The Emergency Funding Ideas That Could Help Keep Transit Alive

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As transit operators in major U.S. cities plan drastic service cuts to address pandemic budget holes, leaders and advocates are advancing ideas to scrape together new funds, whether or not fresh federal aid arrives.

One proposal to support theNew York City Metropolitan Transportation Authority, which faces a $16.2 billion deficit by 2024, is a bill by state assemblyman Robert Carroll to charge a flat $3 fee for every online purchase delivered in New York City, starting Jan. 1. In an op-ed for the New York Daily News, Carroll estimates that his bill would raise more than $1 billion annually for the MTA from the 1.8 million packages delivered in the city every day.

A related idea appears in the state budget plan passed by the Massachusetts Senate in November — a 7% fee on single-occupancy ride-hailing trips, and a 3% fee for shared trips, up from a 20-cent flat fee. Acalculator from the Metropolitan Area Planning Council estimates that the new fees would generate about $72 million annually. Some of that could fund the Massachusetts Bay Transportation Authority, which operates Boston’s “T” and faces a budget shortfall as high as $600 million next year. 

Some agencies are looking for extra cost savings. San Francisco’s Municipal Transportation Agency is projecting a $168 million gap in the next fiscal year, with potential layoffs for 1,200 employees. At a board of directors meeting last week, SFMTA director Cheryl Brinkman suggested eliminating the city’s residential parking permit program to reduce operating expenses. “If we do need to look at layoffs in the future, and look where we can cut costs, will we take a look at that program?” Brinkman said. “It seems like if we’re going to be looking at cutting costs, the pain needs to be shared equally.”

These and other ideas reflect the peril that transit agencies find themselves in, as talks for a second federal stimulus falter in Congress. A $908 billion deal reached by a bipartisan group of senators last week includes $15 billion for public transit —less than half of what agencies have said they need. But whether that proposal will get a vote is uncertain. Without emergency aid, large agencies will be forced to make painful service cuts.

“There is no getting around the fact that agencies, especially the bigger ones, will be in trouble if that federal relief doesn’t come through,” said Ben Fried, the communications director of TransitCenter, a think tank. 

Even with billions in dollars in aid, however, agencies are likely to face multi-year cycles of budgetary pain, Fried said.Cuts to service are expected to hobble the economies of the nation’s largest cities even as the prospect of mass vaccinations offers hope that the pandemic’s worst health effects will ease in the coming months. City leaders, employers, property owners, developers and many residents view transit’s continued existence as critical to the post-Covid recovery, by whatever means necessary. “Thinking about other mechanisms that are available to transit agencies, and being prepared to fill those gaps, is smart,” Fried said.  

Other stopgaps include emergency loans taken out by agencies themselves or by states on agencies’ behalf, Fried said. States could also pass emergency legislation that raises new revenue for transit, such as a short-term property or sales tax. In Massachusetts, Boston Mayor Marty Walsh and local transit advocates are calling on lawmakers to increase the state’s gas tax. “They could take a vote tomorrow that would stave off 100% of these cuts with a modest increase in gas tax,” said Chris Dempsey, the director of Transportation For Massachusetts, referring to the hollowed-out service plan the MBTA has proposed for next year. 

Yet all of these ideas would each come with unique political, legal and logistical challenges. In New York, Carroll’s previous attempt to tax online deliveries stalled. Massachusetts Governor Charlie Baker has called raising revenue for transit a “bad idea.” In San Francisco, overhauling parking permits as a budget fix could be complicated by state laws governing such programs, SFMTA director Jeffrey Tumlin said in last week’s board meeting. 

Agencies are also looking at shifting funds originally budgeted for capital investments towards operating expenses, a bridge solution that could contribute to a backlog of disrepair, said Michael Pimentel, the deputy executive director of the California Transit Association. Longer-term ideas for funding public transit, such as congestion pricing programs or transit ballot measures put to voters, are also being discussed.

But those would need to be developed over timelines that stretch beyond the present moment of crisis. Only the federal government has the resources to respond with the speed and scale of what agencies require, Pimentel said. Unlike most cities and states, it also has the ability to run a deficit.

“While we’re dealing with immediate needs by agencies that are taking severe action to lay off workers and cut service, it’s about timing and how quickly we can act,” he said. “We need to look to the level of government that actually can provide for what’s needed.”

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