Management & Operations

Get the money flowing

Posted on October 18, 2006 by Frank Di Giacomo

The job of running a transit system has never been more difficult. Sky-high fuel prices; concerns about security; difficulties in obtaining local, regional, state and federal funding for operating and capital expenses; rising insurance costs and an inability to provide additional service to meet rising demand. These are some of the challenges that top transit executives are facing in a post-9/11, high-fuel-prices-are-here-to-stay world.

In our second annual general manager survey, we asked top transit executives at agencies of all sizes to name the greatest challenge facing their system. Not surprisingly, a dearth of funding for operating costs and capital expenses was by far the most common answer. Of course, five years ago, they would have given the same answer. Ten years ago, the same answer. There never seems to be enough money to meet the needs of providers of public transportation!

The same as it’s ever been
Just because the answer is always the same doesn’t mean that the respondents lack imagination. Funding is a key issue in this industry and, likely, will remain a key issue as long as public transportation is offered. Thirty years from now, long after SAFETEA-LU has become an acronym that no one can translate, transit systems will be decrying the inadequate subsidies provided by local, regional, state and federal agencies.

The current situation, however, does create some extraordinary concern. Why? Because demand for transit services is especially strong right now, often outstripping jurisdictions’ resources to provide additional service.

Earlier, I mentioned SAFETEA-LU, the transportation bill that provides $52.6 billion for transit investment through 2009. Many of us in the industry thought the approval of the heavily delayed measure last year would help to unleash a strong surge of bus procurement. It hasn’t. At least not yet.

What we’re hearing from transit executives is that high fuel costs have exacerbated funding problems. In some cases, capital funding has been converted to operating dollars to help cover shortfalls in the budget for fuel. This shifting of funds delays capital replacement and expansion, handcuffing agencies that want to buy more buses and railcars to meet growing service demand.

Another complaint that we’re hearing is the process of obtaining federal funding has been daunting, at best. Expectations that the better-late-than-never approval of SAFETEA-LU were going to open the floodgates for federal transit investment have been severely scaled back.

One general manager reported that 20 of his buses are eligible for retirement, which wouldn’t draw much attention except that those 20 buses represent nearly 40% of his fleet! But he can’t find funding for bus replacement.

We’re all in this together
Bus and railcar manufacturers, as you might expect, are feeling the pain of their customers. With federal funding slow to make its way downstream from Washington, D.C., and local and state funding providing scant relief, transit systems are reluctant to order new rolling stock.

But that doesn’t mean that transit systems should not be talking with bus and railcar manufacturers about this problem. Many of these supplier representatives, especially those who are APTA Business Members, have access to information about local, state and federal funding sources that you’re probably not aware of. With their resources and connections, they can help to get the money flowing.

In addition, transit agencies also need to stay abreast of the FTA rulemakings that impact the flow of SAFETEA-LU funds. More than that, they need to provide the FTA with their input during the comment period, even if it’s just to say that the funding process needs to be simplied so federal dollars can make their way to the bottom line — improved public transportation.

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