March 2, 2009
|IN DEPTH: LEGISLATIVE ISSUES
Stimulus Funding for Transit: A Long Time Coming
By DONNA AGGAZIO YOUNG, for Passenger Transport
Someone once said, “Success is simple: Do what’s right, the right way, at the right time.” With our nation facing the worst economic crisis since the Great Depression, a “perfect storm” emerged for a successful effort to champion public transportation as a part of the nation’s plan to regain long-term growth and prosperity.
Doing what’s right in the right way at the right time is never a simple or easy task. Throughout 2008, Congress heard the compelling evidence connecting public transportation and a strong economy and responded by laying the groundwork for the law’s transit provisions.
Public transportation’s role in the American Recovery and Reinvestment Act of 2009, signed into law on Feb. 17, marks the new Congress’ and new Administration’s recognition that public transportation projects create jobs quickly.
The path to transit’s inclusion in the ARRA has been a long one, with timely, critical, and consistent information describing unmet needs keeping lawmakers focused on public transportation as a key component of economic recovery.
Making the Case for Investment
A recent APTA survey gave specific examples of how investment can be used quickly for much-needed projects. The survey identified approximately 787 projects worth an estimated $15.9 billion that can be put under contract within 90 days.
These ready-to-go projects would create and sustain more than 440,000 much-needed jobs. Funding for these projects can build new transit facilities, rehabilitate and expand rail lines, and purchase new energy-efficient buses and rail cars. APTA estimated that transit systems could effectively use another $31.9 billion in a slightly longer time frame of 90 days to two years.
U.S. DOT added more credibility to the case for investment with its own estimate that every $1 billion of federal investment in transportation infrastructure, made without a state or local cost share, leads to the creation of approximately 28,000 jobs.
As Congress considered various stimulus-related bills, several other APTA-commissioned reports supported the call for greater investment in public transportation. A September 2008 survey on rising fuel costs[s1] indicated that 63 percent of transit systems had experienced capacity problems during the peak travel period. The survey found insufficient revenue the most common limitation to adding service, with more than half of all agencies reporting declining or stable local and state financial assistance over the last year because of the economic downturn.
Next, APTA’s Transit Savings Report in early February 2009 showed that transit use leads to commuter cost savings. The report found that a person can save an average of $8,481 per year by taking public transportation instead of driving, based on today’s gas prices and the average unreserved parking rate.
APTA also met with Congressional staffers and sent numerous letters to Congressional leadership that cited public transportation’s role in reducing the nation’s dependence on foreign oil.[s2]
Journey Brings Obstacles; Congress Takes Action
The road to the current law can be traced back to several bills passed but not enacted in the 110th Congress. An early version of a House stimulus bill, H.R. 7110, offered assistance with capital projects and operating expenses and did not propose funding to be distributed by formula. It failed.
Another bill, H.R. 6899, passed the House in September and sought to provide relief from high fuel costs and make operating costs eligible for funding. The Senate adjourned before taking action.
H.R. 6052, “Saving Energy through Public Transportation Act of 2008,” which passed the House on June 26, 2008, would have authorized $850 million in each of two fiscal year—FY 2008 and FY 2009—to help transit systems cope with rising fuel costs.
The Senate took up the role of public transportation’s ability to reduce American dependence on foreign oil by holding a first-time hearing before the Banking, Housing, and Urban Affairs Committee in September 2008. At the hearing, APTA President William W. Millar testified that the American public cannot use what it does not have if service is cut when demand is at its highest in the modern era.
The House’s economic recovery bill, H.R. 1—introduced by Transportation and Infrastructure Committee Chairman James L. Oberstar (D-MN) on Dec. 18, 2008—proposed $12 billion for transit, including $2.5 billion for the discretionary New Starts/Small Starts program. The Senate version did not contain a provision for that program. The House bill also called for $2 billion for rail modernization.
