Local Funding for Public Transportation Operations: Producing Inequitable Results?

» Less wealthy regions may be more likely to spend less on transit, leaving the poor there with higher transportation expenses.

One of the unique features of the American transit funding system is that the federal government chips in significant sums each year for capital expenses, such as for the purchase of new buses or the construction of new rail lines, but the law forbids significant involvement in subsidizing operating expenses. This means that local and state governments must find the means to pay for service day-in and day-out.

This could offer the benefit of a considerable range of local political decision-making: Some cities may choose to prioritize transit, while others don’t — people can choose to move between cities based on whether or not they want to take advantage of such transportation offerings. Yet the provision of transit for impoverished people is a redistributive service, and there is considerable theoretical support for the argument that redistributive public functions should not be funded by local governments. Cities that choose to aid their poor, scholars like Paul Peterson have argued, will simply attract more of the needy into their city limits; other municipalities without such aid will be able to escape with lower taxes and no aid to the poor.

A review of evidence from American cities on transit operations funding suggests that neither of these arguments is substantiated. Rather, the current funding system results in highly inequitable results that result in worse transit service in places with higher poverty rates and lower median household incomes. Differences in metropolitan wealth are highly positively correlated with levels of funding for transit service. In other words, the places where residents need transit service most are those that are providing the least of it. Median household incomes, at least based on the regions reviewed here, are prime determinants for the level of public services offered.

To conduct this quick study, I considered data from 15 American cities. I selected all central cities with populations of between 600,000 and 1,000,000 in the 2010 U.S. Census, producing a broad sample of cities throughout the country with varying demographic profiles.* I assembled data at the metropolitan (MSA) level (from 800,000 to 5.6 million in population) from local transit systems (for operating funding data), the Brookings Institution (for 0-vehicle households, metropolitan area poverty rates and median household income), the American Public Transportation Association (for ridership in July 2011), and the U.S. Census (for central city population, poverty rates, and median incomes).

Comparing statistics across this group of cities indicates that by requiring operating funding to be assembled at the local level, people living in poorer metropolitan areas are likely to be denied the quantity of transit services that their peers in wealthier regions are offered. This will only increase the transportation costs faced by people living there. This indicates that there is a strong equity argument to shift operating funding of transit services away from the local level and towards the federal government, which would be more likely to spread resources equally across metropolitan areas, regardless of local incomes.

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The most devastating data, as shown in the charts above, demonstrate that metropolitan areas with higher poverty rates and lower median incomes are likely to spend less on operating their public transportation networks than peer cities with lower poverty rates and higher median incomes (R-squared correlations of positive 0.72 and negative 0.49, respectively). A 50% increase in the poverty rate is associated with a 49% decline in per-person transit operations funding. The differences in transit funding are even more significant when compared with differences in income. The regression shows that a 50% increase in regional median income is associated with a 220% increase in per-person transit funding.

This suggests not only that less-wealthy metropolitan areas do not have the funding capacity to ensure good transit for their populations, but that they are providing disproportionally less public transit than their wealthier peers.** Local funding results in considerably varied service provision, based almost directly on the wealth of each respective region.

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This is not to suggest that people in poor areas are not able to get around at all. The evidence in the chart above shows that there is no correlation between the poverty of metropolitan areas and the rate of zero-household vehicles (R-squared correlation of 0.07). People who live in areas with poor transit offerings will simply find the means to drive. This comes with a grave consequence: Driving costs the average person more than using transit, so impoverished people in transit-poor areas are in effect forced to spend more for transportation than their peers in transit-rich areas.

On the other hand, there is a strong relationship between the number of zero-vehicle households in a region and the ridership on transit there (R-squared correlation of 0.66). The regression implies that a 50% increase in the rate of zero-vehicle households in a metropolitan area is associated with a more than five-fold increase in transit ridership. This suggests, perhaps unsurprisingly, that people are more likely to abandon their private vehicles when good transit is offered. Giving up on using personal cars lessens personal transportation costs, but ironically the evidence shows that this is more feasible in regions with lower poverty and higher median incomes. Regions that are already well-off are making themselves better off, while those that are poorer are reinforcing their economic problems.

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Nonetheless, the relatively strong correlation between transit operating dollars spent per person in the metropolitan area and voting share in the relevant county for Barack Obama in the 2008 presidential race (see above; R-squared correlation of 0.66) suggests that through political action, people have the ability to alter the level of service offered by transit services in their area. More strongly Democratic-voting populations appear to benefit from better transit offerings.

There is a direct correlation between investing in improved transit and the rate of ridership in the regions evaluated (R-squared correlation of 0.85), suggesting that higher funding for public transportation services is associated with more users. This is hardly a surprising result (one would hope that transit funding is roughly proportional to the number of riders!), but it reinforces the contention that transit ridership levels are not simply a result of socio-economic conditions and land uses, but also a consequence of direct political decision-making about how much to spend on transit.

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I also considered another possibility: That transit funding in regions is to some degree dependent on differences between central city and suburban populations within each metropolitan region. This question seems particularly relevant considering the recent situation in Detroit, in which suburban reluctance may have led at least in part to the canceling of a light rail line down Woodward Avenue. But a comparison between the central city share of zero-vehicle households (when weighed in terms of the city’s share of the metropolitan area population) and transit funding — where a larger share of zero-vehicle households in the city should theoretically indicate less funding — shows a weak positive correlation (R-squared of 0.34), which is unexpected. An increasing divergence between central city and suburban poverty rates and transit funding shows the expected negative correlation (R-squared of 0.33), indicating that a significant difference in poverty rates within the metropolitan area is associated with somewhat of a decline in transit funding, though it cannot account for most of the differences between regions.

This evidence is purely correlative, not causative. This means that I cannot conclusively show from these data that the lower level of transit funding in poorer metropolitan regions results from those regions’ economic difficulties.

Even so, these data suggest strongly that people living in cities with high poverty rates and low median household incomes are likely to suffer from inadequately funded public transportation systems compared to their peers in low poverty rate and high median household income metropolitan areas. This produces an inequitable funding distribution that further disadvantages lower-income households in lower-income regions by forcing them to resort to the use of expensive private automobiles rather than cheaper transit. This certainly should put in question the assumption that it is in the best interests of residents for funding decisions about public services to be made at the local level.

We should reevaluate whether it is reasonable for metropolitan areas to take responsibility for funding transit, or whether such funding concerns would be better placed in the hands of national government decision-makers, who might be more likely to prioritize equal spending on transit across regions.

* This list includes Austin, Boston, Charlotte, Columbus, Denver, Detroit, El Paso, Indianapolis, Jacksonville, Memphis, Nashville, San Francisco, San Jose, Seattle, and Washington. I did not include Baltimore because I could not find funding data for Baltimore’s transit services apart from those of Maryland in general, since the state has a unified transit system. I did not include Fort Worth because it shares its MSA with larger Dallas.

** One could also argue that the lack of transit provision is strongly correlated with a reduced median income in the regions studied.