Federal transit programs need to be reformed to protect taxpayers, improve service

Congress is working to develop a multi-year surface transportation bill to replace the current one set to expire next year. As a new member of Congress, I believe we must take a hard look at whether federal transit grant programs are delivering intended benefits to riders prior to providing funding.  

In 2021, Congress passed the Infrastructure Investment and Jobs Act, which authorized up to $108 billion in federal spending on public transportation programs. That’s on top of the $30.5 billion the federal government provided to transit agencies in response to the COVID-19 pandemic. 

What results can we see from that unprecedented infusion of federal money?

The data shows that transit continues to experience rising costs and falling productivity. Nationally, total transit ridership in 2024 was down almost 30% compared to 10 years earlier. 

While transit ridership has been declining, costs have continued to rise, far faster than inflation. Many large capital projects receiving federal funds have more than doubled in cost. For example, the cost estimate for a proposed four-mile light rail extension in Seattle more than tripled from $2.1 billion to about $7 billion. This project is not an outlier—the inflation-adjusted cost of light rail has grown from less than $50 million a mile in the early 1990s to more than $300 million a mile today.

Portland, Salt Lake City, Houston, Seattle, and Charlotte, among other cities, expanded their light rail systems with federal assistance, but in those cities, transit ridership is lower today than it was 10 years ago. There is no evidence to support claims that reducing or eliminating federal grants for the construction of rail systems will reduce ridership.   

These light rail projects, and many others supported with billions of dollars in federal grants, highlight the need for reform. The grant programs were set up with the best of intentions, but it has become clear they aren’t delivering the desired outcome. 

This is not a new problem. For more than 30 years, studies by the Government Accountability Office, Congressional Research Service, universities and think tanks have identified shortcomings in how the grant programs have been administered, as well as deceptive practices of the grant applicants. With billions of dollars at stake, the reward for exaggerating benefits and low-balling cost estimates is very large, while the consequences are practically non-existent. 

Despite these recommendations for reform, transit performance has actually gotten worse. Productivity dropped even when ridership was growing. Between 1995 and 2019, total ridership grew by 32%, but inflation-adjusted operating costs doubled, and “general administration” grew by 111%.

Instead of helping transit agencies become more cost-effective and productive, the lure of federal grant money has created incentives for transit agencies and elected officials to pursue costly capital projects even in the face of stagnant or falling ridership. 

Unfortunately, there are additional problems. Before the Federal Transit Administration hands out grants, it requires a Full Funding Grant Agreement that commits recipients to project completion. The intent is to ensure agencies follow through, but when projects go over budget, by billions of dollars in some cases, local agencies often go deep into debt to cover the cost increase, saddling local taxpayers with debt repayment decades into the future. Reform is needed to protect taxpayers.

At a time when Congress needs to keep the deficit from increasing, it would be wise to take a hard look at these transportation grants.

Our nation needs smart infrastructure investment, but we should get back to the basics of cost versus benefit analyses before pouring billions of dollars into projects that don’t make sense. These are not crumbling bridges and pitted roads, but new public transit projects that lack the ridership and business model to succeed.

Congress should look at making the following changes to the formula funds and grants program. 

Formula funding changes:

• Cap federal funding of capital improvements of transit projects at 50%. The total is currently 80%. Give a preference to regions that provide a higher local share.
• Fund transit operations at 80%. Give a preference to regions that keep their systems in a state of good repair. 

Grant funding changes:

• Create a rigorous project analysis tool that examines benefits and costs, and then only provide funding to projects with a benefit-cost ratio of 1.5 or higher. The Federal Transportation Administration needs to revamp the scoring criteria to ensure that the number of passengers carried and cost are the primary criteria. 
• Require that entities have at least a 20% buffer on funds that need to be paid back to the federal government. 

Congress needs to make changes to ensure the upcoming surface transportation bill leads to a more constructive, results-driven approach to federal transit grants—one that delivers better outcomes for transit riders and taxpayers.

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Source: https://reason.org/commentary/federal-transit-programs-need-reform-to-protect-taxpayers/