Brown Offers Senate Plan For More Federal Operating Aid to Local Transit
Local transit officials seeking more federal operating aid during lean budgetary times got a new ally today in Sen. Sherrod Brown (D-OH), who introduced legislation in Congress’ upper chamber to give rail and bus agencies more flexibility to spend funding from Washington on averting service cuts and layoffs.
Sen. Sherrod Brown (D-OH) (Photo: Partnership for Success)
Brown’s plan aligns with a House bill sponsored by Rep. Russ Carnahan (D-MO) and endorsed by 95 other Democrats. At a press event today announcing the Senate bill, the duo was joined by transit-boosting Rep. Betty Sutton (D-OH) and members of the Transportation Equity Network (TEN), Transportation for America (T4A), and the Amalgamated Transit Union (ATU).
The Brown-Carnahan measure would allow urban areas — now barred from spending federal money on operating, save for 10 percent of their stimulus allocations — to use between 30 percent and one-half of their federal transit grants to defray the cost of keeping trains and buses running.
The bill also would free up more funding for urban transit agencies that have demonstrated cuts in carbon emissions after getting anti-pollution stimulus grants and those agencies that can increase the amount of money raised for transit operating using sources other than the farebox.
ATU legislative director Jeff Rosenberg said in an interview that transit groups believe Brown’s seat on the Banking Committee, which has jurisdiction over rail and bus networks, will put the bill in a good position as senators prepare to take up their version of long-term federal transport legislation.
Given the current uncertainty surrounding the timing of that bill, Rosenberg added that extra transit operating aid could also move through Congress if the Senate decides to act on the infrastructure-heavy jobs bill that the House passed in December.
"There is a role to play for the federal government to invest in transit systems to keep service going," Rosenberg said.
The ATU and the Community Transportation Association of America, which represents an array local transit agencies, have formed a new coalition aimed at marshaling grassroots support for federal operating aid.
Why not just eliminate capital aid altogether, and gradually shut transit systems down?
Doesn’t anyone see where this is going? If I were a right winger trying to rid of public transit, this is the way to do it. What a perfect way to “starve the beast.”
I’m not so sure, Larry. For the past several years, essential maintenance has been lumped under “capital” programs, but other than the federal funding restriction, I can’t think of a good reason to do that. It would be more transparent for taxpayers if essential maintenance were under operating expenses, and capital programs were just system expansion.
This is about eliminating essential maintenance — ie. replacing buses on an ongoing basis. Because in much of the U.S., that’s what the federal aid goes for.
“Operating” means it goes for pensions, and to offset cuts in state and local support (ridership doesn’t seem to be the problem right now).
This is all about excuses to do what they want to — just like the latest Ravitch Plan, have New York State borrow money to avoid cuts and tax increases for his generation today, in exchange for a promise to stick it to younger generations on both ends later.
Yes, wages and salaries, pensions and health and welfare are all part of what operating monies will be used for. No shit. Capital money goes for that too, it just goes to construction unions and construction management and ownership.
Even the essential maintenance the good Captain refers to (reimbursable in the MTA budget) involves a lot of wages and benefits. Even non-union transit operators are 70% labor cost. This is not a reason to oppose this bill.
Unfunded pensions are a bad thing. Larry has established that, I often quote from him. But this comes down to access to Federal support, access to the printing presses. We could run transit based on private financing, it could be run at a profit. The system and service would not look a lot like it does now, but we could do it.
This legislation is important because it raises the importance of transit to the level that is worthy of the Federal printing presses. The auto industry was worthy of the printing presses (Cash for Clunkers, they use labor), and the banking industry was worthy of the printing presses (they don’t but they fucked up the whole economy) and the farmers are worthy of the printing presses (they use a lot of immigrant labor, no pensions Larry).
This legislation raises the Federal commitment to transit and should be supported as such.
Its not “just like the latest Ravitch Plan” the State of New York can’t print money. There are basically two ways to finance the recovery the Federal government can print money or the private banks can lend it. The banks, bond underwriters and rating agencies may have made some bad bets on MTA borrowing for pensions and whatever, maybe New York State can find a way to pay it, maybe not, Larry prefers bankruptcy. Even if he gets his way, which he won’t, the Federal Government’s need to help finance local transit operations will not go away, it will increase.
