July 16, 2018

Is a US transit funding crisis looming?

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While US federal funding is fairly certain for transit systems in the short term, a potential crisis is looming to address a huge $US 90bn investment backlog identified by the Department of Transportation. The American Public Transportation Association is lobbying hard to find a solution, as its president and CEO Paul Skoutelas explains in an exclusive interview with David Briginshaw.

THE short-term outlook for rail transit systems in the United States looks bright with federal funding now in place for the 2018 fiscal year and funding expected to remain at a similar level next year, with local funding assured in many areas. However, the longer-term outlook is uncertain, as the US needs to find a solution to a $US 90bn funding backlog to bring older systems back into a state of good repair and expand networks to cope with growth.

 

NA transitThere was a huge sense of relief among the 1500 members of the American Public Transportation Association (Apta) in March when President Trump signed the 2018 omnibus budget which saw significant increases in federal funding for public transport and passenger rail. The 2018 bipartisan appropriations bill increases the $US 12.3bn authorised for the Federal Transit Administration (FTA) to $US 13.5bn and provides significant increases for Federal Railroad Administration (FRA) commuter rail and inter-city rail projects.

“There is $US 16.5bn for public transport in total, of which $US 13.5bn is for urban rail and bus, and $US 3bn for commuter rail and Amtrak,” Mr Paul Skoutelas, Apta’s president and CEO, explains. The $US 13.5bn includes $US 2.6bn for Capital Investment Grants (CIG) compared with $US 2.4bn for the 2017 fiscal year (FY). “We are also pleased that the bill contains strong legislative language to ensure the future of the CIG programme,” Skoutelas says. “Funding for the rail State of Good Repair programme increased over the FY 2017 level from $US 2.6bn to $US 3bn.

“The measure increases funding for other transit formula programmes as authorised by the Fast Act. It increases the appropriation for the Tiger programme from $US 500m in FY 2017 to $US 1.5bn, and it provides $US 250m for Positive Train Control implementation. Finally, the measure increases Amtrak funding from $US 1.5bn in FY 2017 to $US 1.9bn this year, and it provides significant increases for other passenger rail programmes.”

Skoutelas says that Congress is already working on various fiscal appropriations for the FY 2019 for bus and rail. “We are looking at the same level of funding in 2019 as this year, but it is not assured,” Skoutelas told IRJ. “The best guestimate is that we end up very close to where we are now.

“We are looking towards 2020 for a new authorisation to start in 2021. This will be a very important milestone for transit and highways.

“There is a lot of doubt over funding, and uncertainty over the Highway Trust Fund, for example,” Skoutelas points out. “We are calling on the Administration and Congress to address the urgency of the Highway Trust Fund solvency which expires in just over two years. This will provide predictable, multi-year funding to not only address America’s deteriorating infrastructure, but also provide for continued investment to help grow the nation’s economy.”

“There are very important needs across the country,” Skoutelas continues. “Legacy transit systems, which are also the larger systems, need a higher level of investment to keep up a state of good repair - fleets, tunnels, stations and tracks all need investment.”

The oldest US transit systems are in the biggest cities and include Boston, New York, Philadelphia, Washington DC, Chicago, Atlanta, and the Bart metro network serving San Francisco and the Bay area.

The US Department of Transportation (USDOT) has identified a huge $US 90bn backlog of investment needed to modernise the oldest networks. “We know we can’t address the backlog in one fell swoop and we will have to spread it over a period to chip away at the modernisation of the old systems,” Skoutelas explains. “But we also want a healthy funding component for expansion. We want to see a doubling of the programme in the next funding cycle - we need around $US 30bn a year at the federal level.”

To help to strengthen its case to win extra federal funding, Apta commissioned the independent Economic Development Research Group to conduct a study of the economic cost to the nation of failing to address the backlog. The study, which was released in May, estimated that failing to modernise the public transport system would result in a loss of $US 340bn in business revenue to the US economy over a six-year period.

The study says that failure to modernise ageing public transit infrastructure leads to worsening reliability of equipment which causes delays and even cancellation of services. This in turn slows down workers’ economic output which directly impacts business sales in a regional economy.

The report examined public transport modernisation needs nationally and conducted in-depth case studies of six transit systems:

  • Massachusetts Bay Transportation Authority (MBTA) in Boston
  • Chicago Transit Authority (CTA)
  • Metropolitan Atlanta Rapid Transit Authority (Marta)
  • Southeastern Pennsylvania Transportation Authority (Septa)
  • San Francisco Municipal Transportation Agency (SFMTA), and
  • Washington Metropolitan Area Transit Authority (WMATA).

