» A reliance on federal aid may not be a realistic approach in a budget-constrained future.
Like it or not, U.S. transit agencies are incredibly reliant on the federal government when it comes to funding their capital needs. In Chicago, for instance, over half of funds expected to pay for new capital investments over the next five years are supposed to be handed in from Washington. Every major city around the country relies on aid from D.C. for the purchase of new buses and trains, the maintenance of existing infrastructure, and the construction of new rights-of-way.
The current state of things in the nation’s capital, however, should put in question just how much local agencies can rely on federal funds to go about their business. Congressman John Mica’s proposal for a six-year transportation reauthorization bill — currently the only such legislation that has actual funds attached to it* — would cut annual federal expenditures on transport by 30% to match revenues being taken in by the national fuel tax; the wording of the bill implies that urban transit’s share could be cut even more decisively. That would be devastating. Take Los Angeles, where 10 to 20% of all of Metro’s funds are derived from federal sources; such a bill would result in a $1.44 billion cut over six years.
With debt ceiling negotiations continuing to focus in on reductions in long-term discretionary spending — that includes transportation — there is little reason to expect that the picture will improve even in the medium term.
Though President Obama and many members of the Congress have proclaimed their support for expanded national investments in infrastructure like public transportation, they have been unable to identify actual methods by which to fund it. Nobody in power wants to raise the gas tax, apparently. Nor do they want to install a vehicle miles travelled fee. Or, for that matter, make a strong claim for using debt today to make investments in tomorrow’s needs.
Faced with these terrible circumstances, the nation’s transit providers will have no choice but to increase fares or cut service in the short term and look for improved efficiencies in management over the next several years. If implemented correctly, these reforms could produce public agencies that are more effective and less wasteful than they have been in the past. Having to live with constrained resources can — can — lead to innovative thinking about how to provide the best quality service at the most reasonable price.
But there is only so much you can do to improve service delivery with a declining budget — and transit agencies have already tightened their collective belts considerably over the past few years. Thanks to genuine interest in reinvestment in our urban cores, a significant need to focus public policies on subduing the effects of climate change, and a frustratingly high rate of poverty, transit must play an increasingly important role in the provision of mobility not only in our biggest cities but also in medium-sized cities throughout the U.S. So reducing public transportation provision cannot be an option.
While Washington may be a morass of inaction, it is thankfully not the only source of public funds; there are local, regional, and state governments out there that already collect taxes and that could step in — if their leaders felt up to the task.
At the lower levels of America’s federal system, we have already stepped in many times to improve our transportation networks; operating funds are covered either by fare revenues or dedicated taxes. And while the national government continues to contribute a major proportion of overall spending on new rail transit lines, local agencies must contribute a significant match in order to win approval for their plans. But it may be time to take the existing pattern a step further — that is, if the national government does not sweep in at the last minute to save the day, something it can hardly be expected to do.
This means states and municipalities must make a far clearer commitment to the long-term health of their transportation agencies by establishing new guaranteed annual capital funds to replace lost federal revenues. This means submitting far more significant proposals to referenda than the 1/2¢ sales tax increases every decade or so that constitute the most ambitious policy moves on transportation finance usually undertaken today. No, we need property tax enlargement, or an inflation-aligned growth in the state fuel tax, or income tax surcharges. With the decline in federal revenue collection, states and municipalities need to fill in the gap, or let the needs of their transportation agencies go unfulfilled. This will require significant political leadership.
There are downsides to this approach. One of the great advantages of federally sourced funds is that they can be distributed along egalitarian lines. A large poor city may contribute fewer tax revenues to the central government than a small wealthy one, but a redistribution-oriented federal system allocates collected funds along population lines and gives the more populated city more funding, making the situation more fair from a proportional perspective.
Similarly, Washington’s involvement may now come across as too intrusive, requiring too much regulation and the like, but valuable environmental and public consultation rules enforced at the national level may not be taken seriously more locally. Attaching the rules to the awarding of federal funds ensures that they are.
Most problematically, by encouraging states and localities to tax themselves to pay for the public resources they desire, a Tiebout mechanism will be put in order. You don’t want public transportation? Fine, don’t live in a state or city that doesn’t tax you to pay for it. Want transit? Be willing to put up the local funds to pay for it — and convince the rest of your neighbors to agree, or encourage them to move out.
For the least wealthy members of society, however, such a system is inherently classist, since it forces people who, for example, do not have a car to live in the places where they are taxed to pay for transit, which must be subsidized to operate. So not only are they put at a disadvantage because of their poverty, but they are also forced to bear the full burden of paying for the costs of their mobility needs, which are arguably a right. Federal funding, which taxes people at the same rates across the country, avoids that problem.
Overcoming these difficulties may be downright impossible. But in an age of cutbacks, we may have no other option but to act, whether Washington is ready to follow through or not.
* Senator Barbara Boxer’s two-year proposal, while a much more reasonable bill that would maintain federal spending at existing levels, has a $12 billion gap that no one has been able to fill thus far.