FTA 1996 Report: An Update

1996 Report: An Update

U. S. Department of Transportation
Federal Transit Administration

Our nation faces many transportation challenges, from managing traffic growth to ensuring access to jobs and sustaining our environment for future generations. Public transit can help America meet these needs by providing high-quality service in congested corridors, offering low-cost transportation access for millions of Americans, and supporting pedestrian-oriented business districts and neighhoods. This report - FTA 1996 report - introduces estimates of the value of these benefits to the American people. For many years, these benefits have gone unnoticed. The findings presented here are the foundation for addressing future transportation needs in the United States.

Gordon J. Linton, Federal Transit Administrator

The benefits of public transit include: providing an affordable, high-quality alternative to the automobile for commuting to work and other travel; reducing traffic congestion and improving travel time for motorists; less auto-related air pollution and fuel consumption; low-cost mobility for people who cannot afford to own or are unable to drive a car; and increased neighborhood vitality and productivity of business centers.

Given such a menu of advantages, it is hardly surprising that numerous reports, studies and evaluations of the past decade have called for an increase in transit services. The passage in 1991 of the Intermodal Surface Transportation Efficiency Act (ISTEA) - allowing Federal funds previously restricted for highways to be spent on transit - was a major step in a positive direction. Federal funding for transit increased steadily during the initial years of ISTEA, but then was cut in FY1996 by 12 percent from FY 1995 levels.

These cuts have already affected the provision of transit services. Many transit systems have had to raise fares or reduce service. Inevitably, travellers will use transit less often, putting additional cars on the road, and increasing congestion, pollution, and fuel consumption.

This report presents new estimates of the value of the benefits provided by public transit systems, describes some of the challenges transit must confront, and outlines how the President's proposed FY 1997 budget would help expand and restore transit service.

What if... What if all rail transit access to and from the island of Manhattan were eliminated and new bridges and tunnels constructed to accommodate all the new auto drivers? To replace the 6 rail tunnels under the Hudson River and to replace the 30 rail transit tracks that link Brooklyn and Queens with Manhattan across the East River would require in excess of 120 new highway lanes to handle this traffic. To accommodate 120 new traffic lanes would require the equivalent of 20 new Brooklyn Bridges.

Without transit, the nation's $40 billion in annual traffic congestion losses would be $15 billion higher.

Transit Reduces Traffic Congestion and Improves the Entire Transportation System

Over the last 30 years, rail transit services have grown to help meet increasing rush hour travel demand. The number of workers commuting by transit from suburban homes to central city jobs has increased 53 percent since 1970, with virtually all the growth in transit commuting occurring in rail services. From 1984 to 1994 alone, annual rail transit patronage increased by 2.9 billion passenger miles, or 18 percent.

Continued growth in high quality transit services is essential to meet the travel demand that is forecast for the next 20 years, especially in the nation’s most severely congested urban travel corridors. According to local travel forecasts assembled by U.S. DOT, overall transit patronage will increase by 22 billion passenger miles over the next 20 years.

Ten million Americans use transit each working day. Another 25 million Americans use transit less frequently but on a regular basis. By providing commuters an affordable and convenient transportation option, public transit keeps traffic congestion from being worse for millions of motorists, whose taxes and tolls go partly to support their local transit systems. According to Federal Transit Administration (FTA) analysis, the nation’s $40 billion in annual traffic congestion losses would be $15 billion higher were it not for transit. In fact, if all the Americans who take transit to work decided to drive, their cars would circle the Earth with a line of traffic 23,000 miles long.

While diminishing roadway traffic, transit reduces auto-related pollution and fuel consumption. America’s transit travel stops over 126 million pounds of hydrocarbons - a primary cause of smog - and 156 million pounds of nitrogen oxides - that cause respiratory disease and acid rain - from ever leaving the tailpipe of any automobile. Transit also reduces auto fuel consumption by approximately 1.5 billion gallons annually, lowering the nation’s trade deficit and reducing dependence on foreign oil.

The key role high-speed public transit plays in managing severely congested urban traffic has been recognized by leading economists for decades. A well established principle of transportation economics says that simply expanding highways in order to reduce congestion actually encourages transit passengers to become motorists. Highways grow more crowded, ultimately eliminating any travel-time advantage driving held over transit service.

