Overcoming Public Transit’s Fiscal Cliff

Public transit agencies have been facing a “fiscal cliff,” a looming budget shortfall as federal COVID-19 relief expires but transit ridership and fare revenue remain below pre-pandemic levels. According to an American Public Transportation Association (APTA) survey, half of the nation’s public transit agencies are expected to be impacted within the next few years. To respond, many agencies have anticipated or already implemented less frequent service, increased fares, suspended routes, and other pitfalls to transit availability and reliability. While the federal government provided $69.5 billion to transit agencies to bridge them through the pandemic, said relief funds are temporary. The expiry of this support means that transit providers nationwide must find new funding sources or risk becoming victims of the “transit doom loop,” where service cuts lead to ridership losses, reduced revenue, and further systemic damages. This article explores the political landscape surrounding transit funding efforts.

The Post-Pandemic Transit Landscape

Transit ridership has stalled at 74 percent of pre-pandemic levels as of September 2023. Part of this drop is due to the rise of remote work, a remnant of office closures during the pandemic. MIT researchers found that remote work has “significantly changed urban transportation patterns.” Transit commuting is twice as much impacted by the increase in remote work as car commuting. For cities like New York and Chicago whose transit networks center around business districts—Manhattan for the New York City subway and The Loop for the Chicago “L”—this has shifted where demand for transit capacity is. Most transit services are designed around this suburb-to-downtown model, although most commutes were between suburbs, even before the pandemic. This mismatch may explain the failure of ridership to rebound after the pandemic.

Still, other funding sources have posed their own challenges. States around the country face lower sales tax revenue, which affects budgets and services. Many transit agencies are funded in part by sales taxes. Agencies like King County Metro (Seattle) and Bay Area Rapid Transit (BART), cite this issue as a factor behind its impending “fiscal cliff.” However, there is a silver lining: Houston’s public transit foresees losing “a tenth of its sales tax revenue” yet is mulling expanding service instead of reducing it. Houston sets the example for diversified and sustainable funding sources as the agency has managed to shield itself from implications of federal funding drying up and even sales tax revenue reductions.

Ask The Voters? Transit Ballot Measures in 2024

Beyond the 2024 presidential contest, voters around the country also approved many down-ballot transit measures. APTA President Paul Skoutelas told Mass Transit, “Initial results from this year’s public transportation ballot initiatives show a clear trend: Communities across the country are backing public transit.” While there were positive election results for transit, voter decisions were more nuanced.

San Francisco’s Measure L sought to tax rideshare and robotaxi services to fund the San Francisco Municipal Transportation Agency (SFMTA), more commonly known as Muni.  Proponents argued that the tax would help preserve bus lines from cuts while still applying the city’s taxes to said services below other big cities like New York, Chicago, and Washington D.C. Opponents, including Uber and Lyft, questioned the tax’s oversight and usefulness. Nearly 57 percent of voters supported the measure, which meant the measure ultimately failed. A competing ballot measure to reform San Francisco’s business tax system, Measure M, included a “poison pill” that would cancel out Measure L by garnering more votes. Ultimately, Measure M earned over 27,000 more votes than Measure L did. Despite a clear majority of San Franciscans backing transit funding and framed by the media as a success, Muni did not secure that funding and announced proposed service cuts for this summer. This setback demonstrates how ballot measures are not always effective in translating public support into public transit results.

Meanwhile, San Diego County voters rejected funding for public transit, but in raw votes rather than via ballot measure maneuvering. The San Diego County ballot measure, Measure G, reflects a divide between denser, urban areas that rely heavily on public transit and suburban areas that are more car-dependent. San Diego City proper passed this measure with a majority, but it could not overcome suburban opposition.

Similarly, two suburban counties in the Atlanta metropolitan area—Cobb County and Gwinnett County—rejected the transit funding measures on their ballots. Gwinnett County had also turned down an expansion of the regional transit system in 2019. In Georgia, public transit is viewed as an urban amenity with suburban counties opposed to subsidizing it; though they may also reap the benefits of that service expanding to their communities with, as proponents argued, less congestion and newer infrastructure.

Moving beyond setbacks, there were many victories for public transit elsewhere. Maricopa County in Arizona, anchored by Phoenix and infamous for its urban sprawl, approved a funding measure with nearly 60 percent of the vote. Voters in the rural Colorado ski town of Mountain Village backed a new gondola service connecting to nearby Telluride and continued support for the regional bus system. These results suggest that public transit enjoys broader support than expected, even in conservative areas like Maricopa County, which voted for Trump while backing transit funding.

