In recent years, many public transit agencies have been facing fiscal cliffs—sharp declines in revenue that threaten their ability to maintain service levels. These financial challenges are caused by a combination of factors, including inflation and rising costs; flat or reduced sales tax; the end of COVID-19 relief funding; deferred maintenance; reduced state appropriations; costly or unfunded mandates; service cuts; and the complex politics that surround public agency funding and operations.
Consistent and reliable funding is vital for transit agencies to maintain financial stability and continue providing essential services to their communities. In response to this evolving fiscal landscape, agencies must adopt bold and forward-thinking strategies that can help them achieve sustainable operations. Read on to hear more from transit planner Erik Mumm on strategies public transit agencies can implement as they look to the future.
Public transit agencies must adopt a proactive approach, starting by clearly defining the scale and timeline of the fiscal cliff and developing a projection of what sustainable funding could look like. Agencies must also recognize the value of preemptively conducting internal cost-saving exercises to assess existing cost efficiency—either by conducting in-house reviews or by engaging an external auditor. These assessments should address service and non-service-related expenses. For maximum effect, assessments can be paired with a forthright report detailing the service cuts that will need to take place if the fiscal cliff remains unresolved.
Following a review, agencies can implement a variety of operational cost-saving measures, including streamlining services, optimizing their workforce, and investing in a comprehensive maintenance regime—which can help extend asset lifespan and lessen the costs of unforeseen repairs. Agencies can also look to new technologies to optimize service and maintenance efficiencies as well as consider revising fare structures.
Additionally, agencies should diversify their revenue streams to secure long-term financial security. This can be primarily through broadening funding sources—such as partnerships, advertising, and comprehensive fare policy reviews—and expanding the pursuit of grant opportunities. Agencies can further explore strategies to maximize land value, like land banking and transit-oriented development, to help generate new revenue streams and offset operational costs. However, this must be done in a way which maintains affordability and access for those who need it most.
Equally important as operational and fiscal strategies for transit agencies is to proactively cultivate strong partnerships. Agencies can build grassroots coalitions with business alliances, community-based organizations, and public advocacy groups to build public support in favor of maintaining and expanding transit in communities.
Luckily, transit can make its case as a public benefit with data. By leaning into the power of ridership data and economic impact reports, agencies can demonstrate the value of public transit to stakeholders and make a compelling case for increased funding. This can also help align agencies with broader community priorities, like economic development. With a broad base of community and business support, as well as the data to back it up, agencies can be ready to have productive conversations with policy makers.
Initiatives such as Metro’s Better Bus Network redesign, which reimagined Washington Metropolitan Area Transit Authority’s (WMATA) bus network to better serve the region’s evolving demographic growth, demonstrate how agencies can enhance service effectiveness while making cost-neutral changes. At the same time, WMATA focused on publicly cutting costs across the board—leading to public and policymaker support for more stable funding sources.
Serving as a trusted advisor to Metro for the Better Bus Network Redesign, Kimley-Horn supported the creation of a more equitable transit network that better connects Metro customers across the greater DC area.
As public transit agencies plan for a sustainable financial future, prioritizing service optimization and strategic network redesigns is essential. Transit is a necessity for economic growth and regional prosperity, and it will continue to be more so as metro areas continue to grow.
It is essential to partner with a consulting firm that understands the fiscal challenges agencies are facing. With an approach that blends cost efficiencies, diverse revenue streams, grassroots support, and data-driven advocacy, agencies can build public and policymaker consensus to safeguard funding that will stay the course.
