As the country grapples with rising unemployment rates, Congressional leaders are beginning to consider passage of a “jobs bill” that could reportedly include anything from tax credits for new hires to infrastructure. A recent report by the American Public Transportation Association shows that investment in transit — and in transit operating aid especially — should be added to the bill. The report, funded by the federal Transit Cooperative Research Program, estimates every $1 billion spent on transit can support up to 41,100 jobs and generate up to $2 billion of gross domestic product per year through job creation, increased productivity from reduced congestion and cost savings for both transit riders and businesses.
The report finds that operating aid is actually a better job creator and short-term stimulus than capital spending (see chart at right). While every $1 billion spent on transit operations supports over 41,000 jobs, the same billion dollars spent on capital investment supports about 24,000 jobs.
Transit agencies and their riders could use the help. Systems across the country are facing huge deficits and are implementing or proposing crippling service cuts and fare increases to close operating deficits. Yet the federal government virtually prohibits the use of federal transit dollars to pay for day to day operations. Instead, the funds can only be used for capital expenditures such as building new transit lines or buying buses or trains.
A Brief History of Federal Transit Aid
The federal government did provide transit operating aid prior to 1998 and it still does for areas with populations between 50,000 and 200,000. Cities with populations greater than 200,000 have been left to their own devices to fund their transit systems.
The systematic elimination of federal transit operating assistance began with the Reagan administration’s 25% reduction in mass transit funds in the ’80s. Federal transportation funding for transit was slashed while funding for highways increased under George H.W. Bush’s administration. The final nail was driven in the federal transit operations assistance coffin during the Clinton administration when the federal government reduced aid and eventually stopped providing transit operating assistance to larger cities altogether.
The result? Cities and states were left on their own to make up the slack with less federal resources, resulting in unprecedented levels of borrowing and cut-backs just to maintain existing service. Most public transit agencies operate at a deficit and seldom make a profit from revenues collected from fares.
Next Steps For Federal Policy
So what can be done to sustain transit agencies? First, restore federal support for transit operations in any future job creation or stimulus bill. Transit operating aid would help keep transit workers employed, offset fluctuating fuel prices, and keep service running on bus, subway, and rail lines. Second, give public transit agencies greater flexibility over use of federal dollars. Rep. Russ Carnahan (MO) has introduced marker bill H.R. 2746 that would allow public transit agencies representing cities larger than 200,000 people to “flex” part of their capital transit funds for operating expenses (contingent on increased local match funds). Lastly, lawmakers and members of the public alike should consider the short-term effect of public transportation spending as well as the longer-term benefits of sustained transit investment on travel times, costs and economic productivity when drafting the next federal transportation bill. We should ask ourselves, especially during a recession, are we getting the biggest economic bang for the buck?
Veronica Vanterpool contributed to this article.