congestion reduces costs for businesses that transport goods and consumers who buy those goods. Public transportation is important to communities of all sizes, from large metropolitan regions to small cities and rural communities. Less urban states and smaller cities depend on the federal transit program to pay for a larger share of their transit capital investments than more urban areas, and they also rely on federal funds to pay for an important share of the costs associated with providing service.
To meet the demands of our nation’s aging infrastructure network, growing urban population, and changing travel and commuting patterns, a renewed long-term federal commitment to public transportation is essential. Currently, system needs far surpass resources from all levels of government. At the federal level, fuel taxes dedicated to the Mass Transit Account of the Highway Trust Fund, last raised in 1993, have lost more than 37 percent of their purchasing power. APTA urges the Committee to increase the dedicated revenues that go into the Highway Trust Fund, so that Congress can pass a surface transportation bill that provides for the growth of predictable federal funding under a multi-year authorization bill.
Since the expiration of TEA-21 in 2003, we have now had 25 short-term extensions, lasting a little more than four years authorization under SAFETEA-LU, and a bit more than two years under MAP-21. More recently, federal transit funding has grown only minimally, from $10.231 billion in FY 2009 to $10.692 billion in FY 2014. The uncertainty of recent federal authorizing laws and lack of predictable funding of the federal transit program have made it nearly impossible for the industry to keep the system in a state of good repair, replace the aging infrastructure and fleets, and address the growing demand for service. Short-term authorizations increase project costs and decrease certainty for long-term planning.
While growing communities compete for limited funds to build a variety of new fixed guideway systems (BRT, light rail, trolley, heavy rail and commuter rail), and transit ridership continues to grow, the deterioration of our systems adversely impacts both efficiency and safety. The U.S. DOT now estimates that we have an $88 billion backlog in the state of good repair of public transportation capital investment needs. And this backlog doesn’t even include the annual cost of maintaining the current system, like replacing aging buses, rail cars, vans, buildings, bridges and stations; the cost of building new capacity; and the more than $3 billion in costs to install positive train control systems at the nation’s commuter railroads.
While spending for public transportation is paid mostly by fares that riders pay, as well as state and local funding, the federal government is an essential partner in this process. While federal funding supports 19.2% of all spending on public transportation, 44.4% of all capital spending for transit comes from the federal government. However, according to the CBO, the decline in real spending on transportation infrastructure has occurred at all levels of government, but it has been
the greatest at the federal level. Yet, federal funding is critical as it helps to ensure that locally-derived benefits are fully integrated into the national multimodal transportation network that is so essential to ensuring U.S. competitiveness in our global economy.
These are some of the reasons that APTA has urged Congress to enact a long-term authorization bill that grows federal funding for public transportation. We strongly support the preservation of the federal transit program, and we support an increase in the dedicated revenues that go into the Highway Trust Fund for both the Mass Transit and Highway Accounts. It is estimated that more than $90 billion in new revenues is needed just to maintain current public transportation and highway programs, and APTA strongly believes that there is a need to grow current federal investment levels for transit. We need a revenue stream that supports growth of the federal programs, as flat funding at current levels will not permit transit to adequately address the growing backlog of capital needs or the growing demand for transit service. It should come as no surprise that we strongly oppose efforts to devolve the federal transit or highway programs to the states. Public transportation is an essential part of the overall surface transportation system, and given our growing population and increasing congestion on our roadways that program is more important than ever.
We know transit ridership is growing, we know the nation’s population is expected to grow significantly, and we believe that the demand for public transportation service in our communities will continue to grow. Nationally, public transportation ridership continues to set record levels. In 2014, people took a record 10.8 billion trips on public transportation—the highest annual ridership number in 58 years. Some public transit systems experienced all-time record high ridership last year. This record ridership didn’t just happen in large cities. It also happened in small and medium size communities. In fact, some of the biggest gains came in towns with less than 100,000 people with ridership growth of double the national average. This record growth in ridership occurred even when gas prices declined by 42.9 cents in the fourth quarter. From 1995-2014 public transit ridership increased by 39 percent, almost double the population growth, which was 21 percent. The estimated growth of vehicle miles traveled was 25 percent. This proves that once people start riding public transit, they discover that there are benefits over and above saving money.
Our failure as a nation to adequately invest in this essential element of our surface transportation system will only cost the nation more in the long run. Conversely, investment in public transportation will help support a healthy, growing economy, facilitating the efficient movement of goods and people, and stimulating economic development in communities served by vibrant public transportation systems.
One only needs to ride a train or bus during the morning commute to recognize the growing demand, and to experience firsthand the strains that that demand is placing on systems. The demand and support for public transportation is also reflected at the ballot box. Last year, 69 percent of ballot initiatives seeking taxpayer support for transit investment were approved by voters. Clearly, citizens are willing to pay for improved transit service. These local ballot initiatives confirm the stability of the local partnership, but they are not a substitute for the federal partnership.
RETURN ON THE FEDERAL INVESTMENT
For every dollar we invest in public transportation, we generate about $4 in economic returns. And $1 billion in federal transit investment fosters productivity gains that create or sustain 50,000 jobs. It is important to note that 73% of federal transit capital funds flow through the private sector. In fact, much of the bus and rail equipment is manufactured in rural areas and provides high wage jobs in those communities. For example, bus original equipment manufacturers have plants located in Alabama, North Dakota, Kansas, Minnesota, South Carolina, California and upstate New York. Rail Cars are manufactured in places like Nebraska, Idaho, Illinois, and Pennsylvania. Components and subcomponents are being manufactured all across this country. As these investment metrics make clear, local and regional transportation improvements yield national benefits.