“Our failure as a nation to address America’s public transit modernisation needs has wide-ranging negative effects because lost time in travel makes a region’s economy less productive,” Skoutelas says. “Congress has an opportunity in the current fiscal year 2019 appropriations process to help address the nation’s ageing public transit infrastructure.”

Apta says ageing public transit infrastructure will result in a $US 180bn decrease in Gross National Product, which includes a loss of $US 109bn in household income and 162,000 jobs over six years.

Another indication that all is not well, came from the American Society of Civil Engineers which graded the nation’s public transport infrastructure a D minus - this is the lowest grade it awarded to any category of US infrastructure.

Federal funding only represents 43% of total funding in public transit, as the remaining 57% comes from local sources and initiatives. Here, local authorities have been quite successful in gaining public support for transit. “Over the last 15 years, cities and regions have introduced ballot measures which have been very successful,” Skoutelas says. “We have had a passage rate of over 70% and this continues to be a very important component of transit funding.”

November 8 2016 was an historic day for public transport when US voters approved 34 out of 49 local and statewide public transit measures. “Around $US 200bn was voted for public transport across the country,” Skoutelas explains. “Los Angeles voted $US 120bn and Seattle $US 54bn for public transport.

“Not all ballot measures are successful,” Skoutelas says. “Nashville, which is a growing city, proposed a $US 5bn plan in May that was rejected by voters, and Phoenix had to go to ballot twice before its transit plan was approved.”

Skoutelas believes that it is sometimes harder to persuade voters in areas which have depended for years on cars as their main means of getting around of the benefits of investing in public transit, as they find it difficult to imagine how a good-quality rail service could benefit them.

Other drivers

But there are other drivers of investment in public transit. Large corporations looking to relocate or set up a new headquarters now regard the availability of good-quality public transport as very important when deciding which city to invest in, so that it is easy to attract workers.

For example, Amazon, which has its main headquarters in Seattle, is looking for a second headquarters location and plans to invest $US 5bn. This new facility will generate 50,000 jobs with annual salaries of $US 100,000 or more. Amazon says it regards the importance of an efficient transport system as a part of its ideal location requirements. Specifically, it wants optimal direct access to rail, metro, and bus routes.

There are also signs that America’s love affair with car might finally be waning. The so-called millennial generation of people in their 20s and early 30s are wedded to their smartphones and tend to choose the most practical mode of transport, especially if it can be ordered or paid for through an app. Research conducted by Apta a few years ago, showed that public transport was ranked as the best mode to connect all other modes, according to 54% of millennials polled. Young people also want to be able to access their mobile devices on the move, which also aids public transport.

Skoutelas is keen to point to out that a lot has already been achieved. “Since 1995, some 42 new rail lines have opened, 12 of which have been completed in the last five years,” he says. “We have seen 75% ridership growth in the last five years.”

According to Apta, 10.1 billion journeys were made by public transport in the United States in 2017. While commuter rail and light rail ridership remained steady, with many operators reporting increases in traffic, overall ridership dipped by 2.9% compared with 2016 as there was a 4.3% decrease in bus ridership.

Skoutelas says the US transit industry is making a lot of progress in adopting new technology in areas such as mobile ticketing and mobile apps. As far as digitalisation is concerned, Skoutelas says there is a lot of discussion about the subject, and some of Apta’s members are in the early stages of adopting digitalisation, but there is still some way to go yet.

Apta is also acutely aware of the rise of Uber and Lyft, and Skoutelas says the association is working with its members to adapt to the new situation. “We are holding our first mobility summit in Washington DC in July with speakers from around the world,” Skoutelas says. The theme of the conference is “from transit authority to mobility integrator,” reflecting Apta’s desire for more seamless transport and for its members to become mobility providers rather than simply transport operators.

Apta is also keen to see more innovation in the way public transit is funded. “We are seeing increasing private-sector investment around stations,” Skoutelas says, but it needs to go beyond this. The Hudson-Bergen LRT project in New Jersey, the first section of which opened in 2000, was the first public-private partnership (PPP) rail project in the US. There are now two more: the Denver Eagle 3P project to build three commuter rail lines, the first two of which have already been completed, and the Maryland Purple Line light rail scheme on which work started last year. “Canada is doing all of its major transit investment projects as PPPs, so we will be visiting cities including Montreal and Vancouver next month to find out more,” Skoutelas says.

In the meantime, Apta’s main focus is maximising investment in transit to cope with the backlog and provide funding for expansion. “Our goal is to maximise total investment,” Skoutelas concludes. “We need each of the parties to grow their portion - we need to martial strong federal and local funding.” Without this commitment, many of the biggest networks face a tough time ahead.

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