State Governments Step In

Although facing budget shortfalls, some states are investing in transit. Massachusetts allocated $8 billion to fund Boston’s MBTA, while Maryland, Virginia, and D.C. collectively provided critical funding to the Washington Metro (WMATA). California’s allocation of $2 billion in 2024 to public transit across the state will help build new infrastructure, maintain current service, and replace fleets with more environmentally friendly options.

However, budgetary issues continue as states do not have unlimited funds. Oregon lawmakers seek to expand transit funding, but it is unclear where that funding will come from. Illinois faces a similar uncertainty. States are considering sustainable funding options, from direct state funding and agency consolidation to fare hikes. However, one promising solution is to redirect highway funding towards public transit instead. Pennsylvania Governor Josh Shapiro shifted such funds to the Southeastern Pennsylvania Transportation Authority (SEPTA). This strategy could be effective in other states but is contingent on political will. In a 2023 survey conducted by Transportation for America, 71 percent of respondents agreed that “states should fund more options [other than highways], like trains, buses, bike lanes, and sidewalks.”

Getting Creative: Congestion Pricing

The urban-suburban divide over transit funding is perhaps most visible in the New York City metropolitan area, where 23.8 percent of commuters rely on public transit, the highest in the country. It has a mix of urban transit in the New York City Subway and buses as well as suburban transit with the Long Island Rail Road (LIRR), Metro-North Railroad, New Jersey Transit, and PATH trains. However, the New York City Subway in particular faced an existential crisis with critical maintenance and repairs needed to sustain operations and no funds to complete it. The funding solution pushed by subway advocates was congestion pricing. The Metropolitan Transportation Authority (MTA)—which runs buses, subways, and commuter rail—would establish a congestion relief zone on Manhattan below 60th Street and charge drivers entering the zone a toll. The toll would help fund the subway and have the added benefit of reducing the number of cars entering that portion of Manhattan, and thus traffic.

While a lifeline for the MTA, the congestion toll plan has been mired in transit politics. In the 2022 New York gubernatorial election, Republican candidate Lee Zeldin attacked the plan and tied incumbent Governor Kathy Hochul to it, resulting in one of the closest elections in recent memory. The plan also faced significant, bipartisan suburban opposition. Five members of Congress, led by Democrat Josh Gottheimer of New Jersey, signed a letter expressing opposition to the “congestion tax.” Based on polling, city residents opposed the plan by a significant margin, being even more disliked among suburbanites. Bowing to electoral pressure, Governor Hochul indefinitely paused the program in June 2024 ahead of its planned implementation at the end of that month, citing electoral concerns for her party.

After former President Trump’s election victory, the congestion pricing plan was resurrected in spite of his expressed opposition. Many viewed the lame-duck period before his inauguration as New York’s last chance to implement congestion pricing. With that quasi-deadline, congestion pricing started on January 5, 2025 though the toll was cut from $15 to $9, limiting revenue for the MTA but remaining under threat from the Trump administration. Last month, Trump-appointed Secretary of Transportation Sean Duffy reversed prior federal approval for the scheme and the White House took credit, with a controversial post on X simultaneously proclaiming Trump as a monarch. The MTA has since filed a lawsuit.

The future of congestion pricing is unclear, but the current initial implementation is still a positive development for the future of transit funding. As the first of its kind in North America, there is no standard to hold the New York. However, it has been implemented in other large cities abroad from London to Singapore to Stockholm. Those implementations hold good news for New York, namely that congestion pricing has seen increases in public support once results like less emissions and reduced traffic can be discerned. 

The pandemic radically altered how people move, when people move, and where people move. As their existence is crucial to ensuring a healthy urban fabric, transit agencies must evolve to meet demand where it is now located given pandemic changes. A dynamic transit agency that is responsive to where it serves can help foster the partnerships and political support necessary to avoid a transit doom loop. From ballot measures to state dollars to new models completely, public transit futures are not this or that. Agencies do not have the luxury of exclusivity to choose how they are funded and their future success hinges on their ability to establish and sustain a diversified funding model that insulates it, to the extent possible, from crises like the pandemic and budgetary fluctuations.

Featured Image: Todd Trumbull for the San Francisco Chronicle