So Far, Stimulus Is Leaving Mass Transit Behind

(Bloomberg) -- As the U.S. government signals its willingness to come to the aid of airline and cruise industries wounded by the novel coronavirus, another transportation sector is desperate to signal its distress to federal lawmakers. And the case for support rests, in part, on climate change.

Mass-transit systems across the country are taking a violent financial hit from Covid-19. That’s because these systems are largely dependent on fees from riders which are, of course, way down. New York City’s Metropolitan Transit Authority, the nation’s largest public transit system, reports that ridership fell 60% on subways and as much as 90% on commuter trains. Washington, D.C. says its mass transit lost 100,000 riders in the course of a week. In San Francisco, rail ridership on Bay Area Rapid Transit was also down 90% as of Tuesday.

Protecting mass transit is important in the short run to keep essential industries such as health care up and running. But to advocates, bailing out mass transit also makes sense for the long term. “Transit is essential to combating climate change and transitioning to net-zero [emissions],” says Scott Goldstein, policy director for the grassroots advocacy group Transportation for America. “And if we do not support them today in crisis, they will not be there for us in the future.”

On Wednesday, Goldstein’s group—along with a broad coalition of transit agencies, local elected officials, and other advocacy organizations—sent a letter to congressional leaders asking for nearly $13 billion for commuter train and bus systems as part of the stimulus. (Separately, the MTA has requested a $4 billion dollar bailout because of the virus.)

As previous financial crises have shown, mass transit suffers after a downturn.  While many municipal systems get federal money, by law all but the smallest systems can use those funds only for capital expenditures, such as new equipment, rather than operating expenses. (The federal government did recently allow a waiver so federal funds can be used for extra costs associated with the virus, such as extra cleaning.) Still, the vast majority of costs are for salaries for employees, which cannot be easily adjusted without layoffs.

That leaves large transit systems dependent on the farebox—and the lockdown in response to the global pandemic has all but eliminated that revenue. Yonah Freemark, a doctoral student at the Massachusetts Institute of Technology, is tracking which agencies are most dependent on fares. “In general,” he says, “the biggest agencies are the most dependent.”

New York’s MTA provided more than 5.4 million rides on the average weekday in 2018, about twice the number of daily airline passengers in the U.S. The MTA gets 53% of its $11.2 billion annual budget from fares, according to Freemark’s analysis of monthly figures from the U.S. National Transit Database, and spends 77% of that on labor costs. Bay Area Rapid Transit serving San Francisco gets 74% of its revenues from riders, spending three-quarters of its $650 million annual operating costs on its workforce.

Social distancing has meant that mass transit is experiencing a steep fall off. “We are already seeing the financial impacts,” says Steven Higashide, director of research at the Transit Center, a private foundation that advocates for public transit. He says ridership across the country is already down on average between 30% and 60%.

Even transit systems not so dependent on the fare box are suffering because the alternative source of revenues—local sales and payroll taxes—are also depressed and look to stay that way for the foreseeable future. History suggests things will get worse even when ridership returns. “As local and state tax revenues cratered during the recession of 2008-2009,” Goldstein noted in a blog post this week, “transit agencies were forced to make enormous cuts to service and lay off thousands of employees, which had devastating impacts on riders and communities.” Atlanta’s mass-transit system was so hard hit, he wrote, that it temporarily cut nearly 50% of all the bus routes in the city.

The American Recovery and Reinvestment Act of 2009,  the stimulus package after the fiscal meltdown of 2008, included $48 billion for transportation infrastructure, but only $8.4 billion was specifically tagged for mass transit and that was for mostly restricted to capital improvements rather than operating costs. The MTA required an additional bailout from Albany as well as a 10% fare hike.

President Donald Trump on Wednesday said the airline industry “would be the number one” priority of his $1 trillion stimulus package, and Bloomberg News reported that the Treasury Department will propose a $50 billion lending plan. The cruise industry is also seeking help as a portion of the additional $200 billion “stabilization assistance” sought by the White House.

Rescuing fossil fuel-dependent industries with government spending outrages transit advocates. “I can’t think a more misguided sense of priorities than giving a taxpayer bailout to the airlines,” says Billy Fleming, Wilks Family Director of The McHarg Center of Urbanism and Ecology at the University of Pennsylvania. His view, shared by many transit backers, is that airline executives made profits by squeezing consumers into uncomfortable conditions and then squandered that money on stock buybacks.

Fleming is part of a broad coalition that was pushing for a Green New Deal that prioritizes transit even before Covid-19 reached the U.S. One of the members, Data for Progress, released a new poll showing that a majority of Americans support increased funding for public transit, although Democrats supported transit spending by a far larger margin.

That leaves transit advocates longing for a stimulus plan that encourages the sort of mass-transit expansions needed to meet ambitious climate goals, not just to revive industries with large carbon footprints. Transportation “contributes more to greenhouse gas emission than any other sector of the American economy,” says Fleming. If stimulus is “done right, it could be a very important lever for decarbonizing our environment.”

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