The Trouble With Transit Funding

The ‘fiscal cliff’ facing many U.S. transit agencies, accelerated by drops in ridership and the end of pandemic-era assistance, is a sign of deeper, more structural problems, writes Daniel C. Vock in Route Fifty.

According to research from the Urban Institute, transit agencies need more diverse funding streams, rather than depending largely on one or two often volatile sources such as sales taxes and fare revenue. “Keeping a lid on operating costs has become even harder in the wake of the pandemic because of factors such as difficulty retaining drivers and higher material costs.”

The researchers have several recommendations for transit providers: “agencies can demonstrate that the public still wants robust transit service by, for example, creating rapid bus routes using dedicated lanes or redesigning their bus networks. They can look for a chance to redirect revenues from existing taxes, rather than pushing for raising new taxes. They can encourage dense development around their stations to promote future ridership and, in some cases, agency revenue. They could create and fill rainy day funds to smooth out future jolts to their revenue sources. And they could be ‘transparent about doomsday scenarios’ if they don’t receive more funding, with details about specific cuts that would result.”