Planning Magazine

On the Edge of a Fiscal Cliff: Transit Agencies Seek Solutions Post-COVID

Big-city transit struggles amid mounting budget pressures, lost ridership, and changing customer expectations while smaller systems are leading through innovation.

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Pallbearing protesters carry a Bay Area Rapid Transit casket through downtown Oakland, California, to call attention to the need for public funding for transit. Photo by Adam Pardee.

Philadelphia's buses and trains are running on borrowed time. Three years after the COVID-19 pandemic caused transit ridership to plummet nationwide, passengers still have not returned to their routines from the "Before Times." Ridership on public transportation provided by the Southeastern Pennsylvania Transportation Authority (SEPTA) is still well below 2019 levels across the board. Bus ridership recovered the most, but its June 2023 numbers are three-quarters of what they were before the pandemic. Regional rail is at 58 percent, the subway system at 51 percent.

So far, SEPTA has been able to keep its trains and buses running without major service cuts or fare hikes, thanks to pandemic-era subsidies from the federal government. But that money is set to run out in April 2024, and nobody is expecting riders — and the fares they pay — to return to full force by then.

"We need help from our funding partners in Harrisburg (Pennsylvania's capital)," said Pasquale Deon Sr., SEPTA's board chair, when the agency passed its annual budget in June. "The looming fiscal cliff threatens SEPTA's ability to provide reliable day-to-day services — let alone run extra trains when there is an emergency like the I-95 collapse or ramp up for the 2026 FIFA World Cup." As of August 2023, any relief from Pennsylvania state government is tied up in protracted budget negotiations.

The fiscal cliff that looms ahead for SEPTA and other big-city transit agencies is only one example of how societal forces unleashed by the pandemic are changing day-to-day business for transit agencies and, by extension, the communities they serve. Changing commuting patterns brought on by the rising popularity of work-from-home have shaken long-held assumptions about which services to provide. Agencies are also wrestling with staffing shortages and the increased prevalence of violence, drug use, and behavioral issues in public spaces. On the flip side, the agencies can tap into billions of dollars in new federal infrastructure money, and many advocates, galvanized by free-fare policies during COVID shutdowns, are pushing to get rid of fares altogether.

"Post-COVID, the critical role that transit plays is not going to change, but we have to rethink how we do things and how we make decisions," said Leslie Richards, SEPTA's general manager, during a July webinar hosted by the Volcker Alliance and Penn Institute for Urban Research. "Cities and regions and transit are intrinsically related. Our futures are tied together. The stronger the transit system is, the stronger the region that it operates in is bouncing back."

An uneven financial picture for big agencies

Many of the busiest transit agencies in the country — Boston, Chicago, and Washington, D.C., among them — face similarly daunting financial situations as Philadelphia. They depend heavily on fare revenues, especially for rail systems that attract the kind of wealthier suburban commuter who is now only going into the office a few times a week. And, unlike small transit systems, they usually can't use federal money to pay for day-to-day operations.

Protesters pause their mock funeral procession for BART in front of San Francisco City Hall. Large transit agencies like the Bay Area’s face difficult financial situations. Photo by Sergio Ruiz.

Protesters pause their mock funeral procession for BART in front of San Francisco City Hall. Large transit agencies like the Bay Area's face difficult financial situations. Photo by Sergio Ruiz.

New York's Metropolitan Transportation Authority (MTA), by far the biggest transit agency in the country, would be in the same boat, too. But state lawmakers came to the agency's rescue this past spring with a deal to dedicate $1.1 billion a year to the agency, including a one-time payment of $300 million. The state has also promised to share a portion of casino revenues with the MTA.

During the July webinar, Janno Lieber, MTA's chair and CEO, said he started pushing for relief more than a year ago because it would be "insane" to impose major cuts in New York. "We have 85 percent of our commuters [using] mass transit, about 5 percent walk, and only 10 percent drive, which is a rich man's game," he said. "It made no sense to wait until you were facing the choice of massively cutting service or massively raising fares or doing layoffs. It made no sense."

California lawmakers also cushioned the blow for major transit agencies, such as San Francisco's Bay Area Rapid Transit, which was facing large shortfalls. But with the state facing major budget troubles of its own, the package was less generous. It included $1 billion in relief and gave the agencies the option of repurposing $4 billion originally meant for infrastructure improvements to pay for operating expenses instead.

Smaller agencies build out

Eighty miles south of the Grand Canyon amid Arizona's ponderosa pine forests, the Mountain Line transit agency runs nine bus routes, paratransit, and on-demand services for the Flagstaff area. Heather Dalmolin, the agency's CEO and general manager, says Mountain Line does not face a fiscal cliff like big-city agencies do, but it is still facing mounting financial pressure.

Flagstaff, like most of Arizona, is growing in population. That growth — much of it fueled by development around Northern Arizona University — benefits Mountain Line because it generates more sales tax revenue that the agency depends on.

But with more development comes more demand. Dalmolin says the transit agency will likely have to ask voters for an increase in the sales tax in coming years to expand services and to keep up with escalating costs for labor, fuel, maintenance, and liability insurance. She'd like Mountain Line to expand hours and to potentially offer a connection to a new hospital that is not currently on a bus route. The conversation about those improvements started before the pandemic, "as the next evolution of what transit needs to look like in our community" after two decades of having the bus service in place. The city of Flagstaff is even in preliminary discussions to include transit access as a criteria when considering new developments, Dalmolin adds.

