Transportation, Federal Government, Government
Ground Zero: America’s Cities Need New Infrastructure and Transit Funding
Funding Future Mobility: Exit 3A
June 07, 2012
This is the third stop in our transportation infrastructure thought leadership series. In “Ground Zero,” we discuss how U.S. cities are the hardest hit in the need for improved mobility, including the challenges of public transit funding.
More People on Busier Roads
While underfunding of transportation infrastructure affects both rural and urban systems in virtually all areas of the United States, it can be argued that some of the most significant impacts are felt in larger urban areas. And for good reason—U.S. cities house the majority of the population, putting more strain on infrastructure. According to the 2010 census, almost 84 percent of the U.S. population lives in metropolitan areas; 75 percent in the top 100 urban regions alone. While only about 27 percent of all roadway mileage is located in urban areas, these roads carry two-thirds of total vehicle miles traveled, according to the U.S. Federal Highway Administration.
Perhaps most important, almost all of the United States’ traffic congestion occurs in heavily populated cities, where expensive problems become expensive solutions. The economic impact of time wasted in traffic tops $100 billion per year by some estimates; however, adding capacity is much more expensive in cities than in rural areas. In short, the biggest mobility challenges of the future—and the most significant front in the war on climate change—can be found in our larger cities. Unfortunately, they are also where we find our greatest funding shortfalls as well.
The Road to Transit
It is becoming increasingly apparent that we can’t beat congestion in our larger cities by widening highways alone. Mobility solutions of the future will be multimodal, including much more investment in public transit. Transit is a vital resource to battle urban congestion, and will become even more important in the war on global warming as we try to reduce fuel consumption and greenhouse gas emissions.
While transit accommodates a huge proportion of urban travel in a few cities like New York, in most cases the transit share is still relatively low—less than 5 percent on a daily basis and typically no more than 10 percent during rush hours. These numbers often reduce public support for transit funding, particularly the diversion of taxes paid by road users to transit investments. This silo philosophy stands in the way of integrated multimodal mobility solutions that will be needed in the future. However, there are signs the silos are falling, especially in our largest cities, which are increasingly finding their own sources of transportation funding in the face of declining revenue from federal and state sources.
Transit Funding in America
Data from the American Public Transit Association shows the current funding picture of all transit agencies across the United States, including capital investment and operating costs. In total, federal transit funding accounts for less than 20 percent of costs nationwide. A good portion of the nearly $11 billion in federal funds dedicated to transit comes from a special dedication from the Highway Trust Fund, although this is in doubt as well. Because transit is considered by many to be a “local” issue, this earmarking of funding derived primarily from the federal gas tax on highway users is under threat, as evidenced by a recent proposal in the House of Representatives to eliminate transit funding from the Trust Fund; a proposal which has since been withdrawn.
On the other end of the spectrum, about 60 percent of total transit funding comes from local sources. Farebox revenue—the fares actually paid by transit users—covers about one-third of operating costs, but none of the capital cost. Many argue that transit users should pay a higher share of the cost of providing transit. This is an argument that may have merit, but also suffers from a lack of perception of funding sources. With the gas tax for highway funding so low, and essentially invisible to drivers since it is automatically paid at the pump, the public often perceives highways as free; basically an entitlement. Transit users, on the other hand, pay for use at the turnstile and more directly experience their contribution.
The benefits of transit are easy to see—increased use can help overcome gridlock on crowded roads and also help reduce fuel consumption and greenhouse gas emissions. However, increased transit funding is not always as clear a discussion. Since drivers perceive they pay nothing to use roads, it is difficult to increase the share of transit usage while acknowledging the need to raise transit fares. However, that might change if we adopted a more direct program of user fees for highway use.
The Big Move to Local Funding Solutions
The bottom line on transit funding is local—60 percent local—but it remains to be seen whether that local support will be sufficient in the future to meet a growing need for new transit options in our big cities. The trend toward local funding of mobility is by no means limited to transit alone. Increasingly, our large urban regions are coming to realize that they can no longer depend on state and federal funding to solve their mounting mobility challenges. Given that Congress is close to 3 years delayed in reauthorizing federal transportation policy, and that the federal gas tax hasn’t been raised in almost 2 decades, it’s probably wise of regional planners and elected officials to become more self-reliant.
Before our next installment, let’s explore a case study that shows a major urban area doing just that. In Exit 3B, we discuss how Los Angeles, California, is taking its mobility future into its own hands through long-term planning and local funding measures.
Ed Regan is a CDM Smith senior vice president based in Columbia, South Carolina, USA, and a preeminent thought leader on transportation finance and planning. Nearly 4 decades of dedication to the toll industry have fed his passion to advocate sustainable solutions for funding transportation infrastructure today and in the future.