Because investment in added highway capacity immediately produces added use of the highway, economists argue that improving transit can be a more effective way to reduce highway congestion. Commuters then act in their own interest and choose the mode of travel they find to be faster, namely transit. Recent research by the firm of Hickling-Lewis-Brod provides empirical support for this theory, finding that transit significantly improves the overall point-to-point speed of travel for both transit riders and highway users in severely congested urban travel corridors in several cities: Boston, New York, Atlanta, San Francisco, Pittsburgh, Chicago, Philadelphia, and Washington, D.C. As motorists switched from automobile commuting to transit, congestion on highways lessened and highway travel time improved. Increased transit investment in these corridors can be an effective use of transportation revenues that clearly benefits motorists.

Economists agree that the most effective way to reduce congestion on highways would be through “pricing.” Just as movie-goers line up for evening shows despite the fact that matinees are less crowded and less expensive, many motorists would willingly pay a premium for guaranteed high-speed travel during periods of peak travel demand. Others would jump at the chance to save money by traveling at a less expensive time of day thus relieving peak-period highway usage. In this way, pricing highways according to their value to the consumer would reduce traffic congestion.

However, roadway pricing is sometimes impractical. Economists note that in these instances, improved transit is an effective "second best" alternative to highway pricing. In particular, transit subsidies can be used to entice enough drivers from cars to transit and thereby curb highway gridlock. The analysis, prepared by Hickling-Lewis-Brod, suggests that -- in the absence of roadway pricing -- the national congestion reduction benefits of transit alone justify public subsidies for transit of roughly $15 billion per year nationwide.

Transit Provides Low Cost Mobility

For 80 million Americans who do not drive because they are too old, too young, disabled, or cannot afford a car, transit provides low cost mobility and access to services, schools, jobs, and other economic activities. Transit offers a practical way for people to maintain power over their lives. Unfortunately, no full accounting of transit’s benefits has ever been attempted beyond routine analysis of trips made by general groups considered to be disadvantaged. Such an accounting would provide the impetus to make sure that all these Americans have access to essential transit services.

One way to assess the value of a transit trip to passengers is to look at how much they would be willing to pay for transportation if transit were not available. Passengers from households with annual incomes of less than $24,500 -- the amount at which the Federal Government's Earned Income Tax Credit phases out for a family of four -- make 3.5 billion transit trips each year. Recent research by Hickling-Lewis-Brod suggests that these passengers value their access to transit at about $23 billion each year.

Low-cost mobility services today are inadequate to meet the needs of people who do not drive automobiles and rely on community and social service programs. With increased Federal financial support for transit, numerous Federally funded entitlement programs could reduce their transportation expenses by substituting transit for separate in-house services. It is estimated that $352 billion in Federal entitlement programs are affected by the availability of low-cost transit mobility services for their clients. In just four major Federal programs -- Medicare, Medicaid, Food Stamps, and Unemployment Compensation -- each dollar invested in low-cost mobility services reduces the cost of these programs by an average of 60 cents.

Americans Depend on Transit Millions of Americans use and benefit from public transit, but some Americans have fewer transportation options than others: 32 million senior citizens increasingly rely on transit as their driving ability decreases with age. 24 million people with disabilities need transit to maintain their indepandence. Otherwise they must depend on expensive private service for transportation. 37 million people living below the poverty line often cannot afford a car and rely on transit to reach their jobs. 56 million children under driving age travel farther to schools than ever before. Many depend on transit to participate in educational and extracurricular activities.

Transit Increases the Productivity of Business Centers and the Value of Neighborhoods

American cities like New York, Chicago, Los Angeles, Philadelphia, and Dallas compete in the global marketplace for a vast array of commodities, financial services, commercial ideas, finished products, fashions, art, entertainment, publishing, and human skills. The availability of public transit services improves the ability of these cities to compete effectively in a global market.

In addition to creating wealth for the people and businesses directly involved, these marketplaces create jobs. Almost half of all Fortune 500 companies, representing over $2 trillion in annual revenue, are headquartered in America’s transit-intensive metropolitan areas. Improving transit will support the power of U.S. cities to generate jobs across the country.

