Transit Leaders See New Federal Money as a Bridge, Not the End of the Line

Congress pulled public transit agencies from the brink of financial collapse during the darkest days of the pandemic, and it is getting closer to helping them upgrade their physical assets too. But that doesn’t mean the agencies running buses and trains are in the clear yet.

The actual impact could vary greatly from one agency to the next, but overall, the industry is still worried about whether ridership will return to pre-pandemic levels. 

Recent estimates show that ridership levels are now about 58 percent of what they were before the pandemic. Many agencies hope to see that number climb as offices reopen after Labor Day. If not, agencies may have to change the services they offer, make spending cuts or find new sources of funding to make up the difference.

Meanwhile, the industry faces a massive backlog of improvements needed to bring its equipment up to good condition. The Federal Transit Administration estimates that more than 24,000 buses, 5,000 rail cars, 200 bus and rail stations nationwide need to be upgraded, not to mention tracks, signals and electric equipment that needs to be replaced. The total national bill would top $105 billion.

Three separate coronavirus-related relief packages helped transit agencies keep day-to-day operations going at a time that ridership plunged. 

When all that money is added up, transit agencies in every metro area of the country got more than 132% of their 2018 operating expenses in coronavirus relief. Many smaller jurisdictions got three or four times their 2018 budgets from those rescue packages, according to an analysis by Jeff Davis, a senior fellow at the Eno Center for Transportation.

The infrastructure bill the Senate passed in early August focuses more on the physical assets that need to be upgraded. The upper chamber’s bill would allocate $106.9 billion for transit purposes over five years – a 63 percent increase from current levels. Some of that money is reserved for specific purposes, like switching bus fleets to electric or hydrogen power, or making stations accessible to people with mobility limitations. 

“This is a big relief, [but] this is not going to transform transit in the United States,” says Ben Fried, communications director for TransitCenter, a transit advocacy group, about the Senate-passed infrastructure bill.

“The transit money here is not of a nature that’s going to result in a huge number of new lines and new services in cities,” he explains. “It can help improve the lines that we do have and make sure that our systems are more reliable, that buses and trains don’t break down as much, that agencies don’t have to borrow as much for their capital plans [which] can help keep fare hikes in check.”

Ward McCarragher, the vice president of government affairs and advocacy for the American Public Transportation Association, which represents transit agencies, says the influx of money from Washington will help agencies respond to increasing public demand to address racial equity and climate change, too. 

“In the last two years, in addition to Covid, people are much more focused on equity, and whether we’re getting service to the communities that need it most. This money helps provide that,” he says. “That’s true of both the Covid funding to help with the operations, and then the infrastructure bill will help provide the capital necessary for that.”

The transit agencies hope the House will add more transit money, as it considers how to respond to the Senate’s bipartisan infrastructure deal. 

Many prominent House Democrats have chafed at the Senate’s approach on the bill, which they see as too focused on highways and not aggressive enough in combating climate change or addressing racial disparities exacerbated by the highway system.

That said, APTA still praised the Senate bill for increasing support for buses, subways and local rail systems.

The federal spending on transit should also make it easier for transit agencies to make longer-term plans, which is especially important if they want to make major upgrades in their equipment, like buying new vehicles or installing electric-charging equipment, McCarragher says. 

No Long-term Approach

Congress has often made it difficult to look very far in the future when federal funding is concerned. The FAST Act, the surface transportation law that provides the bulk of federal money for transit expired last fall, and Congress passed a one-year extension at the last minute. The path to getting the FAST Act approved in 2015 was even more tortured; lawmakers passed dozens of short-term bills while they struggled to find money to pay for highways and transit.

“Transit agencies are often conservative in their budgeting approach,” McCarragher says. “Without that long-term certainty, they were not willing to make long-term commitments.”

But Fried, from TransitCenter, says that same conservative approach is another reason why transit agencies have been careful in how they’ve restored service, despite the influx of money from the American Rescue Plan Act earlier this year.

“What we’re seeing from agencies that are of a more conservative mindset with their budgets is that they're still holding back, and not putting out like all of the service hours that they were putting out before the pandemic,” Fried says. “They're anticipating that, after two years or whenever the Rescue Plan funding runs out, they may still not be in good shape.”

One clear example of that is in San Francisco, where the local transit agency just brought service back to 85% of pre-pandemic levels earlier this month. It was the first time since March 2020 that the famous cable cars climbed the hills of the city.

Jeffrey Tumlin, the director of transportation at the San Francisco Municipal Transportation Agency, explained in a July interview with radio station KPFA that the agency had structural deficits even before the pandemic, which only grew worse when the coronavirus hit. 

“What we’re missing right now is people returning to downtown offices, that was always our biggest source of ridership,” he said. “And what we’re finding is those office buildings are just empty. So not only are we not getting riders on Muni, but we’re also not getting commuters parking in our parking garages, which is another key source of revenue for the system.”

“We need to calibrate our recovery, to stay ahead of the San Francisco recovery. If we spend our money too quickly. The result is we run out of money, which means we don’t make payroll,” he explained.

Meanwhile, officials in New York have started talking about a potential 15% reduction in services in 2023, after federal coronavirus relief largely runs out. They are worried about projections that ridership will only return to 80% to 90% of pre-pandemic levels.

But, of course, riders are more likely to take buses and trains if there is more service available. That puts transit agencies in the tricky position of trying to stay ahead of demand.

“Agencies are trying to bring back service in advance of the riders,” says APTA’s McCarragher, “so when the riders start coming back into their offices, the service is there for them, it’s efficient and it’s ready to roll.”

Getting commuters back on the buses and trains that they used to ride, he says, “will help communities restore the economic growth that we need to see over the next several years.”