After receiving strong bipartisan support for the legislation during floor debate in late January, the House adopted a powerful amendment by Reps. Jerrold Nadler (D-NY), Peter A. DeFazio (D-OR), Keith M. Ellison (D-MN), Michael McMahon (D-NY), and Daniel Lipinski (D-IL) that added $3 billion in public transportation investment.
The Senate bill offered $8.4 billion for transit, $1.1 billion for intercity passenger rail grants, and an additional $2 billion for high-speed rail. An amendment by Sens. Patty Murray (D-WA) and Dianne Feinstein (D-CA), which sought to increase funding for infrastructure provisions of the bill including $5 billion for transit, was defeated by a slim margin.
In letters to both House and Senate conferees, APTA strongly recommended the adoption of the $12 billion level for investment contained in the House version of the bill, which also—in addition to the New Starts/Small Starts investments—included $2 billion for Fixed Guideway Modernization grants included in the House bill.
Stimulus Funding: A New Day for Transit Investment
Of the $8.4 billion in ARRA for public transportation investment, $6.9 billion will be distributed to public transportation systems through the existing formula programs; an additional $1.5 billion will be available as grants for new major projects. The law also provides an additional $9.3 billion for high-speed and intercity passenger rail.
“Distributing the funding by formula gives us a good idea of the amount of money we will receive and can jumpstart what transit can do for the economy versus other industries,” said William Volk, past chair of the APTA Legislative Committee and managing director of the Champaign-Urbana Mass Transit District in Urbana, IL.
Congress also included tax incentives to encourage transit commute benefits at the same levels as parking benefits. Taking effect immediately, the law raised the cap for pre-tax transit benefits to $230 per month.
State Revenue Challenges
In 2008, many transit systems began to face the consequences of reductions in state revenues because of the economic recession. Transit systems in California have been the hardest hit: for example, the San Francisco Bay Area Rapid Transit District (BART) faces a $35 million deficit in FY 2009 and a deficit of $45 million to $55 million in FY 2010.
“To balance its budget, BART has already instituted a selective hiring freeze, and is considering position cuts, service reductions, fare increases, additional parking fees, reduced allocations to capital projects, and use of reserves. These strategies are being considered due to the elimination of all transit assistance from the state and declines in sales tax revenues,” said BART General Manager Dorothy Dugger.
“Replacing the electrical systems at our stations, adding operational flexibility to our rail system with the installation of a crossover in Contra Costa County, and reconfiguring the seating in our rail cars for additional capacity are just a few of the important projects that can go forward with the federal stimulus dollars,” she added.
To keep transit systems informed about the allocation, use, and eligibility of transit-specific ARRA funds, FTA has dedicated a section of its web site to infrastructure implementation, updating it weekly. It will also provide answers to questions submitted from transit systems seeking clarification on all aspects of the law.
“FTA wants to be clear about how and when the money will flow, ensure our grantees understand the new ground rules, and honor President Obama’s commitment for accountability and transparency,” said Matthew J. Welbes, FTA executive director and acting deputy administrator.
Successful implementation depends on successful preparation. To create frequent and open communication within the transit industry, FTA and APTA sponsored a webinar on how to apply for stimulus funds on Feb. 13, four days prior to the bill becoming law. More than 700 public transportation professionals participated and learned details of the application process during the webinar. As of this writing, at least one future webinar is planned once apportionments are published in the Federal Register.
The APTA Legislative Conference, March 8-10 in Washington, DC, will provide another opportunity to learn up-to-date ARRA details and information.
Public transportation rose to the moment to be a part of the nation’s economic future. Playing a part in the most significant economic recovery package in our history, experts suggest, may bode well for the prospect of funding for public transportation in the upcoming authorization or FY 2010 appropriations. Leaders in the transit industry see the potential for growing optimism for stable future funding.
J. Barry Barker, APTA vice chair-government affairs and executive director of the Transit Authority of River City in Louisville, KY, summed it up: “How we as good stewards of public dollars use the stimulus funding in the short term will reflect positively in the reauthorization and beyond.”