Transit benefits not only commercial centers in central cities, but also the surrounding “edge cities” by providing fast, convenient and efficient access for large numbers of people. The people who converge in these cities to conduct business place a high value on their time, especially if they come from another city or country. The commercial sections of these cities are crowded during business hours, requiring travel options that accommodate frequent contacts. In some of these districts, businesses are located on top of each other in skyscrapers, and the miles of elevator shafts exceed miles of roadway. The World Trade Center in New York accommodates 50,000 workers in two office buildings. When hundreds of such vertical “Main Streets” empty at lunch time or at the end of the workday, extraordinary numbers of people need to be moved all at once. A single subway line, like those in New York City, Washington, D.C. , or Chicago, can carry 30,000 passengers per hour in each direction, roughly three times the passengers carried on a busy ten lane freeway in the same hour.

Residential areas with a variety of commercial activities within walking distance of transit are known to transportation planners as “liveable communities.” The benefits of residing in such communities are substantial. For individuals placing a high value on their time, convenient access to numerous economic activities is decisive. Residents in these livable neighborhoods spend less time getting places, tend to have more socially cohesive communities, and enjoy numerous other advantages. Nationwide, such communities have effectively resisted developments that threaten the quality of the neighborhood. High property values in such neighborhoods, other factors being equal, reflect the benefits residents receive.

Metropolitan areas with substantial walkable neighborhoods also generate fewer vehicle miles of travel (VMT) than areas that are more auto oriented. Fewer VMT means lower air pollution and other undesirable side-effects of auto travel. FTA calculates that the 80 million Americans who live in transit-intensive metropolitan areas save $20 billion in auto costs each year. They also have travel patterns that result in less pollution, emitting 200 million fewer pounds of hydrocarbons and 272 million fewer pounds of nitrogen oxides annually.

Transit serves as a vital thread in the interwoven fabric of urban infrastructure. Like school teachers, firefighters, police officers, and other public servants, transit professionals are a crucial yet often overlooked source of civic safety and well-being. Infrastructure investment is often undervalued. The most important reason infrastructure is undervalued is the difficulty of tracing the benefits that flow from infrastructure and properly attaching value to these benefits. Yet when a Civil War-era water main rupture under a city street, or a nineteenth century bridge collapses because of deferred maintenance, the folly of ignoring infrastructure investment -- and re-investment -- becomes painfully clear.

Transit service is invaluable in emergency situations. For example, in 1989, the San Francisco Bay Area Rapid Transit System (BART) played a key role when the area’s bridges and freeways were devastated by the Loma Prieta earthquake. During the month that the San Francisco-Oakland Bay Bridge was closed, BART ridership rose from 200,000 per day to over 320,000 per day. After the Bay Bridge reopened, BART ridership stayed at about 250,000 per day, retaining over one third of the new ridership generated during the emergency. Similarly, in 1994, transit came to the rescue of Los Angeles after the Northridge earthquake immobilized many motorists. Finally, in 1994, following an underground tunnel flood in Chicago, transit moved over 750,000 people in less than two hours without incident.

Transit Conditions and Investment Needs

Investment levels can determine whether transit succeeds in alleviating congestion, ensuring low-cost basic mobility, and creating livable cities. Congress requires the Department of Transportation to prepare a biennial report on transportation investment requirements. U.S. DOT recently issued the 1995 edition of this report called the Status of the Nation’s Surface Transportation System: Conditions and Performance. It reviews the condition of the nation’s highways and transit systems and establishes the investment levels necessary to maintain and improve transportation in the United States.

United States Transit

In some areas, a single transit agency operates more than one mode (e.g., bus and rapid rail)

According to the 1995 report, just maintaining the nation’s transit facilities and equipment in their current state of repair and to meet projected increases in travel demand requires all levels of government to spend a total of $7.9 billion each year over the next 20 years. These estimates are important for assessing whether planned transportation investments can meet the nation’s need for economic competitiveness, traffic congestion management, access to jobs, and clean air.

