U.S. Transit Agencies Face a Financial Crisis

According to an S&P Global Ratings report, which this month downgraded the public transit sector from stable to negative, “Some public transit operators face an operating fund fiscal cliff — especially if they are unable to identify new revenue sources or right-size operations reflecting lower expected ridership levels — once the federal assistance aid now compensating for diminished passenger fare revenues is depleted.” Dan Zukowski highlights the crisis in Smart Cities Dive, as major systems across the country struggle to find sources of funding as ridership remains low, particularly in cities with high rates of remote work. Meanwhile, other issues plague transit systems:

“Labor shortages are reflected in the signing bonuses they offer bus operators. Many agencies are looking toward major investments to electrify their bus fleets. And new approaches to better serve their communities have some agencies redesigning bus networks and trying alternative fare strategies, including fare capping, discounted fares and eliminating fares.”

Zukowski points to zero fare transit programs that have successfully boosted ridership in their cities, noting that free fares can reduce agencies’ operational costs by eliminating the need for collection mechanisms and enforcement. Ultimately, finding revenue sources other than fares, such as congestion pricing programs, might be essential to the survival and effective operations of U.S. transit agencies.