Business Logistics 420Public Transportation

Spring 2001

Lecture 11: State and Local Funding Programs for Transit

Lecture Objectives

• Illustrate that state and local responses to transit funding issues vary greatly from community to community

• Provide example of comprehensive state funding program -- Pennsylvania

Overview of State and Local Funding

• Public financial support for transit started at the local level, then at the state, and finally the federal level.

• Public support for transit dates back to the early 1900s with local government support for subway construction in large cities

• Seattle Transit has been public since the 1920s • Chicago Transit Authority formed in 1947• Widespread state and local support started in late

1960s -- 1970s

Features of State and Local Funding Programs

• State and local programs generally mirror the federal programs and are designed to provide needed match

• For example, federal government provides 80 percent of capital costs, many states have programs to split the other 20% with local governments

• Source of state/local funds varies significantly among states/localities and is a function of state law, history, politics

State Roles in Addition to Funding

• State enabling legislation determines– how transit agencies are organized, governed– what taxes can be used to support transit

• States often provide in-kind benefits such as free vehicle registration, exemption from fuel taxes

• States provide technical assistance and planning funds

Pennsylvania’s State Transit Program

• The Commonwealth of Pennsylvania is a major funding agency for all forms of public transit– first transit funding legislation -- 1967– in fiscal 1999 PennDOT provided more than

$720 million capital and operating assistance to urban areas

Types of Organizations Funded in Pennsylvania

• 22 Urban Transit Systems• 22 Rural Transit Systems• 60 Community Transit-- shared-ride systems• About 6 intercity bus operators• AMTRAK• Non-profit agencies serving disabled persons

Pennsylvania Transit Funding Programs

• Capital Assistance -- 1/6th total cost• Operating Assistance -- formula based on

historical needs -- about $250 million in 1999• Free Rides for Senior Citizens on Fixed-Route

systems -- Pays transit fare• Reduced fare on shared-ride systems -- pays 85

percent of fare

• Planning and technical assistance grants

Formulas Used to Distribute Operating Funds

• Political deal (based on historical trends)– SEPTA gets 70.3% of the appropriation– PAT gets 25.4% of the appropriation– Other urban areas share depends on

• % funding in 1990-91 (as base funding)• % federal funds• % vehicle miles• % vehicle hours• % passengers

Transit Funding Is ComplexNote: CAOE is Capital Assistance for Operating Expenses

Federal Op Asst1%

State CAOE26%

State Op Asst40%

Federal CAOE

6%

Senior Citizen

13%

Local Share14%

0%

Pennsylvania Transportation Assistance Fund (PTAF)

• First dedicated transit funding in Pennsylvania -- 1991

• Distributes income from these sources to transit systems based on formula– $1 per tire sold in Pennsylvania– $2/day tax on motor vehicle rentals– 6% sales tax on periodicals – 3% sales tax on lease of vehicles– 12 mill tax on the Public Utility Reality (PURTA)

Study Questions

• Briefly describe PennDOT’s funding programs for local transit agencies

• What are the pros and cons of a dedicated funding program like PTAF

• How are state and local shares of transit capital and operating assistance determined?