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Monday, February 25, 2013

Public Transportation Program and Funding Issues

William J. Mallett
Specialist in Transportation Policy

The federal public transportation program, administered by the Federal Transit Administration (FTA), is the primary means by which the federal government funds and regulates public transportation, such as local buses, subways, and ferries. The program was reauthorized through FY2014 as part of the Moving Ahead for Progress in the 21st Century Act (MAP-21; P.L. 112- 141) with funding set at $10.6 billion in FY2013 and $10.7 billion in FY2014. About 80% of the funding for the federal public transportation program comes from the mass transit account of the highway trust fund and about 20% from the general fund of the U.S. Treasury, although the mass transit account, itself, has required transfers from the general fund. A $4.8 billion transfer of general funds was made in FY2010, and MAP-21 authorized another transfer of $2.2 billion in FY2014.

MAP-21 simplifies the structure of the public transit program by eliminating some programs and consolidating others. The law also recasts some discretionary programs as formula programs, strengthens FTA’s role in safety oversight, and introduces performance management into the planning process. FTA’s six major funding programs and their funding shares are: (1) Urbanized Area Formula, 42%; (2) State of Good Repair (SGR), 20%; (3) New Starts, 18%; (4) Rural Area Formula, 6%; (5) Bus and Bus Facilities Formula, 4%; and (6) Enhanced Mobility of Seniors and Individuals with Disabilities, 2%.

Because the authorization of the public transportation program expires September 30, 2014, it is likely that extension or reauthorization legislation will be considered in the 113
th Congress. Funding levels and revenue sources, particularly as they relate to the highway trust fund, will probably be issues in the debate. The federal budget deficit has put pressure on many areas of federal spending, including public transportation assistance. Some Members of Congress have urged that transit spending be supported mostly at the local level. Others argue for higher federal spending to address a backlog of capital expenditures, growing transit and paratransit ridership, and the desirability of encouraging use of public transportation. There has also been pressure to increase federal support of operating expenditures due to budget problems at the local level.

An obstacle to greater federal spending, however, is the condition of the highway trust fund. Over the past few years the revenue flowing to the mass transit account has been less than its outlays, a situation that is expected to continue under current law. The primary revenue source for the highway trust fund, the fuels tax, was last raised in 1993 and there appears to be little appetite to raise it now. The precarious situation of the mass transit account may require some action before the end of FY2014, depending on the actual amounts of revenue and outlays, but action will almost certainly be needed in FY2015 and beyond. This might involve a cut in program spending, an increase in revenues paid in to the account, or another transfer from the general fund.

Other issues that may come up in the debate are privatization and the operation of the New Starts program. Privatization, such as competitive contracting, is frequently touted as a means of controlling costs and improving quality in public transportation. Consequently there have been proposals in Congress for the federal government to promote greater private-sector involvement, and these might come up again in reauthorization. MAP-21 made several changes to the New Starts program to speed project delivery and to allow spending on expanding existing transit rail and other fixed guideway systems. How well these changes work may be an issue in reauthorization, as might the types of projects funded, particularly streetcar and bus rapid transit projects.

Date of Report: February 22, 2013
Number of Pages: 22
Order Number: R42966
Price: $29.95

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