Public transit agencies experienced unprecedented decreases in ridership and fare revenue because of the COVID-19 pandemic. The U.S. Congress provided emergency funding as part of three separate laws in 2020 and 2021. This emergency funding helped public transit agencies avoid major service cuts or layoffs by replacing fare revenue and local and state funding that was lost due to the pandemic. Transit agencies have obligated more than 99 percent of these COVID-19 emergency relief funds. While transit ridership levels have recovered to more than 70 percent of pre-pandemic levels nationwide, those levels vary by agency, and there is some evidence that fare evasion has increased in the last three years. In addition, operating costs have increased substantially since 2019. As a result, transit agencies are facing a situation where COVID-19 relief funds are expended and operating costs have increased, but fare revenues have not returned, presenting a looming operating budget shortfall, or “fiscal cliff.”
According to APTA’s survey of public transportation agencies in June 2023, half of responding transit agencies say they are facing a fiscal cliff in the next five years, with 71 percent of agencies with operating budgets over $200 million saying so.
Addressing these funding challenges will require new approaches to funding and possibly governance of transit systems. TCRP Project J-11/Task 10, “Regional Organization Models for Public Transportation,” examined the topic more than ten years ago. Of seven strategies for successful organizational transformation identified as part of that project, two stand out that apply particularly to the current situation: “It is important to recognize and capitalize on windows of opportunity for governance change” and “Governance and financing for public transportation are so closely inter-related, they must be addressed together.”
The objective of this project is to identify governance and funding models that would be particularly effective in assisting transit agencies in recovering from the financial difficulties precipitated by the COVID-19 pandemic and provide for long-term funding reliability. The study should:
- Examine public transit governance and funding models inside and outside the United States.
- Identify strengths and weaknesses of various governance and funding models for public transit.
- Assess post-pandemic changes in governance and/or funding models implemented to address revenue shortfalls.
- Identify which governance and funding models work particularly well together and why.
- Identify the most effective governance and funding models for public transit based on system size and geographic coverage.
- Identify governance and funding models that may be particularly effective in the post-pandemic financial landscape.
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