Big City Transit Agencies Face Budget Shortfalls

As rainy day funds and federal aid dwindle, transit agencies formerly reliant on farebox revenue are exploring new ways to fund their operations.

June 29, 2022, 6:00 AM PDT

By Diana Ionescu @aworkoffiction

Bus Service

A Southeastern Pennsylvania Transportation Authority (SEPTA) bus in Philadelphia. | Tupungato / Shutterstock

Transit agencies in some of the biggest U.S. cities “are facing a fiscal cliff,” according to one in a series of Governing articles that outline the prospects of transit agencies around the country. 

As Jake Blumgart writes, “It is worth noting that the vast majority of American transit systems do not rely on fares for much of their budget. Their ridership is overwhelmingly comprised of lower-income passengers, who have not had the luxury of remote work during the pandemic.” But for agencies in big cities where remote work made a big impact on ridership and revenue, the drastic change in how people use transit could mean an existential crisis.

The article describes an analysis by TransitCenter of transit systems in New York, Philadelphia, and Chicago. New York’s Metropolitan Transportation Authority (MTA) doesn’t face a budget shortfall until 2025, in part thanks to its “expansive” ability to borrow money. But to maintain the system long-term, the agency needs new sources of funding, such as the city’s congestion pricing program. Philadelphia’s Southeastern Pennsylvania Transportation Authority (SEPTA), meanwhile, is cushioned by a rainy day fund that the state requires transit agencies to maintain. In Chicago, the Regional Transportation Authority (RTA) is relying on the generous amount of federal aid it received, as well as a local sales tax on online sales that contributes to the agency’s revenue.

All three agencies, however, expect to face budget shortfalls by the end of 2025.

Monday, June 27, 2022 in Governing

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