Fed support for transit operations needed
Without aid, maintenance problems will keep recurring
AS CONGRESS SLOWLY advances what will become a complete package of transportation funding and policy decisions that define the federal role for at least the next decade, it may be a good time to renew the call for transformative change in federal participation in transit operating costs. Without a change in federal policy, all of the well-intentioned and critically necessary support that’s been provided to transit agencies through the various COVID relief acts will come to naught, as the structural issues that constrain the delivery of high-quality transit services will remain.
At the same time, Congress should provide additional federal funding support for important preventative maintenance activities on the nation’s highway and bridge system. As I will explain, the lack of federal operating funding support for preventive maintenance across modes is consequential, undermining the quality and reliability of our entire transportation system.
Foremost on the list of reforms that are urgently needed is federal funding participation in transit agency operating expenses. There was a time when there was federal support for transit operating costs, but that ended in the Reagan-era retrenchment of the 1980s. The end of the federal role in funding operating costs had two significant consequences: first, it made transit agencies overly reliant on fare revenue to support their operating budgets, and second, it encouraged transit agencies to defer important maintenance activities, since infrastructure and system issues that simply worsened over time would eventually become candidates for more expensive repair and modernization work, and thus qualify for capital funding.
Since federal funding for capital projects has always been available, and capital funding at the state level is largely a matter of leveraging existing funding resources to issue debt, state agencies could effectively mask their real funding needs and state and municipal governing bodies could avoid the difficult task of raising net new revenue for transit. This moral hazard – incentivizing bad maintenance practices at the expense of reliable service delivery – has been a long-overlooked consequence of political convenience that needs to end if we are going to deliver on what people expect and demand of their public transportation systems.
Heavy reliance on fare revenues means, in practical terms, that operating budgets are heavily constrained by the inability to raise fares beyond an amount that most riders can reasonably bear. Worse, many political leaders have brought a Puritanical perspective to transit fares, determined to impose a “user pays” philosophy to public transportation that they do not bring to auto mobility. This says as much about who has (or is perceived to have) political power (drivers), and those who have less influence on Beacon Hill.
Massachusetts has a particularly troublesome record on transport funding equity: since 1991, the Massachusetts gas tax has risen by 14 percent while transit fares across modes have increased by 250 percent. Yes, you read that right. Perversely, the Legislature feels free to impose “fare recovery” metrics on transit riders at a time when its stated policy is to decarbonize the transportation sector. Lowering carbon emissions can be accomplished in the short and mid-term by encouraging riders to shift to transit, but that won’t happen without more rapid and accelerated investment in service reliability, new service delivery models (more frequent service all day long), and a new, lower fare structure. All of that requires more robust and stable transit operating budgets that are less reliant on fares.
Underfunding operating budgets has a second, less transparent consequence. The chronic underfunding of transit operating budgets creates a moral hazard that has a pernicious influence on service delivery and public confidence in the system. Why a moral hazard? When transit agencies view state underfunding of maintenance as something that can be eventually remedied with federal capital dollars, it inevitably and historically leads to failing infrastructure that can only be remedied by more expensive projects funded by federal capital funding. Political leaders accept this hazard as it takes them off the hook and lets them avoid the political pain of raising net new revenue.
No one should therefore be surprised at recurring infrastructure maintenance problems when federal capital money is available to come to the rescue when those problems have worsened to a level of high expense and urgent need. This is a problem not unique to transit, as it applies across modes. The recurrence of failing bridges across the nation, and the chronic inability to keep up with bridge maitenance is another highly visible symptom of the underlying moral hazard that provides misplaced incentives for highway officials (enabling them to kick the can) and political decision makers (enabling them to avoid taking tough votes on transportation revenue).The lack of preventative maintenance funding as an operating budget expense is a national problem. Providing federal support for operating and maintenance costs can put an end to these poor practices, or at least make them less appealing. Congress still has time to make alterations to the INVEST Act and the Senate’s Bipartisan Infrastructure Framework in a final reconciliation of the two that will restore federal funding to operating expenses, promote more preventive maintenance activities across modes, and enable transit agencies to stabilize their budgets without heavy, inequitable, and unsustainable reliance on fare revenues. Without this type of reform, all the federal capital money in the world won’t prevent chronic maintenance failures or transit operating budget crises. Yes, more capital funding is needed and welcome, but federal funding support on the operating side of the ledger is crucial if the 2021 transportation reauthorization effort is truly going to alter the failed policies of the past.
James Aloisi is a former Massachusetts secretary of transportation and a board member of TransitMatters.