Bus

Transit Funding, Elections Loom Large Over the Industry

Posted on June 16, 2011 by Alex Roman, Managing Editor

Page 5 of 5

Parsons Brinckerhoff
George Pierson
President/CEO

What are some of the key challenges facing transit properties?

No surprise, no secret; it comes down to three words: Funding, funding, funding. Obviously, with an economic downturn causing less revenue within state and local municipalities, there's less money available for all sorts and varieties of things, including transit. As a result, what we've seen is an overwhelming majority of agencies cutting back either by reducing service in some manner or raising fares, and obviously, all of them are looking to be as efficient as possible. So, the primary challenge, really, is to balance their budget, if you will. As we know transit properties generally are not self-supporting financially, so they rely on funds from outside the farebox. But, those monies outside the farebox are under the greatest pressure they've been in an awfully long time.

The real challenge is the combination of that funding crunch and trying to do more with less, juxtaposed with what is an increased demand on their systems. Because of the economic crunch combined with significantly higher gas prices these days, many have seen an increase in ridership, so they get hit on both sides. They have a funding crunch, so they have less money to do what they were doing previously, but now, they are being demanded to do more because of an increase in ridership. If that wasn't enough, if you overlay the delay on the surface transportation program funding, it just creates more uncertainty, if you will, for general transportation funding, including that which might be available for transit...it is quite difficult to be head of a transit agency these days.

What trends are you seeing as agencies try to, for lack of a better term, stem the flow?

Obviously, every transit agency has different challenges, different ridership, different geography to address, so they all are going to come up with their own unique way of addressing and trying to close a funding gap. From an operating perspective, I think many are looking at reduced service. Some are increasing fares. But, of course, there's a tremendous effort to be more efficient to drive efficiencies through the system.

The second is to look for additional funds to help support capital programs. Some of that has been done through local ballot measures to either raise taxes or issue bonds, many of which have been supported by the local electorate. Not every agency has the ability to do that so freely and so easily, so some of them, then, have to begin knocking on the doors of their funding sources, and really, be in the queue for everyone else who's knocking on those doors to compete for funds.

Another challenge that is probably a bit more acute these days than it has been in the past, although it's always been there, is the concept of whether transit as a mode of service is one that should be supported. I think while there has always been the transit versus highways debate for funding for all sorts of other reasons, I think there's a sharper criticism of transit from sort of this more recent upswing of fiscal conservatism, if you will, because transit by nature doesn't pay for itself. Because of that, it becomes an easier target for fiscal conservatives to say, 'well, if a system is not paying for itself, then it clearly is one that is not necessarily wanted by the local population, so why should we continue to support it?' My own personal view is that is a very short-sighted way of looking at transit. It creates tremendous benefits to the community beyond simply balancing its own budget. However, I will say that there is more criticism now coming from fiscal conservatives then there has been in the past, and again, that creates a challenge to transit agencies to continue to show their relevance in helping drive local economies.

STV Incorporated
Rich Amodei
Sr. VP/chief strategic growth officer

What impact has the Obama Administration had on public transportation?

For the first time in many years, investing in the nation's transportation infrastructure is at the forefront of the Administration's agenda and it's not a moment too soon. In the President's most recent State of the Union Address, he focused on the need for more and continued investment in railways, roads and bridges to support reliable and efficient transportation of people and goods across America to promote economic growth and maintain our competiveness with countries in Europe and Asia. I believe that he is following through on his commitment and this is a huge win for the country and our industry as a whole. His efforts to bring high-speed rail to the nation continue to move forward even with the recent setbacks in a few states where significant funding was turned down. It was encouraging to see that these funds are now being redirected to other states and to Amtrak with a focus on the Northeast Corridor. Obviously, the Administration is transit friendly, and the nation and the industry can clearly see the projects on the horizon and the benefits they will bring to bear.

Have you seen an influx of business in your industry as a result of this focus?

Yes, we have. STV was selected by the Federal Railroad Administration as the project management oversight consultant for the Florida high-speed rail system prior to its cancellation, and we continue to serve in this capacity for high-speed rail investments in the Pacific Northwest from Portland to Seattle. In the west, we are the prime designer for the first leg of the California high-speed rail system from Anaheim to Los Angeles that will provide the capability for shared corridor service accommodating Amtrak and express commuter rail. These programs represent significant new business that did not exist in the past and they continue to evolve and move forward.

What are some of the growing trends you are seeing in the industry?

One of the most obvious trends is the fact that fuel prices are rising significantly, with gasoline approaching $5 per gallon, and this will have an impact on the industry to meet the demand for more transit riders. Many cities across the country are experiencing large increases in ridership, with some approaching or passing the 10 percent mark. This will put additional pressure on the nation and the industry to continue the increased interest, consensus and investment in public transportation infrastructure as an option to the automobile. I think we are already seeing the effects of this dynamic based on a flurry of new opportunities that have us and the rest of the engineering community busy preparing responses for new planning, design and construction projects not only in the U.S. but north of the border into Canada, where investments in public transportation are increasing.

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