This amount of investment is insufficient, however, to improve transit above its current quality of service. To eliminate the current backlog of unmet investment needs and modernize and rehabilitate the nation’s bus and rail vehicles would require an annual investment of $12.9 billion. This would allow transit systems to guarantee most rush hour riders a seat and shorter waiting times for buses and trains.

In 1995, investment in transit capital totaled nearly $6 billion, enough to maintain current conditions, but insufficient to either improve conditions or add service to absorb increased transit travel demand.

Federal Transit Administration FY 1995, FY 1996, and Proposed FY 1997 Budgets
($ thousands)

FTA Funding Category	FY 1995	FY 1996	FY 1997
Formula Grants	2,491,911	2,052,925	2,151,972
Urban Formula Operating	710,000	400,000	500,000
Urban Formula Capital	1,589,836	1,491,244	1,481,871
Elderly and Disabled	59,152	51,609	54,754
Non-Urban Formula	132,923	110,072	115,347
Discretionary Grants	1,724,904	1,665,000	1,799,000
Bus and Bus Related	353,310	333,000	274,000
Rail Mod	724,960	666,000	725,000
New Starts	646,634	666,000	800,000
Washington Metro	200,000	200,000	200,000
Interstate Transfer	48,030	0	0
Transit Planning & Research	93,079	85,500	85,500
University Transportation Centers	6,000	6,000	6,000
Administration	42,316	39,772	43,652
Violent Crime Reduction	0	0	10,000
Total	4,606,240	4,049,197	4,296,124

Federal Transit Assistance Levels

The FY 1996 reductions in transit spending will be difficult to offset through efficiency gains and increased state and local spending and threaten some important transit services. The President's proposed FY 1997 budget would restore needed funds for transit.

Effects on Urban Areas

The FTA's Urban Area Formula Grants provide funds for both operating and capital expenses to the 396 urbanized areas in the country. Between FY 1995 and FY 1996 Federal operating assistance to transit systems in these areas fell by 44 percent overall, from $710 million to $400 million. In many cases, cuts of this magnitude can not be offset solely through enhanced operating efficiencies. FTA estimates that unless states and local governments step in, over 300 transit systems will have to reduce service or raise fares 10 percent or more. Since state and local transportation agencies increased their share of all transit funding from 45 percent to 79 percent between 1980 and 1993, it may be difficult for them to come up with much additional money for transit. This is particularly true when responsibility for social service programs is being devolved to state and local government, and may increase the probability of more service reductions and fare increases in the future.

Innovative Finance -- Expanding Investment Resources President Clinton has signed an Executive Order directing each Federal agency to encourage private sector investment in infrastructure to promote innovative financing techniques. In September of 1994, FTA announced its innovative Financing Initiative and requested grantees to share information about their use of pioneering finance techniques in local transit projects. The Initiative showcased the efforts of transit agencies in multiplying the value of Federal Funds through innovative asset management and private sector involvement. FTA received 67 project proposals from 32 states and Puerto Rico representing a value of over $4 billion, with significant matching of public funds by private sector involvement. Innovatively financed projects involve many techniques, including leasing transit vehicles -- which can be more cost effective than a direct purchase; joint development of transit facilities which can multiply the commercial activity near transit hubs and bolster the economic well-being of communities; state revolving loan funds to facilitate a state vehicle purchase and leasing program, decreasing transportation providers capital costs through pooled purchases and vehicle leasing. The Innovative Financing projects funded to date have leveraged 2.5 times the Federal investment, showing that private sector--investors, developers, and the private capital markets--provides an important source of revenue for improved public transportation.

The FY 1996 budget reduced Urban Formula operating support by 25 percent for small urban areas with populations between 50,000 and 200,000 and by 48 percent for areas with population over 200,000. A recent Transportation Research Board study concluded that, in areas over 200,000, in population, offsetting these reductions in Federal operating assistance with higher fares would require raising fares by 20 percent to 30 percent over a three-year period. For transit operators in urbanized areas under 200,000 in population, fare increases of 60 percent to 125 percent would be required. Fare increases of this magnitude will cause a decline in ridership of 30 percent to 50 percent. These impacts can be mitigated by the restoration of funding proposed for FY 1997.

