Despite stimulus funds, transit budget gaps remain

The American Recovery and Reinvestment Act (ARRA) contained $8.4 billion in stimulus funding for public transit systems across the country. Yet transit agencies from New York to Atlanta, Madison to San Francisco are facing massive layoffs and service cutbacks to cover widening budget gaps.

A quick skim of the nation’s largest newspapers tells the story – ‘$25 million MARTA rescue plan needed’, ‘Metro stimulus funding scrapped – again’, ‘MTA forecasts $1 billion deficit next year’, and ‘MBTA to lay off 75 to trim deficit‘. And these are all headlines from the past two weeks.

According to Robert Puentes and Emilia Istrate at the Brookings Institution, fifty-one transit agencies around the country are in financial limbo. To add insult to injury, the Federal Transit Authority released a report last week finding that to upgrade the nation’s aging transit infrastructure, $50 billion would be needed. The report also found that one-third of the commuter lines, trains, buses, and other capital was in marginal or poor condition. The FTA said that $5.9 billion per year would be needed for maintenance following the $50 billion upgrades.

Even though $8.4 billion would be a drop in the bucket to upgrade the entire system, wouldn’t Recovery Act funds help those transit authorities in greatest danger of fare increases (NYC riders are looking to pay an extra $1 per round trip) and service cuts (Atlanta riders may not have services on Fridays)? Not really.

Puentes and Istrate explain an important proviso regarding the $8.4 billion in stimulus funds. “Federal rules in effect since 1998 stipulate that this money can be spent only on capital improvement projects and not to finance gaps in day-to-day operating expenses.”

Therein lies the problem. Making sure there’s money to cover a transit worker’s pay isn’t a capital improvement, nor is making sure one hundred workers’ pay is covered so entire routes are not shut down. New York will receive $1.22 billion for capital improvements, Georgia will get $143 million. California is looking at just over $1 billion and even New Mexico will receive $27 million, according to FTA Formula grants released in March.

In addition to these technical problems, most transit agencies are having to fight their state coffers – who face unprecedented money problems of their own.

  • Missouri legislators withdrew $20 million in funding for Metro in favor of a $1 billion tax break for Missourians
  • Wisconsin legislators are double guessing Governor Jim Doyle’s initiative to create and fund regional transit authorities. The state’s budget-writing committee is split 8-8 over how to deal with the situation
  • Illinois Governor Pat Quinn is holding up about $1 billion in transportation money recently approved for CTA, Metra and Pace under the state’s mini-capital bill
  • New York may be facing the biggest budget gap of over $1 billion next year and recent news indicates a second round of fare hikes is in the works before the year is out. Two plans invloving bridge tolls and taxi surcharges are fighting it out in Albany.
  • California riders in San Francisco are facing similar fare increases of 50 cents per ride
  • Georgia legislators may be trying to sneak one past the federal government’s capital improvement provision with their plan to fund MARTA with $25 million in Recovery Act funds. The state legislature failed to free up money already in hand at MARTA, reserved for capital improvements, so transit officials agreed to forgo other stimulus projects in order to fund the budget gap. Agency officials are still looking into the legality of the move – which will prove to be important for a host of other cities if it works.

The problem has become more daunting as the year progresses, and most of the fare increases and service cuts haven’t been implemented yet. But there remains one sliver of hope at the federal level.

It was also announced last week that a bill worth $500 billion over six years has been introduced by Representative James Oberstar (D-Minn.), the chairman of the House Transportation and Infrastructure Committee. Debate over the bill is tentatively scheduled for early summer to cover the expiration of the current bill in September.

Even with the Recovery Act funds and the possibility of a massive Transportation bill, all indications point to a very hot and messy summer along the nation’s bus routes and subway lines.

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