Public transit needs public funding. And that goes way beyond the fare box. Local, state, and federal dollars are the lifeblood of public transportation projects in the United States. But with the country in recovery from the recession and states cutting back programs to close budget holes, support for public transit looks to be grinding to a halt.
There’s an obvious downside for those who rely on public transit to get around, but there’s also a potentially more confounding problem for the nation’s transit agencies. Some of them are right in the middle of expanding or building entirely new projects such as light-rail lines—projects planned during a better economy—or will begin them soon. What only recently seemed to be a set of projects on the path to ribbon cutting have seen transit agencies scrambling to find new sources of funding and to justify projects that had enjoyed wide support.
This is the case in Los Angeles, where the state’s endemic budget crisis could end up eliminating more than half a billion dollars earmarked for an expansion of the city’s light-rail system. Just as local support and taxes are increasingly called upon to fill holes in L.A., similar local sources are the main driver behind an ambitious redevelopment and transit project in Atlanta. Across the country, other impacts are more subtle. In Charlotte, N.C., a recent funding scare has left thankful transportation officials with money still on their books—and a persistent fear that the money nevertheless could be taken away. And in Detroit, where a new light-rail line is on a fast track to completion, state and local economic troubles are posing problems for its future operations.
“What that [present funding levels] would translate to is forgoing improvements,” says American Public Transportation Association chief engineer Martin Schroeder. He says that transit agencies across the country are being forced to slow down or even reconfigure planned projects due to vanishing funds.
That’s the reality in Los Angeles, where budget cuts made by the state of California to address massive deficits could derail a new transit initiative. L.A.’s Metropolitan Transportation Authority is deep into a drawn-out and expensive light-rail construction project: It’s a 15.2-mile route known as the Expo Line, which will be the first rail connection between downtown and the populous Westside of Culver City and Santa Monica. Its first phase, an 8.5-mile segment, is under construction and slated to begin operations later this year. The second phase, however, has a future that’s increasingly unclear.
Both phases of the project have relied heavily on a transportation fund created by voter-approved bond sales. But in an attempt to close budget holes, the state halted bond sales this spring. That essentially pulled $174 million of expected money out of Metro’s pockets. And if things don’t shape up soon, the state could be halting bond sales again in the fall, which will take another $400 million out of play. Such a decision would likely mean delays to phase two of the Expo Line, which had been expected to begin operations in 2015.
“It’s the worst possible time to suspend the funding, because we’re already under construction,” says Metro deputy executive officer for regional programming David Yale. “If this is a pattern that they’re not going to be able to do a sufficient level of borrowing, then, yeah, we’ll have problems.”
Overall, the Expo Line is a $2.43 billion project, and Metro’s still $229 million short of being able to complete it. For now, L.A. County has been able to patch up some of the holes created by the state’s budget crisis, in part by passing a half-cent sales tax in 2008 in order to introduce a dedicated fund for transportation projects. That fund is designed to generate $40 billion over a 30-year life span.
Yale says that Metro has been able to tap into some of those funds to keep construction of the Expo Line’s first phase on track. “That money is there. It is reliable. And we are using it to keep these projects moving while we wait for the state to get its act together,” Yale says.
But he says that voters’ willingness to tax themselves for these sorts of expensive and time-consuming projects has limits. Unless the state can find a way to navigate the billions of dollars of deficits it appears to be facing, L.A. may be forced to look for other creative ways of raising the money needed to keep this project on schedule. “It is very difficult to keep going back to our local voters without the confidence that the state will be part of the partnership,” Yale says.
In Atlanta, local sources are providing almost all of the funding for the broad-scale redevelopment of a former railroad corridor known as the BeltLine. The $2.8 billion project—which includes 22 miles of light rail, a series of parks and open spaces, hiking trails, and affordable housing—will be primarily funded by a tax-allocation district. Also known as tax-increment financing, the developers borrow against the incremental rise in tax revenues predicted from rising property values and dedicate those funds to a specific purpose. The district created for the BeltLine project covers about 6,500 acres and is expected to generate $1.7 billion in taxes over 25 years.
Some aspects of the project are already under way, as the city has successfully obtained the property along about half of the 22-mile loop. Hiking trails are opening, but the rail element is still three to four years off, according to Perkins+Will design manager Ryan Gravel, who proposed the project. Like much of its local funding, the BeltLine will roll out incrementally. And while the parks and trails are technically easier to realize, the transit is key.
“It’s a great project without the transit, but it’s not a transformative project,” Gravel says. “This project will transform the city of Atlanta if it’s done right.”
When the LYNX Blue Line light-rail service first opened in Charlotte in 2007, the Charlotte Area Transit System (CATS) estimated about 9,000 daily riders on average. After a few months of service, daily ridership was more than double that. Though ridership has since fallen somewhat, today, it’s still above those early projections. Charlotte, it seems, likes its light rail. And CATS is pushing ahead with plans to connect the system with the nearby University of North Carolina campus.
