Perhaps there are a few places where a federal or national subsidy is clearly needed. In particular, I would point out that the federally-mandated discounts for seniors and the disabled are unfunded, and paratransit (taxi) services for the disabled are not fully funded by federal dollars.

If the feds would pick up the whole tab for paratransit and the discounts given to seniors, the disabled and perhaps students, that would go a long way to improving operations. Add on an “emergency” operations fund, accessible during recessions, and transit would have a much more stable future.

There’s a big difference between being open to change, and succumbing to not-invented-here syndrome. In a third-world country, which is what the US is when it comes to transit, the best thing to do is copy what the big boys are doing, learn, and only then innovate if the in-house experts find it prudent. There’s a difference between an established house of experts saying “We could try this” and a government giving grants to inexperienced people so they can reinvent the wheel.

Likewise, we may know what works, but there is always a better to be achieved. Medellin transports more than 40,000 people per day on a gondola that was magnitudes cheaper than other forms of separated grade transit. All of Central America runs on a chartered route system with individually owned buses which are typically owned by the drivers…and in Tegucigalpa they have city wide ridership estimates of well over 1,000,000 per day…all running at operating profits and at zero net cost to the local governments.

Sure, we may know what works in the developed world, but if you asked what worked in the developed world in 1920, you would have come up with an answer like “Completely private market subways and streetcars”. The world is different now, and while we may have an idea of current best practices, we need to be open to the fact that they will change with new technology, constraints, costs, and problems.

In dense urban areas, we know what works because there are dozens of first-world cities with functional transit systems to learn from; in less dense urban areas, we have a reasonable number of examples as well, from Canada and Australia. To try to rediscover what the rest of the first world has been doing for decades is to reinvent the wheel.

The first is that the question of the reaction to the recession is entirely obscured by the development versus redistribution framing. The primary point with respect to the recession is that it is the fiscal authority at the level of the sovereign issuer of currency that has the responsibility to increase deficit spending to provide the assets to permit excess saving to occur during recessionary conditions because it is the only level that CAN do that. Expecting California or New York or South Carolina or Ohio to fulfill that responsibility would be like expecting Greece to fulfill that responsibility within the Eurozone.

But that is an economic stabilization function and could be done on an entirely functional basis – subsidize transit operations in proportion to the reduction in tax base as a stabilizing measure and subsidize transit operations in proportion to population served and decline in national economic activity as a stimulus measure.

The second is that independence of oil-fired transport is a national security concern, so that federal operating subsidies for oil-free transport are justified on a national defense basis. That could well be on the basis of a per capita distribution to an account for each municipality, and counties and reservations for residents outside incorporated areas. Then projects would compete for funding from those accounts by being certified as qualifying projects, and then making their case to be allocated funding. If the funds were on a use-it-or-lose-it basis, we would see a wide range in experiments in a range of qualifying oil-free transport.

Since overall federal funds would be allocated based on share of total national ridership and off-peak service hours, broad economic effects would be normalized. Recession-induced peak ridership declines would suggest that less peak service is needed, so the transit operator should be cutting back there anyway. Off-peak service on the other hand is a social good, so that should not be jettisoned so quickly in lean times and the formula would respect that.