Effects on Rural Areas

Transit in rural America dramatically improved with increased funding through ISTEA. Ninety million rural Americans now have better access to medical care, groceries, and jobs. Today, rural transit is a notable success story, carrying riders a billion miles each year. This service is vital, especially for non-drivers like the 30 million rural elderly, working poor, and people with disabilities. But the FY 1996 Federal transit cuts place this service in jeopardy.

For instance, the nation's 1,100 plus rural transit providers take people to job training programs.Reduced transit funding will either divert job training funds to pay for transportation, or will eliminate transit that job trainees need to become productive participants in the economy. Likewise, without door to door transit service, many older and disabled residents in rural areas will be forced either into isolation or out of their homes into publicly funded care which is far more expensive than bus trips to the grocery or the doctor's office.

The FY 1996 budget reduced rural transit funding 17 percent, from $133 million to $110 million. The results of this cut are predictable: increased fares and reduced service. Rural travel options will be reduced or eliminated for those unable to drive or afford increased fares. Transit quality will further decline because of proposed human services funding cuts, an important source of funds for rural transportation services. The FY 1997 increase would help stem this decline.

Effects on Research and Technology

The FY 1996 budget reduced national research funding for transit by 12 percent, yet Federal transit research has played a key role in maintaining the nation's global competitiveness in developments such as electronic farecards and transit vehicles powered by low-polluting fuels. To sustain this success, the United States must continue devoting resources in this area now to ensure the emerging technologies are developed for markets both domestic and international with no further reduction in funding.

Recent advances in so-called smart transportation technologies promise to transform transit vehicles and service. For example, transit agencies are already using Advance Public Transportation System (APTS) to track bus locations and collect fares electronically, which gives transit riders more reliable service and reduces operating costs. APTS can provide more accurate, real-time information on bus schedules and routes, allowing passengers to plan their trips with little or no waiting. The Mass Transportation Administration of Maryland reports a 23 percent increase in on-time performance for bus routes using automatic vehicle location. In Winston-Salem, North Carolina, the transit agency has used automatic vehicle location and computer-aided dispatching to reduce dial-a-ride van costs by 9 percent--even as ridership has increased 18 percent.

In partnership with the transit industry, FTA is developing the Advanced Transit Technology Bus (ATTB), a project that will shave over 10,000 pounds off of a typical 30,000 pound bus. Savings from the weight reduction include lower fuel and brake costs as well as less road damage. The low-weight bus also uses advanced materials and a high-efficiency drive system to save fuel, reduce emissions, ease maintenance and provide a longer lasting non-corrosive body.

FTA is also developing a fuel cell bus. This bus has an engine twice as efficient as a typical diesel bus engine with negligible emissions and easier maintenance but none of the range limitations of battery-powered buses. Preliminary test results indicate that emissions from a fleet of 200 fuel cell buses would be equal to those of one conventional diesel bus.

For many people with mobility disabilities, transit is the indispensable lifeline to participation in the economic and social life of their communities. Federal Cuts Reverberate in Harrisburg, Pennsylvania The effect of reduced Federal transit funding is already apparent in Harrisburg, Pennsylvania. Within two weeks of the FY 1996 transportation appropriations bill's passage, Harrisburg's Capitol Area Transit System's board of directors convened a special meeting. They had to deal with the 48 percent reduction in Federal operating assistance which left a half-million dollar hole in their annual budget. The board took measures that now are faced by transit agencies nationwide, and raised bus fares 22 percent effective January 1, 1996. Ridership has already fallen by 5 percent and further service cuts are planned for August. Service Down, Fares Up for Montgomery, Alabama Transit Riders When the Montgomery Area Transit System (MATS) in Alabama confronted a $427,961 Federal operating assistance shortfall late in 1995, the bus system's board took prompt action, using over $200,000 from the city's maintenance department as one-time emergency funding. But after finding short-term funds to keep the system running, the MATS board still had to pull its belt so tight that there will no longer be midday bus service, only two routes will operate on Saturdays, and twenty-three of the agency's employees had their jobs eliminated. And even as service goes down, fares go up. Passenger fares have been increased 50 cents to $1.50 and student fares increased a quarter to 75 cents. A two-earner family commuting by bus could pay an additional $500 per year for their trips to work.