This legislation is just a blow for reality. And, small operators (read suburban and exurban systems) already get Federal operating aid, this just levels the playing field for the cities. Oshkosh thanks Larry for the help.
They aren’t adding money for operating, they are diverting it from capital.
And most capital is just ongoing normal replacement, which is really maintenance.
Does this bill have a bill number? I can’t find it in thomas.loc.gov, and would like to be specific in communicating about the bill (so that folks who want to read it, can). Thanks
Anyone remember the Beame Shuffle during the 1970’s NYC almost bankruptcy?
A federal bill allowed the MTA to “borrow” capital construction funds to cover immediate operating costs.
The bill was sponsored by a Manhattan Congressman named Ed Koch.
Whatever became of that Ed guy?
Re Capital/Maintenance, Ravitch and bond issues: Ravitch is doing the right thing right now, just as he did in the 70s, keeping the system above water, barely.
Keeping the system in a State of Good Repair – SOGR – means repairing, rehabilitating or replacing every part and component as it reaches its useful life. If you don’t, you get deferred maintenance, and pretty soon the Mean Distance Between Failure – MDBF – starts to fall, and eventually you start laying trains on the ground.
All this happened in the late 1970s, we watched that movie play out in slow motion. It then took about 15 years intense reconstruction to get close to a SOGR and get the MDBF up around a million miles, up from a couple of thousand. Remember when having a bus or train die under you during a trip was the norm?
The Beame Shuffle loans were still being paid back into the 1980s. The MTA allocated local funding in place of federal Sec 3 capital funds to new contracts awarded in the 80s. It all worked out in the end.
Capital costs are usually looked at as major purchases – particularly for new start system expansion. It makes sense to sell bonds for projects that have parts that last 35 to over 100 years.
The problem comes in when you have a fully operating system and you look at useful life to maintain a SOGR. The good news – the system was built like a brick shit-house to last 35-100 years. Bad news, the 35-100 years are up.
Example: NYCTA has 6000 subway cars. Each car has a useful life of 35 years. If you want to maintain the fleet in good repair, you can either buy 6000 cars every 35 years, or replace 1/35 of the fleet every year.
If you decide 1/35th, then you need to buy about 171 subway cars every year, forever. At about $3 million each, that’s over $500 million, every year, year after year (increasing for inflation…)
Sure, it’s a capital cost, but it’s a reoccurring capital cost just like labor and electricity that keeps coming back each year. It needs to be budgeted on a Pay As You Go basis and on on bond issues.
Overall, the system, including subway tunnels, can be expected to last an average 100 years, which means 1 percent should be repaired, replaced or rehabilitated every year. The system has a replacement value well above 200 Billion Dollars.
Therefore, they need to spend over 2 Billion Dollars every year on capital maintenance projects until or unless they shut the system down.
The failure here has been the city and state colluded, starting in the mid 1990s, to sell bonds to fund much of these annual capital maintenance projects. Effectively, the NYS legislature has been using their credit card to avoid raising the taxes, tolls, fees or fares needed to keep the system on a pay as you go basis.
Well kids, we have maxed out the Master Card, and hit a the Great Recession, all at the same time. The 1970s may actually have been easier. So Ravitch may be allowed to sell some more bonds, because there is no cash to carry on for the next year or two, but at the same time, Ravitch will probably bring some sanity to the long term paying for maintaining the system with pay as you go financing as soon as the economy recovers.
I be pleasantly amazed if the legislature is able to correct the rest of the budget fiasco and raise taxes for the things people demand they want and actually cut out the things we don’t need (like upstate 6 lane expressways to nowhere, in key senators’ districts) With Ravitch as Lt Gov, maybe this will happen. Maybe.
Back to FTA and shifting capital to operating funds – the first priority is paying for the workers and electricity and diesel – or no subway or bus can run. Right after that is seeing that maintenance is still performed. Maybe we can survive till the economy recovers.