There’s been a lot of talk about the infrastructure component of the proposed stimulus, and whether it’s too slanted towards roads, bridges and other aspects of our car-dependent transportation system. One complication is that, in order to make for effective stimulus, the infrastructure investments have to be “shovel ready”, that is, ready to start up almost immediately. My understanding is that this one of the problems (from a stimulus perspective) with high-speed rail. But what about metro and urban public transit? My experience has been that they are perpetually underfunded and starve for dollars for capital improvements. So, do transit authorities around the country have “shovel-ready” projects ready to go?
To answer this I asked my top-secret source inside the Chicago Transit Authority. Here’s what he had to say in full:
1. The funding mechanisms for transit are perverse–IL funds its transit systems’ operating budget through sales taxes and a small amount through real estate transfer taxes. The feds stopped providing operating support to transit systems in 1998. Roads are funded (again, generally speaking) w/gas tax. There have been attempts to realign this crazy situation with congestion pricing and other more equitable arrangements but nothing has come of it. And to recover federal capital dollars a state usually has to provide a state match (and sometimes a local match). IL, unable to pass a capital program since 1999, has recently forfeited much of the federal transit dollars it was to receive in the last transp. law.
2. Connections between operating funding subsidies (state/local/sometimes federal) and capital support (infrastructure) are key. For CTA, under law we have to recover 50% of our operating costs from our customers (it’s called the “recovery ratio”). Or, put another way, only 50% of our operating costs are subsidized by government. Houston, Denver, Phoenix all have much, much lower recovery ratio requirements (I think Houston is like 11%). Thus they can “afford” to build out there transit infrastructure because they know they will be able to recover the requisite operating costs through revenue. Having a new line that a system can’t “afford” to run is obviously not a good idea.