What Federal Administration Transit Funds Buy

FTA capital program funds are used to replace and expand the nation's fleet of buses and rail vehicles, restore and expand bus and rail maintenance and other facilities, and construct new transit lines. Together with a non-Federal share of about an equal amount, the federal capital investment supports about 220,000 jobs.

Buses. Together with local match, Federal funds support the purchase annually of about 5,400 urban buses and paratransit vans, 600 buses for rural transit systems, and 2,000 buses for special services for elderly and disabled persons. The new buses still are not enough to reduce the average age of the fleet. About 6,400 urban buses and paratransit vehicles, 2,000 rural buses and 5,300 buses for special services should be replaced each year just to maintain the current average fleet conditions. In addition, 12,800 urban buses and paratransit vehicles, 4,700 rural buses and 11,200 buses for special services are in service past the end of their useful lives.

Bus Facilities. Federal funds, together with State and local match, have been sufficient recently to support maintenance of existing bus garages and terminals, but not for many improvements or construction of new facilities. Nationally, there are 523 urban bus facilities, of which about 32 percent are in fair or poor condition.

Rail Vehicles and Facilities. Federal funding, and local match, supports replacement and rehabilitation of the existing rail fleet and restoration of rail facilities such as stations, track, and yards and shops. Nationally, there are 7,439 miles of track, 2,271 stations, and 119 rail maintenance facilities. About 73 percent of elevated structures, 41 percent of third rail, and 48 percent of maintenance facilities are in substandard condition, requiring major investment. Recent levels of Federal, State, and local funding have been just adequate to maintain the status quo of rail vehicles and facilities. Meanwhile, there is a backlog of 3,800 rail cars which are in excess of their useful life.

Bus and Rail Systems. Federal funds are being used to construct extensions of rapid rail, busways, light rail, and commuter rail across the country (see table below). These projects represent a total Federal investment of $4.6 billion, and will result in over 80 miles of new rail service which, together with substantial improvements in transit service, will provide about 150 million annual transit trips.

Federal Transit Administration
New Capital Funding Commitments	Amount ($ Million)
Atlanta--MARTA North Line Extension	$305
Baltimore--Light Rail Extensions	85
Boston--South Boston Piers Transitway (Phase 1)	331
Dallas--South Oak Cliff Light Rail	160
Houston--Regional Bus Plan	500
Los Angeles--Metro Rail Red Line (MOS-3)	1,416
Maryland--MARC Commuter Rail Extension to Frederick	105
New Jersey/Urban Core--Secaucus Transfer Station	444
New York--Queens Subway Connection	306
Pittsburgh--Airport Busway (Phase 1)	121
Portland--Westside Light Rail	590
Salt Lake City--South Light Rail	241
TOTAL	$4,604

Conclusion

Transit is vital to America's marketplaces--cities where American products and jobs compete in the global economic market. The savings generated by transit take several forms. Residents of the nation's transit-intensive areas already save $20 billion each year in transportation costs and improved transit would increase these savings. Transit creates access to jobs and keeps people connected to their communities. Across the country, low-cost transit services save tax dollars and promote economic opportunity for the 80 million Americans who do not drive because they are too young, too old, disabled, or cannot afford a car. Better transit would increase the $30 billion in annual benefits for transit-reliant Americans; benefits which come from the links transit creates to job opportunities, health care, and other essential services, all while lowering public social service costs.

Transit is a key to solving traffic gridlock. Strategic investments can lower the costs of highway congestion, adding to the $15 billion that transit already saves American taxpayers by reducing highway gridlock each year. Taken together, these savings are much larger than what is invested in transit each year by all levels of government.

In short, Federal transit spending represents an economically wise investment in our infrastructure and in the quality of life for the 200 million Americans who live in urbanized areas and the 30 million rural Americans who depend on transit.

This Report describes some of the benefits produced by transit in national terms. The table below estimates the value of transit's benefits on a local level for selected urbanized areas and compares them with total transit funding in these areas. In each case, the benefits of transit to the taxpayer far exceed its costs.

SOURCE: Federal Transit Administration Analysis

Special thanks to the following individuals who made this report possible:

Rich Steinmann, Fred Williams, Matt Welbes, Wendy Feuer and Jennifer Karp