On a very fundamental level, federal transportation funding keeps this economic engine running, as transit agencies can only plan and advance large, multi-year capital projects when they can be confident the resources will be there when they are ready to break ground.
To ensure the reliable, long-term funding best suited to infrastructure investment, APTA urges Congress to enact a 6-year, $100 billion authorization for the federal transit program that includes robust funding to grow the program from $10.7 billion in the current year to $22.2 billion in 2021. Revenues into the Highway Trust Fund (HTF) must increase to support this much needed growth.
Additionally, we see this moment in time as an ideal opportunity to establish a dedicated revenue stream for intercity passenger rail, separate from the revenues required for the Highway Trust Fund and Mass Transit Account. Like public transit, intercity passenger rail is experiencing ridership growth and increased demands for public service in corridors throughout the country. We have asked that Congress provide $50 billion over the next six years to facilitate the
development of a national high-speed and intercity passenger rail system.
APTA’s surface transportation authorization recommendations are based on needs identified in eight categories of equipment and facilities funded under the current federal program. They are based on the need for six-year investment from all sources—fares, local, state, and federal—of $245 billion. APTA’s investment requirements include the cost of bus replacements, demand response vehicles, rail vehicles, state-of-good-repair spending, New Starts and core
capacity projects, and other costs. And they reflect investment requirements in states, cities and communities across the country.
APTA recommends that Congress take the necessary steps to restore, maintain and increase the purchasing power of the federal motor fuels user fee to support a significant increase in the federal investment for the public transportation program. In addition, in order to meet the full range of funding needs, APTA supports the use of other financing strategies to meet the investment goals.
First and foremost, funding must be sufficient to address the capital investment needs dictated by the nation’s population growth, economic and personal mobility needs (including the reduction of traffic congestion), environmental and sustainability needs, and of our aging population. While meeting our capital expansion needs, funding must also be sufficient to address issues of state of good repair across so many of our aging public transportation systems nationwide.
It is important to note that there are differences between funding and financing when it comes to transportation infrastructure projects. Funding options are those that generate revenue streams and financing options leverage revenue streams. Financing options are programs or instruments that leverage revenue streams as a way to move many infrastructure projects forward, especially significantly large and expensive projects. Without adequate funding sources, states and local governments cannot take full advantage of the financing tools available. Additionally, financing options may not be practical or available for every infrastructure project.
Unfortunately, current revenues going into the Highway Trust Fund are $15-16 billion short of what is needed annually just to fund current transit and highway programs. Since the expiration of the SAFETEA-LU authorizing law in 2009, federal funding has grown by less than one-half percent while demand for transit service has grown and the cost of restoring the existing systems to a state of good repair has grown to $88 billion.
Second, it is imperative that the funding for transportation investment be stable and reliable, whether they be from federal, state, or local sources, or from public transportationgenerated revenues or public-private partnerships. Major transit capital investments often require advance planning and multi-year construction programs.
Third, it is critical that the transportation finance legislation developed by this Committee recognize that not all financing mechanisms and revenue generators work at the same level of efficiency and effectiveness for all modes. Our proposal recommends legislation that would promote the development of revenue generated from traditional financing sources like municipal bonds to innovative financing mechanisms, such as public private partnerships, tolling and
congestion pricing to supplement current revenue streams. However, infrastructure banks, municipal bonds, private activity bonds, and loan programs such as Transportation Infrastructure and Finance Act program (TIFIA) and the Railroad Innovation and Improvement Financing Program (RRIIF) that require payback will not sustain an ongoing transit program. They can help public-private partnerships work, but transit public-private partnerships are not a revenue source but rather a management tool.
We want to emphasize that the certainty and predictability of the dedicated funding within the Mass Transit Account of the Highway Trust Fund, and channeled through the Federal Transit Program, has truly served the needs of the public transportation industry, and allowed agency finance professionals to take advantage of and leverage a multitude of financing arrangements.
For many years the federal gas tax has supported the national program and served effectively as a user fee. While trends and market forces suggest that the gas tax is not the growing revenue source that it once was, it remains a viable source that can be collected efficiently and without creating any new federal bureaucracy in the short run. The most sustainable, forwardlooking and outcome-oriented approach may be a vehicle miles traveled (VMT) fee, but because the systems, methods and infrastructure to implement such a national system are years away, the augmented gas tax could be the bridge to an ongoing national VMT fee. While APTA has put forward these ideas on how to raise revenues for the Highway Trust Fund, we are open to any mechanism that provides a predictable source of funding for these important investments.
Mr. Chairman and members of the Committee, I thank you for this opportunity to share our views as you move forward on this next authorization of surface transportation programs and urge the Committee to support the Federal Transit Program with a six-year investment level for transit projects of at least $100 billion. The next program will absolutely require a wide range of funding options, but for the immediate future, we feel strongly that the base program must
restore and increase the purchasing power of the Federal Motor Fuels User Tax while we concurrently move with a true sense of urgency to develop and implement a national transportation.