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.