How Could Transit Agencies Cope With a Sudden Loss of Federal Funds?

Capital disinvestment during the 1970s and 80s left New York City's subway system in shambles. Photo:  TransitCenter
Capital disinvestment during the 1970s and 80s left New York City's subway system in shambles. Photo: TransitCenter

The election of Donald Trump, combined with continued GOP control of Congress, has introduced a huge cloud of uncertainty over America’s transit agencies. Trump’s outline for spending $1 trillion on infrastructure relies on risky financing that doesn’t make sense for transit projects. His budget priorities reportedly align with conservative think tanks opposed to all federal transit spending. And his pick to lead U.S. DOT, Elaine Chao, has refused to confirm that transit projects in the pipeline will receive the federal funds agencies are banking on.

Two years ago, Republicans and Democrats passed an uninspiring, five-year transportation bill that essentially continued status quo federal transportation policy. The bill included about $10 billion annually for transit, but under Trump and the Republican Congress, agencies can’t be certain that funding will materialize.

While urban and suburban areas retain enough power in Congress to fend off worst-case scenarios, it’s helpful to imagine and plan for what might happen in the event of “volatile or punitive” federal policies, writes TransitCenter. To illustrate the situation transit agencies may be up against, TransitCenter looks to the drastic transit cuts Arnold Schwarzenegger pushed through in California after the economic collapse of 2008:

Governor Schwarzenegger’s 2009-2010 budget eliminated the State Transit Assistance (STA) program, the only ongoing source of state funding for the day-to-day operations of public transit. At the time, the STA accounted for as much as 70 percent of the total budget for some of the state’s transit providers, so its elimination quickly precipitated a combination of service cuts and fare hikes across the state. No agency was spared: L.A. Metro was forced to cut as much as 160,000 hours of bus service, despite the fact that voters had just approved Measure R to expand transit. Sacramento Regional Transit District cut service by 10%. According to Stranded at the Station, a 2009 Transportation for America report, many agencies were forced to eliminate lifeline services for the most vulnerable riders.

Some agencies found ways to lessen these blows. The San Francisco Municipal Transit Agency, second largest in the state, faced a $129 million dollar budget shortfall upon STA’s elimination. However, state law enabled so-called “Congestion Management Agencies” (typically the transit agency in a given municipality) to put a $10 vehicle registration fee before voters to fund transportation projects. San Francisco County approved the fee in 2010 — today it generates around $55 million a year for transit operations. Additionally, the agency negotiated with labor unions for concessions, located “lifeline” funding grants and ultimately laid off a small percentage of its workforce.

On a smaller scale, The San Joaquin Regional Transit District, which operates buses in Stockton also faced a crippling deficit. In response, the agency developed a scoring system to preserve its most productive routes when imposing service cuts, and found ways to increase system-wide efficiency.  It also cut personnel to balance its reduced budget. Additionally, it aggressively sought discretionary grants to cover the cost of capital projects, allowing it to shift other capital funds to cover operations. Some of this came in the form of grants from the FTA, others from the state. Thanks to its multi-faceted response, SJRTD survived relatively unscathed and currently has the 20th highest ridership in the state.

More recommended reading today: Greater Greater Washington looks at how the DC Metro handled the huge crowds at the Women’s March. And the State Smart Transportation Initiative reports that U.S. DOT isn’t forecasting as much traffic growth as it used to.

  • Todd

    The San Joaquin examples shows that transit can be made much more self-sustaining.

    Think about it for a minute. What other kind of business can have massive crushes of people clamoring to use it and yet somehow lose money on the deal?

  • Kevin1813

    The road system for one. The airline industry for another. Pretty much all forms of transportation operate at a loss.

  • Todd

    Airlines have been making a lot of money recently, due to lower oil prices and a good economy increasing travel. Freight railroads make money.

  • Kino

    The Massachusetts DOT and the Mass Bay Transit Authority should read this. The Trump team floated a infrastructure list via McClatchy with the state’s Green Line Extension trolley, but nobody bothered to look at the details. They have the project listed at $3 billion dollars as a non-emergency, non-security project. They can come back and say, yes we looked at it and its too expensive. Or they’ll say, we can chip in money, but you must abide by Trump’s sanctuary city reform. MassDOT is going to lose between $1 billion and $2 billion in federal funding for a trolley project that realisitically costs $6 billion

  • Kevin1813

    Would airlines be making a ton of money if taxpayers didn’t provide massive subsidies for the construction of airports and the FAA? Not to mention the numerous smaller metros that subsidize flights to ensure their community has access to larger metro areas.
    .
    Freight railroads also make money, except… every railroad ever has been given free right of ways from the Federal Government.
    .
    It’s almost as if… all transportation is subsidized (gasp!)

  • Todd

    Airports are largely self-funded. They charge use fees to the airlines who pass them into their passengers. Likewise ATC is paid for by flyover fees and, anyway, is a public safety spend.

    The railroads own the land they operate on, for the most part. The ROW’s were cheap because they were purchased a long time ago.

    All transportation may be subsidized to some extent, but some of it is much more subsidised than others. Google “farebox recovery rates”

  • Claude

    Traffic kills 30,000 a year, so a safer form of travel, such as trains, would also be a public safety expense.
    The cost of ATC is defrayed by flyover fees. To fully fund ATC would require tripling the fees. Since the total sum of all airline profits to date has been approximately zero, the loss of these subsidies might not be economically sustainable.
    But at least some of the major airports, like LAX, are self funding. Others, like Cleveland, are massive multi-million dollar money pits.

  • Todd

    Trains are useless in the US outside of a few commuter cities. The cost of a European-style national system is off the charts – not gonna happen.

    So it’s road traffic and air traffic. If the voters didn’t support subsidies for those, it would hever have been that way.

    For that matter, the voters appear comfortable with that 30,000 number, at least to the extent that they don’t want to pay massively higher taxes or put up with slower speeds and more congestion just to reduce it

  • Trevor Ness

    I went to the last Massachusetts Fiscal Management Control Board (FMCB) meeting in Boston, the outfit created to cut down on Mass transport pork. It was hilariously sad. The Green Line Extension director John Dalton; pulling in $300,000 a year salary; claimed the project had a new $64.7 million deficit. What a coincidence, the board found $65 million in potential savings if they privatized bus maintenance, ie laid off multiple rounds of workers. Every cut in Boston, or local extortion; $75 million from Cambridge and Somerville goes towards this Green Line Extension, its maddening. Hundreds if not thousands will be out of work so the state can build a suburban trolley line. That’s nuts

  • Bruce

    This article now seems very prescient in the wake of Elaine Chao’s delay of Caltrain electrification funds.

  • RGD

    We have the power to change that. What it comes down to is that we need politicians to realize that there is a societal shift taking place right now.

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