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Monday, March 21, 2011

Federal Support of Public Transit Operating Expenditures: Trends and Policy Issues


William J. Mallett
Specialist in Transportation Policy

Congress may debate federal transit assistance as it considers reauthorization of surface transportation programs, which have been extended until September 30, 2011. Reauthorization will proceed in the context of serious budget problems at many transit agencies. The single largest source of funds for public transit, local sales and property tax revenue, has declined or remained stagnant. In response, many transit agencies have had to raise fares, reduce service and eliminate routes, or slow capital improvements.

The American Recovery and Reinvestment Act of 2009 (ARRA) (P.L. 111-5), enacted in February 2009, appropriated $8.4 billion specifically for public transit. But, as is usually the case with federal transit assistance, a large proportion of this funding was only available for capital investment. This revived a long-standing complaint from localities that while the federal government helps transit agencies buy buses and build rail lines, it does not help them pay for labor and fuel to operate them. This complaint is not entirely accurate. Although Congress formally eliminated federal operating assistance for transit operators in large urbanized areas in the late 1990s, federal funding of transit operations has grown dramatically since then, thanks to congressional action redefining “capital expenditures” to include items traditionally considered to be operating expenses, such as maintenance.

Congress subsequently provided some flexibility in the use of ARRA funds for operational expenses in the Supplemental Appropriations Act, 2009 (P.L. 111-32). Other measures to give transit agencies more flexibility in using existing funds for operating expenditures and to make extra funds available for operating expenses on a temporary basis were introduced, but not adopted, in the 111
th Congress. The 112th Congress may wish to consider these and other options, including leaving current federal funding rules unchanged; removing all restrictions on the use of federal transit funding for operating expenditures; reducing or eliminating federal support for transit operations; and using a performance-based system of distributing federal funds to encourage improvements in productivity and revenue generation.

There are three main issues Congress may evaluate as it considers these options:
  • the effects of operating assistance on service provision and fares, as federal operating assistance might help to avoid threatened service cuts and fare hikes; 
  • the effects of operating assistance on transit productivity, given that research has generally concluded that government operating assistance has led to rising costs per vehicle mile; and 
  • the effects of operating assistance on transit infrastructure, as some transit agencies may be directing funding to pressing day-to-day needs while allowing the condition of capital assets to decline. 

Date of Report: March 16, 2011
Number of Pages: 26
Order Number: R41695
Price: $29.95

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Wednesday, March 9, 2011

Essential Air Service: Frequently Asked Questions


Rachel Tang
Analyst in Transportation Policy

The 112th Congress continues to work on reauthorizing the Federal Aviation Administration (FAA). Essential Air Service (EAS) is one of the major issues being debated in the process. A pending House reauthorization bill (H.R. 658) and the reauthorization bill recently approved by the Senate (S. 223) include different provisions affecting the EAS program, and the issue is also addressed in H.R. 408, the Spending Reduction Act of 2011.

This report provides an overview of the EAS program and the legislative issues.



Date of Report: March 3, 2011
Number of Pages: 11
Order Number: R41666
Price: $29.95

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Tuesday, March 1, 2011

Department of Transportation Budget FY2012


David Randall Peterman
Analyst in Transportation Policy

The President’s Department of Transportation (DOT) budget request for FY2012 totals $123.9 billion. It is divided into two parts: a “base” request of $78.6 billion, and a one-time “up-front boost,” related to the President’s proposal for surface transportation reauthorization beginning in FY2012, of $50 billion.

The base request is $1.7 billion (2%) more than the FY2010 enacted DOT budget of $76.9 billion. The total request is $53 billion over the FY2010 enacted level. See Table 1 for a breakdown of the request by DOT administration.

One might ask how this increase is possible in light of the President’s intention to freeze overall federal discretionary spending in FY2012 (and after) at the FY2010 level. It is possible because most DOT funding is not discretionary funding; it comes from the Highway Trust Fund, and is therefore categorized as mandatory funding. Thus, virtually all of the proposed increase counts as an increase in mandatory rather than discretionary funding. Furthermore, the FY2012 DOT budget request proposes to shift funding for some accounts from the general fund to the Highway Trust Fund (which would be renamed the Transportation Trust Fund). This would have the effect of reducing the total discretionary funding for DOT in FY2012 compared to FY2011, all else being equal.

The budget request is complex because it does two different things at once: it requests funding for DOT programs for FY2012, and it restructures the major surface transportation program accounts and funding structure. The latter changes reflect elements of the Administration’s proposal for reauthorizing surface transportation programs for the next six years. The changes include adding intercity rail and new transit construction programs to the programs financed from the trust fund, and increasing the flow of revenues to the fund, although the source of the additional revenues is not specified.

Congress has struggled with surface transportation reauthorization for several years, and may find it challenging to pass a reauthorization proposal on the scale proposed by the Administration in time for it to govern the DOT budget for the fiscal year starting October 1, 2011. Detailed analysis of surface transportation reauthorization proposals is outside the scope of this report.



Date of Report: February 24, 2011
Number of Pages: 6
Order Number: R41650
Price: $19.95

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