transportation systems can use some of their stimulus funds for operating assistance. This legislative remedy will avoid or minimize service cuts and save thousands of good paying transit jobs – while helping those who rely on mass transit to get to work.

Responded on June 1, 2009 3:07 PM
Phineas Baxandall, Senior Analyst, United States Public Interest Research Group (U.S. PIRG)

Failure to support operating expenses is just another way that the federal transportation funding system is skewed against public transportation. Compared to highways, operating expenses comprise a much larger portion of total spending for public transportation. Transit agencies must pay for bus drivers, train conductors, station agents and a host of other operating expenses that don't exist on the highway side. The embedded bias against public transportation would be bad enough if it were not compounded by three other features in the current system that systematically discourage public transportation. The interaction of these biases with the lack of operating funds make world-class public transportation harder to achieve:

State gas taxes -- despite the fact that public transit relieves road congestion and makes it possible for road projects to comply with air standards, most state constitutions limit use of gas taxes to highways. Gas taxes are typically the largest source of state transportation funds. So not only are states forced to fund transit opera...

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Failure to support operating expenses is just another way that the federal transportation funding system is skewed against public transportation. Compared to highways, operating expenses comprise a much larger portion of total spending for public transportation. Transit agencies must pay for bus drivers, train conductors, station agents and a host of other operating expenses that don't exist on the highway side.

The embedded bias against public transportation would be bad enough if it were not compounded by three other features in the current system that systematically discourage public transportation. The interaction of these biases with the lack of operating funds make world-class public transportation harder to achieve:

1. State gas taxes -- despite the fact that public transit relieves road congestion and makes it possible for road projects to comply with air standards, most state constitutions limit use of gas taxes to highways. Gas taxes are typically the largest source of state transportation funds. So not only are states forced to fund transit operations on their own; but their best and most sensible tool for doing so is placed off-limits. These states have no choice but to patch together agreements between local governments for new sales taxes or other fees. Revenue agreements between localities that badly want transit projects nonetheless often collapse because of disagreements over the proper share that each cash-strapped jurisdiction should pay.
2. Federal matching – While the federal government will cover 80 percent or more of highway projects, a new transit expansion is lucky to get 50 percent federal match. Transit starts at an artificial disadvantage because projects will leverage fewer federal dollars.
3. Uneven process – As other commentators have noted, the process for applying for federal transit projects is much more arduous, lengthy and uncertain compared to highway projects. States must pay up front for expensive additional studies, wait through long delays, and then compete against projects in other states – with no certainty that New Starts or Small Starts money will be forthcoming no matter how good their projects are.

Increasing the share of travel on public transportation should be an explicit goal of national transportation policy. That will be harder to accomplish without support for operations. Current policy is much like if the federal government were to ask states to foot the bill for national border crossings and then only paid for the toll booths and security signs. Making public transportation a priority will require support for major expenses, especially the operating bottlenecks that continue to stifle transit around the country.






Responded on June 1, 2009 9:01 AM
Anthony E. Shorris, Director of the Rudin Center for Transportation Policy and Management, Robert F. Wagner School of Public Service, New York University

It's time to re-think the Federal government's failure to support mass transit operating expenses. The reasons are simple: the beneficiaries of mass transit ridership rider extend well beyond the riders themselves. Good old fashioned micro-economics would tell us that when people are affected by a transaction other than the buyer and seller, there need to be ways to capture the value and costs external to the deal. In the case of mass transit, the riders certainly benefit -- and should pay some portion of the cost -- but others benefit too: commuters who gain more road space when people use the train, families who breathe cleaner air, and a nation that finds itself a step closer to energy independence with every rider.

The only hard question becomes which level of government should provide what share of the operating subsidy appropriate for mass transit systems. Since some of the benefits accrue to commuters in the region served by the transit system, they should certainly chip in, as should residents of the areas served (a balance found in the thoughtful pro...

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It's time to re-think the Federal government's failure to support mass transit operating expenses. The reasons are simple: the beneficiaries of mass transit ridership rider extend well beyond the riders themselves. Good old fashioned micro-economics would tell us that when people are affected by a transaction other than the buyer and seller, there need to be ways to capture the value and costs external to the deal. In the case of mass transit, the riders certainly benefit -- and should pay some portion of the cost -- but others benefit too: commuters who gain more road space when people use the train, families who breathe cleaner air, and a nation that finds itself a step closer to energy independence with every rider.

The only hard question becomes which level of government should provide what share of the operating subsidy appropriate for mass transit systems. Since some of the benefits accrue to commuters in the region served by the transit system, they should certainly chip in, as should residents of the areas served (a balance found in the thoughtful proposal for transit system funding made by former New York MTA Chair Richard Ravitch). But there is a national interest here too. First, since the communities that benefit from cleaner air and less crowded roads often encompass more than one state, there is a role for national government. Even more importantly, shifting riders from cars to transit makes America more secure and less dependent on foreign oil. And perhaps most important of all, a more just distribution of transportation services is an appropriate national policy goal, just as is the equitable distribution of educational or health care services. Indeed, as transportation has become one of the largest household expenses, mechanisms to reduce this cost while achieving other important national benefits may prove highly efficient uses of federal dollars.

One last point: the use of federal transit dollars solely for capital as opposed to operating expense can skew local decision-making away from core maintenance towards system expansion. The federal government should be using the power of its purse to encourage rational decision-making at the local level. While, in the end, all dollars are fungible, a more thoughtful use of federal funds could not only advance the national good by creating a more secure and just America over the long-term, but could improve the quality of our existing transportation systems today.


Responded on June 1, 2009 7:54 AM
William Millar, President, American Public Transportation Association

This week’s question is one that is timely and under much discussion in the public transportation industry. This is a time of great opportunities and great challenges for America’s public transit systems. Last year 10.7 billion trips were taken on public transit – the most in 52 years – and a modern ridership record. Since 1995, public transportation use has grown by 38%, a figure that is almost triple the growth rate of the population (14 percent) and up substantially over the growth rate for the vehicle miles traveled (VMT) on our nation’s highways (21 percent) for that same period.

The paradox of this is that at a time of record demand for public transportation, state and local revenues are declining and many public transit systems are facing severe financial challenges, and America’s transit riders are paying the price. Raising fares and cutting service may seem an odd thing to do in light of record ridership, but fares, both here and abroad, cover only a portion of the cost of operating a public transit system.

Funding from all levels of government – federal...