To keep the project on time and within the $977 million budget, officials cut 1.2 miles from the proposed extension this January, bringing the new line down to 9.4 miles across 11 stations. It’s a move that CATS CEO Carolyn Flowers says helped bring the extension’s open date a year closer, to November 2016.
Then state legislators got into the mix.
This spring, legislators proposed cutting more than $22 million in funds for the Blue Line extension. Transit officials were outraged. After further debate, legislators agreed to return $28 million in funding to the budget (more, oddly enough, than they proposed to cut). That budget passed in June; CATS will move forward with the extension. But the budget scare has left an air of uncertainty surrounding the project and the money behind it.
“When you’re building a capital project, it’s extremely expensive,” Flowers says. “The only thing that you can do is hope that you have sufficient funds for the project and that you have them programmed over a period of time that’s realistic in this economy.”
In the end, Flowers knows that many of the decisions about where the money comes from are out of her hands.“We’re saying that we are confidently persistent and cautiously optimistic,” she says.
That sort of caution is evident in nearly any transit project today. The reliance on unsteady public money has pushed some projects to look to the private sector. In Detroit, a coalition of private funders is supporting plans for a 9.3-mile light-rail line along Woodward Avenue, one of the city’s main commercial corridors. The first, 3.4-mile segment is expected to begin construction this year; the entire line has an estimated open date in 2016. The funders are still working to secure funds toward the $528 million total project costs.
“On the capital side, we’re looking pretty good,” says Detroit Department of Transportation manager of strategic planning Tim Roseboom. The project has received Transportation Investment Generating Economic Recovery grant money through the federal government’s American Recovery and Reinvestment Act of 2009 as well as federal New Starts money. The city has begun selling bonds to raise the rest of its local match. And about $125 million of local matching funds have come from private sources, in part through a coalition of local business and civic leaders known as M-1 Rail.
But while the up-front costs of building the line seem to be in good shape, finances for the light-rail line become a little murkier once the project is complete. Roseboom says that running the line could be a big challenge.
“We are definitely having budgetary issues in the state, and locally, just maintaining our service,” Roseboom says. “And we have for the last, well, longer than I care to admit.”
Planners are hoping that the Woodward light-rail line will help spur a regional collection of transit services, which are currently managed under two disparate organizations: the Detroit Department of Transportation and the Suburban Mobility Authority for Regional Transportation. But with the metropolitan unemployment rate about 2 percentage points above the national average of 9.1 percent, expansion looks less and less likely.
“It’s kind of sad, but that is the environment that we’re in. It’s like, what service are we going to cut out this year, which positions are we going to eliminate, which reforms are we going to have to make in order to continue to operate within the budget that’s been approved,” Roseboom says. “But that’s not unique to Detroit or to Michigan.”
Private funding has proven most effective in Las Vegas, where a long-planned and completely privately funded high-speed rail project is edging closer to approval. The federal government recently approved the $6 billion DesertXpress project’s draft environmental impact statement. Its backers have raised more than $25 million, and they have applied for a $4.9 billion federal loan through the Railroad Rehabilitation & Improvement Financing program—more than four times the amount the program has loaned since 2002 in total.
While much of the DesertXpress’s funding has yet to be acquired, federal and state transportation officials support the project—which could make this private venture the first U.S. high-speed rail project.
The 185-mile line would connect Las Vegas with Victorville, Calif., about 60 miles to the east of Los Angeles. With projected speeds of 150 miles per hour, the train would shave hours off the drive between L.A. and Las Vegas. Groundbreaking could happen by the end of the year, with trains running by 2014.
On the public side, funding for high-speed rail is less certain. The federal government’s $10 billion High-Speed Intercity Passenger Rail program failed to secure any additional funding for fiscal year 2011; its chances for fiscal year 2012 are just as dim. But the $10 billion that’s already in play has sparked progress for a variety of passenger-rail corridor projects, according to Petra Todorovich, director of America 2050, a national planning initiative focused on infrastructure and development.
“Many states were not doing rail planning at all because they did not foresee having a federal partner in it, and the only funding they were able to put into their rail corridors was money that was generated by the states,” Todorovich says.
State budget deficits have made it harder for states to play along. The high-speed rail program requires a 20-percent match of funds from states; though most have been able to raise that amount, the lack of federal funding for at least another fiscal year could put a stop to those local fundraising efforts.
“It is a challenge for a lot of the states that are facing high budget deficits, but it hasn’t meant the death of the program by any means,” Todorovich says.
States such as California, Connecticut, and Washington have maintained funding for passenger-rail corridor projects, Todorovich says, because these states have been empowered by federal funds to make them priorities. She is hopeful that the 2012 federal budget will include $1 billion to $2 billion more to keep the program’s momentum going. Still, she recognizes that it’s a difficult fiscal environment.
Despite economic and budgetary concerns, rail projects at a variety of levels will continue to scrape by. Their riders may have to live with delays for now. But through a combination of federal, local, and private funding, expensive and multiyear rail projects at the city and state level may yet be up and running even before the economy is fully back on track.