Congressional Research Service IN11269 (Emergency Funding for Public Transportation Agencies Due to COVID-19)

Summary

A Congressional Research Service Insight, IN11269, by William J. Mallett, dated March 23, 2020, on emergency funding for public transportation agencies due to COVID-19. It reports early ridership losses including 88% for New Jersey Transit, 60% of subway ridership for New York's Metropolitan Transportation Authority, 60% for Denver's Regional Transportation District and 90% for Bay Area Rapid Transit. It describes service cuts and rear-door boarding without fares, and states that in 2018 fare revenue was 31% of operating budgets and 22% of overall transit agency funding, with dedicated taxes another 12%. It discusses the pressure on both revenue sources.

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INSIGHTi

Emergency Funding for Public Transportation
Agencies Due to COVID-19

William J. Mallett
Specialist in Transportation Policy

March 23, 2020

Public Transportation Agency Budgets
The COVID-19 pandemic has reportedly resulted in a swift and large loss of public transportation
ridership and fare revenue. Examples in the early days of the crisis include an 88% loss of ridership for
New Jersey Transit, a 60% loss of subway ridership for New York’s Metropolitan Transportation
Authority, a 60% loss for Denver’s Regional Transportation District, and a 90% loss for Bay Area Rapid
Transit in San Francisco. Many transit agencies, including the Washington Metropolitan Area Transit
Authority, have responded by cutting service, encouraging people to travel only when necessary, and
requiring riders to enter buses through the rear doors without paying a fare.
Fare revenue losses are likely to be compounded by a less immediate decline in local tax revenue
dedicated to transit agency budgets, particularly sales and property taxes. In 2018, fare revenue was 31%
of operating budgets and 22% of overall transit agency funding (Table 1). Taxes dedicated directly to
transit agencies were another 12% of overall funding. With both of these revenue sources under pressure,
many transit agencies will likely find it difficult to meet current commitments, such as staff pay and
benefits, and to restore service to previous levels once passenger demand rebounds.

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IN11269

CRS INSIGHT
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Table 1. Funding Sources for Public Transportation, 2018
(in millions of dollars)
Operating Capital Total
% $ % $ % $
Passenger fares 30.7 16,031 0.0 0 21.6 16,031
Other revenues 5.4 2,814 0.0 0 3.8 2,814
Dedicated taxes, tolls, bonds 6.1 3,196 25.6 5,616 11.9 8,812
Local government 26.5 13,857 23.1 5,077 25.5 18,934
State government 22.7 11,867 15.1 3,319 20.5 15,187
Federal government 8.6 4,513 36.2 7,947 16.8 12,460
Total 100.0 52,278 100.0 21,960 100.0 74,238

Source: American Public Transportation Association, Public Transportation Fact Book 2020, Appendix A, Table 95.

To compensate transit agencies for their losses, the American Public Transportation Association (APTA)
has advocated for $16 billion in additional federal funding. This included $7.65 billion in lost fare
revenue, $6.25 billion in lost sales tax revenue, and $2.1 billion for increased costs, such as extra cleaning
of vehicles and facilities. The calculations are based on the assumption that revenue will be 75% below
previous expectations through September 2020 and 40% below expectations from October through
December 2020. It appears that APTA’s calculations did not include savings that might come from service
cuts. At the very least, this might include a reduction in spending on fuel, lubricants, and tires. According
to APTA, transit agencies spent $4.3 billion on these kinds of materials and supplies in 2018. A 50%
savings on materials and supplies for six months would be about $1 billion.
By comparison, the American Recovery and Reinvestment Act of 2009 (P.L. 111-5), a response to the
deep recession that officially ran from December 2007 through June 2009, provided $8.4 billion for
federal transit programs. Funds were primarily for capital assistance, and were distributed through the
existing formula and discretionary programs managed by the Federal Transit Administration (FTA).

Emergency Federal Funding for Operations
Historically, the focus of the federal public transportation program has been on capital expenditures, but
the program explicitly allows federal funding for operational expenses at a 50% federal share in urbanized
areas of fewer than 200,000 residents and rural areas, and for small bus agencies in urbanized areas of
200,000 or more. On March 13, FTA issued a notice authorizing any transit agency in a state where the
governor has declared an emergency to use federal formula funds for operational expenses with an 80%
federal share. Transit agencies that do this, however, could have less money for capital expenses, such as
purchasing buses and building repair garages.
The Public Transportation Emergency Relief (ER) Program can provide federal funding to service
providers for damage to transit facilities or operations as a result of a natural disaster or other emergency
and to protect assets from future damage. To be eligible for ER funding, an emergency must be declared
by the governor of a state with concurrence by the Secretary of Transportation or by the President. FTA’s
ER program does not have a permanent annual authorization. All funds are authorized on a “such sums as
necessary” basis and require an appropriation. Operating expenses are defined as evacuation activities,
rescue operations, temporary transit service, and reestablishing, expanding, or relocating public
transportation route service before, during, or after an emergency. Operating costs are eligible for
Congressional Research Service 3

reimbursement for one year beginning on the date a disaster is declared, although the Secretary of
Transportation may extend that period to two years after determining a compelling need.

Legislative Issues
The revenue losses and cost changes that transit agencies face from the COVID-19 pandemic are likely to
be disruptive. The magnitude of these effects on agency budgets is highly uncertain and may not be fully
evident for some time. In response, Congress could provide immediate funding for several months of
operational expenses to keep service running and workers employed, and later consider further support if
losses exceed an initial appropriation. Alternatively, Congress might provide support for a much longer
period of estimated losses, but reclaiming funds in the event that agencies’ revenue losses are below
initial estimates could be difficult and unpopular.
If Congress chooses to appropriate funding for the ER Program, it would face a determination of how the
money would be distributed. FTA could allocate the funding on the basis of need claimed by transit
agencies. This might target funds to areas and agencies most affected by the health emergency. To date,
the New York City area, the most transit-dependent region in the country, has been hard hit by COVID-19
infections. An alternative method of distribution could be the existing formulas through which funds are
distributed to urbanized and rural areas. The rural share of funds distributed through the urban and rural
formula programs in FY2020 was about 13%. The formulas are weighted to the most populous places,
particularly urban areas with bus and rail systems.

IN11269 · VERSION 1 · NEW
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