FTA Eliminates New Starts Rule that Gave Leg Up to Private Operators

» Policy change would improve relative standing for proposed transit projects with government-run operation.

Elana Schor reported today on Streetsblog that the FTA’s proposed rules governing New Starts transit grant rankings would be altered so as to eliminate the existing preference given to programs that would be run by a private-sector operator or that prove there are “substantive reasons” not to do so. The rule change, though not likely to affect transit planning in many jurisdictions, is a welcome sign of confidence in the public sector from the Obama Administration and FTA Administrator Peter Rogoff,.

The Bush Administration, which instituted the rule in 2007, was obsessed with the privatization of public assets such as transportation infrastructure, and it jumped at any chance to make that preference matter in federal decision making. The FTA’s rule, which arbitrarily increased project ratings in the New Start process if transit agencies made a significant effort to attract private companies for maintenance or operations, made little sense, since it gave preference to for-profit organizations simply because they weren’t government, the political entity modern conservatives cannot help but abhor, no matter the situation.

A transit system run by a corporation is not inherently better or more cost-effective for the public’s purse than one run by a local agency. The FTA rule was purely intended to encourage local governments already having trouble meeting the New Start cost-effectiveness guidelines to consider private operations as a matter of necessity. Whether doing so saved any money is a different question, and indeed, like many Bush-era policies, it seemed more aimed towards rewarding a select few companies rather than the people actually standing to benefit from improved transportation.

Despite this exciting policy change, the Obama Administration still has a lot of work to do to lessen the influence of corporations in transit policy, many of which exploit the precarious finances of public transportation agencies to improve their balance sheets. Washington has done little to put a hold on the problem.

The leasing of buses and trains from banks and insurance companies continues, despite the fact that doing so results in more long-term expenditures than simply retaining the vehicles in-house requires. Few seem to remember the A.I.G. disaster earlier this year that cost agencies around the country hundreds of millions of dollars.

Meanwhile, transit providers, faced with relentless deficits as a result of insufficient funding, continue to finance new projects with debt: New York’s MTA, for example, will spend about $1.5 billion servicing its load in 2009 alone, filling the pockets of bond holders but lessening the ability to invest in operations, maintenance, and new construction. The administration’s actions, in other words, will seem minor until these far more serious concerns are addressed by the national government.

3 Comments | Leave a Reply »
  • Brad

    This may be a bit off topic, but because of new FTA rules this year public transit agencies are not able to compete against private companies. This stems from the Bush era policies; “private always beats private” and the results are not good in this case. For those outside of Minnesota the state fair here is a big deal. http://www.startribune.com/local/fair/?elr=KArksLckD8EQDUoaEyqyP4O:DW3ckUiD3aPc:_Yyc:aUycaEacyU

    In the past the fair has been served very well by both public and private bus operators. This year private operators went from 40% of the routes to 100%. Service has been spotty, I think this illustrates the fact that more Bush policies in the FTA need to be reversed.

  • Woody

    Nice link. Story had tis incredible stuff:
    The Federal Transit Administration says that the rules prevent “unfair competition” between public services and private companies, and that the agency “has received a great deal of positive feedback about the rules from both public and private operators.”

    A great deal of positive feedback from PUBLIC operators? I think that is a lie.

    And it shows that our government in Washington remains infested with embedded Bushies and Ayn Rand cultists.

  • Nathanael

    Agreed — the Bush era prohibition on public agencies providing special event bus service is a piece of insanity and needs to be removed yesterday if not earlier.

    The only upside is that, with private companies providing crappy, crappy special event service, public agencies can make the case for rail service to stadiums, where they are allowed to provide special event service. This is a pretty pathetic upside.

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