Transit Funding in the Age of COVID-19: It’s Time to Think Beyond Stimulus

With the COVID-19 pandemic as a catalyst, funding for public transit systems has become an urgent and existential need. A drastic ridership drop coupled with dramatic state and local budget cuts have led to a dual capital and operations funding crisis not seen in decades. With little to no federal funding expected, transit systems are in a precarious situation. Tweaking existing finance streams and mechanisms is no longer an option — it is time to consider a paradigm shift for transit funding.

One potential consideration is an increased focus on the transition to transit electrification. Advancing electrification can play a key role in developing new funding options while also improving transit system efficiency, bringing significant operational savings and environmental benefits to our communities.

Building the case for thriving transit systems

Healthy public transportation networks move people across urban areas and provide so much more than just transportation. Transit systems are intrinsically related to economic development, social equity and sustainability — all of which are vital to maintaining prosperous urban environments and communities. According to the American Public Transportation Association, there is a $4 return on investment for every $1 invested in transit, every $1 billion invested creates 50,000 jobs and a $10 million investment in public transit generates about $32 million in increased business sales and residential property values for homes located near public transit. According to a University of Massachusetts Amherst study, each $1 million invested in transit bus electrification will create 14 new jobs. In short, the hidden economic value of public transit could be up to $1.8 billion per city. Public transit, even in its traditional internal combustion form, produces less air pollution per passenger mile than a single driver car. Electrified vehicles can further reduce that rate.

Here are three ways to advance transit funding during the COVID-19 pandemic and why transit — particularly electrified transit — matters.

1. Build in equity, resiliency and sustainability
Incorporating elements that provide equity, sustainability and resiliency into your transit project can improve funding potential and broaden grant eligibility. These elements are key for new transit projects as their initial incorporation will eliminate retrofitting costs, reducing overall project expenditures. Developing projects with these elements also holds a financial incentive as they involve relatively new industries, such as grid adaptation, that will create jobs — a vital factor in this time of major city and state unemployment. Elements incorporating sustainability and resiliency can protect transit from the stresses of extreme weather and climate change while providing equity in the form of continued mobility access.

2. Play the long game, amp up electrification
Before the COVID-19 pandemic, many transit agencies across the U.S. had begun moving toward transit electrification, specifically by transitioning to electric buses. Despite the pandemic, these commitments remain unchanged. It’s estimated that by 2030 more than 25 percent of the United States’ bus fleets could be electric. Transit electrification may offer the potential for additional funding options while benefitting the communities that these systems serve. With day-to-day funding at issue, it may seem unrealistic to ask transit agencies to invest in electrification but investing in electrification creates jobs, advancing city and state economies and in the long term can generate significant savings for bus fueling and maintenance, helping with future transit financing. Electrification also helps with issues of social equity and sustainability by reducing greenhouse gas emissions related to climate change and public health, particularly in low-income neighborhoods where personal vehicles may be slower to convert but may house fleet routes or bus maintenance facilities. AECOM’s expertise in cities, transportation, energy, sustainability and resiliency can increase the possibility of project funding and community improvement. We have worked with transportation agencies like the Fresno County Rural Transit Authority in California to model and forecast the future of electrification, identifying opportunities where policies that focus on bringing equitable change to underserved communities can be established.

3. Take a fresh look at legislation
With current means of funding transit proving unequal to the task, it’s time to change the measures that fund transit. Public-private partnerships are just one means of providing funding support. These kinds of partnerships could in the future enable technology and infrastructure companies to own and operate charging infrastructure for transit agencies, a model that has already been tested with charging infrastructure for private vehicles. These arrangements could also promote electrification by providing tax credits to the private sector whenever they make infrastructure investment improvements that advance electrification. AECOM has the technical expertise to provide recommendation on policy, incentive and even utility tariff changes that can support and accelerate bus fleet electrification.

There are no easy solutions to the issues of transit funding in the age of COVID-19, but with historic, drastic issues cutting across capital and operations funding, doing nothing is not an option. Researching and making informed and well-thought-out decisions will protect transit and the communities that it serves while advancing city and state economies in a time of uncertainty and unemployment. Now is the time to act.