Transit and the new federal transportation bill

By Chrissy Mancini Nichols

Jul 20, 2012

This post first appeared at metroplanning.org

Did you know?  The new transportation reauthorization failed to equalize pre-tax benefits for transit users and drivers. Transit riders may set aside only $125 pre-tax monthly to pay for ticket fares, while drivers may set aside $240 for parking. 

Americans spend more on transportation than anything else except housing (and in some households, transportation costs exceed rent or mortgage payments). To save money and beat high gas prices, people are flocking to public transit – to the tune of 125.7 million more transit trips the first quarter of 2012 than the same time last year. That’s a five percent jump and the fifth consecutive quarter ridership has increased, testimony that transit not only provides a lower cost travel option, but also that service is becoming better and more reliable thanks to technology improvements such as bus and train trackers, which tell riders when the next train or bus will arrive.

So will the newly signed federal transportation authorization, MAP-21, support our nation’s transit systems to continue to provide people with options for how they get around? The good news is the law maintains transit funding at current levels. On the other hand, MAP-21 does not deliver additional resources to struggling transit agencies, nor will it significantly improve our nation’s transportation system by reducing congestion and providing more travel options that are good for the environment, economy, and people’s pocketbooks.  

The new law, which takes effect Oct. 1, 2012, provides the Federal Transit Administration (FTA) an authorization level of $10.6 billion in FY2013 and $10.7 billion in FY 2014. That’s an inflationary increase over the last authorization, SAFETEA-LU, but not nearly enough to modernize the nation’s train and bus systems. About 80 percent of funding will come from motor fuel taxes via the Highway Trust Fund and the remainder from General Fund authorizations.

Here’s the nitty-gritty:

•   Urbanized Area Formula Grants (Sec. 5307 and 5336), which provide capital and operating assistance to areas with a population of 50,000 or more, remain unchanged from the previous federal transportation bill, SAFETEA-LU, except that eligible activities under the eliminated Job Access and Reverse Commute (JARC) now will be funded under this formula section. Funding for FY2013 is set at $4.398 billion and FY2014 at $4.459 billion.

•   Bus and Facilities Formula program,which provides capital funding for busses and bus facilities, will change from a discretionary grant program to formula funding based on population, density and passenger miles. FY2013 funding is set at $422 million and FY2014 at $427.8 million, significantly lower than the $984 million authorized in FY2012.

Changes proposed by the House to make agencies that provide rail services, such as the Chicago Transit Authority (CTA), ineligible for funding, fortunately did not make it in into MAP-21. Over the past two years, this program has generated $80 million for CTA to purchase new busses and rehab bus garages.

•   Fixed Guideway Capital Investment Grants, which grants discretionary capital funding for fixed-guideway projects, replaces the current New Starts and is funded at $1.907 billion for FY2013 and $1.955 billion for FY2014.

                                          The new program expands funding eligibility to capital projects in existing systems if they would increase ridership by 10 percent. Funding may therefore be used to upgrade older transit systems, such as the CTA.

                                          Bus Rapid Transit (BRT) is singled out in MAP-21 under New Starts and presents an opportunity to build gold standard BRT in Chicago. The FTA may provide funding for up to three BRT projects per year that could receive an 80 percent federal share of total project costs.  To be eligible for funding the majority of the BRT must operate in a separated right-of-way dedicated for public transportation use during peak periods,  have defined stations, traffic signal priority at red lights, and short headway bidirectional services for a substantial part of weekdays and weekend days.

•   State of Good Repair replaces the current Fixed Guideway Modernization program. The new program focuses on maintaining our current transit assets as job number one, ahead of building new projects, which was allowed under SAFETEA-LU. Increased from FY2012’s $1.7 billion to $2.1 billion for FY2013 and $2.2 billion for FY2014, the program will grant 97 percent of funds for rail projects based on revenue and route miles of service and the age of the system. Three percent will go toward high-intensity motorbus state of good repair, for busses running on high-occupancy vehicle (HOV) lanes, limited to those areas with at least seven years of bus-on-HOV-lane service, making Chicago ineligible.  

•   Enhanced Mobility of Seniors and Individuals with Disabilities (Sec. 5310) provides $254.8 million in FY2013 and $258.3 million in FY 2014. The new program consolidates the Elderly and Disabled and New Freedom programs.

•   A new $10 million Transit-Oriented Development pilot program has been created to grant communities funding to assist with comprehensive planning around transit stations. This includes planning for projects that increase economic development, ridership, and accessibility around the station, through mixed-use development, improved access to transit hubs for pedestrians and bicyclists, and partnering with the private sector. Communities are eligible if they receive a New Starts Grant.

•   Congestion Mitigation and Air Quality (CMAQ) program is funded at $2.26 billion in FY2013 and $2.28 billion in FY2014. Designed to improve air quality and relieve traffic congestion, CMAQ is funded through the Federal Highway Administration and can be used to improve transit.

•   Transportation Infrastructure Finance and Innovation Loan Program funding is increased from $122 million to $750 million in FY2013 and $1 billion in FY2014. Regrettably what was the greatest strength of the TIFIA program, its strong project selection criteria, has been eliminated under MAP-21. TIFIA loans now will be available on a first-come, first-served basis instead of through a competitive process. Prior to the new law, loans were given only to the most viable projects of national or regional significance, backed by a dedicated revenue stream capable of repaying the original investment, and senior debts had to gain an investment-grade rating. The maximum size of the TIFIA loan was increased from 33 to 49 percent of total project cost.  

•   Public-Private Partnerships. The new law includes language from U.S. Sen. Mark Kirk’s (R-Ill.) Lincoln Legacy Infrastructure Development Act that facilitates the implementation of transit public-private partnerships (PPP), including the development of policies and procedures to address impediments to transit PPPs. The bill also requires the Secretary of the Dept. of Transportation to coordinate, promote and provide technical assistance to public transportation PPPs and to promote greater transparency on federal assistance involving PPP agreements.

•   An important benefit for transit riders, the Transit Commuter Tax Benefit, was not included in the bill. The Senate-approved version of MAP-21 restored, and made permanent, parity between the pre-tax commuter benefit for transit and parking. When the stimulus passed in 2009, it included parity between transit and parking, but due to inaction by Congress, the transit portion was cut in half — from $230 a month to $125 —when the measure expired Jan. 1, 2012. Meanwhile, the parking benefit increased to $240 a month to account for inflation. The permanent increase for transit was left out of the final compromise. Rep. Robert Dold (R-Ill.) has co-sponsored H.R. 6066, The Commuter Savings Act of 2012, which would bring parity through the end of 2013.

•   The Rural Area Grants (Sec. 5311) that fund transit in rural areas is authorized at $599.5 million in FY2013 and $607.8 million in FY 2014, compared with $547.3 million in FY2012.

Though Congress missed an opportunity to make significant policy changes, the Metropolitan Planning Council (MPC) supported the passage of the reauthorization because the alternative, another extension, would have been disastrous for metropolitan Chicago and the nation. Further the benefits of MAP-21 will be felt especially in the Chicago region: Transit systems will get a small boost in funding and changes to how capital dollars are allocated could bring in sizable funding for major capital projects. Read MPC’s complete statement and guide to the transportation reauthorization.  

MPC will work over the next 27 months to make the next reauthorization one that is grounded in a thorough re-examination of how America plans for and invests in its transportation assets; ensures targeted investments that advance coordinated goals, such as economic development and air quality improvements; rewards squeezing more capacity from current transportation facilities; and reduces demand for future transportation resources.