"We're at a very exciting time in our community where [we are] making forward progress in ensuring that transit is viewed as valuable as the streets are viewed," she says. The agency has generated community support by keeping buses and bus stops clean and making sure that parents know the buses are safe enough to take their kids to school.

The Mountain Line operates buses, paratransit, and on-demand services in Flagstaff, Arizona. The agency is pinched trying to keep up with rapid population growth, but new development also helps to deliver much-needed funding in the form of sales-tax revenues. Photo by David Fisher/Flickr/drum118.

The Mountain Line operates buses, paratransit, and on-demand services in Flagstaff, Arizona. The agency is pinched trying to keep up with rapid population growth, but new development also helps to deliver much-needed funding in the form of sales-tax revenues. Photo by David Fisher/Flickr/drum118.

In Conroe, Texas, a fast-growing city of nearly 100,000 people north of Houston, the challenges facing the city-run Conroe Connection start with fundamental infrastructure. Shawn Davis, who oversees the transit service as the city's transportation assistant director, says one of the biggest improvements they've made is building out sidewalks along one of the city's main corridors. That allows people to get to bus stops, but it also gives them another option for getting around the largely rural area by having a safe place to walk. For the transit agency, it means that riders who otherwise depended on on-demand paratransit services because of narrow roads or ditches in their way can now take fixed-route buses.

Bus ridership has been increasing since the agency formed a decade ago, and it barely even slowed down during the pandemic, Davis says.

"We didn't have to convince our community as much as we did before how needed public transit was," she says. The agency never cut back its services. "For me, it was a really good kind of soapbox position. I was able to prove that, even if the city shuts down and everyone kind of goes into their private reclusive spaces, you still require services. ... With everything slowing down around us, for our community to look out their windows and still be able to see us going was really an amazing thing. It just made a statement for our program."

Test-driving new ideas

The tumult in the transit industry has given both public officials and transportation professionals license to experiment with new ideas or to finally try out long-discussed proposals.

Perhaps the most striking example has been the push in several cities to provide bus or rail service for free. Boston Mayor Michelle Wu made the slogan "Free the T" (a reference to the region's transit system) the rallying cry of her 2021 campaign, and she quickly set to work expanding free-fare bus routes once in office. Seattle Mayor Bruce Harrell created a program to help residents of public housing ride for free. The city council in Washington, D.C., voted to make buses free in the capital city, but that effort is on hold for now because of funding concerns.

In the Denver area, the transit agency is lowering fares across the board in an effort to attract more riders. The Regional Transportation District (RTD) expects a 13 percent increase in ridership because of the changes, which also include free fares for youths and deeper discounts for low-income riders. Fare revenue could decline by 20 percent, but that's not as much of a concern for Denver as in other big systems. Fares make up only 8 percent of RTD's revenues, while 76 percent of the agency's funding comes from sales and use taxes.

Debra Johnson, the agency's CEO and general manager, said last year that the many changes following the pandemic could change people's perception of transit. "Transit industries have the chance to rewrite old narratives about the purpose of public transit; no longer will transit agencies be measured solely by the number of customers they can transport but by the value they deliver to the communities they serve," she wrote in a 2023 budget proposal. "This exciting and important discussion of 'value over volume' continues to unfold across the [country] at agencies large and small."

The new Sunrunner BRT system in St. Petersburg, Florida, connects riders to retail, restaurants, the beach, and major institutions. It’s not just for commuters, which is a concept that older systems have been struggling to adapt to since the pandemic began. Photo courtesy of City of St. Petersburg.

The new Sunrunner BRT system in St. Petersburg, Florida, connects riders to retail, restaurants, the beach, and major institutions. It's not just for commuters, which is a concept that older systems have been struggling to adapt to since the pandemic began. Photo courtesy of City of St. Petersburg.

Martin Catala, the program director for transit management and innovation at the Center for Urban Transportation Research at the University of South Florida, says that changing commuting patterns will force agencies — especially larger ones — to reconsider the kinds of projects they pursue.

"When you build something that meets the needs of your community, people start thinking of the benefit of it rather than just the cost," Catala says.

One good example of those new kinds of services, he says, is the "wildly popular" SunRunner bus rapid transit (BRT) route in St. Petersburg, Florida, which debuted last October. In March, the service carried 115,000 people, or about 3,700 a day. The Pinellas Suncoast Transit Authority is already buying more buses to meet demand, and it's expanding the route with money left over from the route's original construction.

The route is the area's first foray into bus rapid transit, an increasingly popular kind of bus route that combines the passenger convenience of rail systems with the familiarity and lower costs of bus routes. In St. Petersburg, turquoise buses run along a 10-mile route that connects beaches, stores, restaurants, bars, a baseball stadium, a hospital, a university, and the recently redeveloped St. Pete Pier. Rides are free — at least through the fall — and buses come every 15 minutes during the day and every 30 minutes from 8 p.m. until midnight. They have semi-dedicated lanes, signal prioritization, level boarding, Wi-Fi, on-board bike spaces, and limited stops.

Negotiations to build the SunRunner took more than a decade, Catala notes, with the transit agency pushing the BRT concept, the metropolitan planning organization (MPO) securing federal funding, and the three municipalities along the route sorting out the gritty details of parking and signal prioritization and sometimes even changing land use.

The bus service has changed the dynamic of the entire area. Apartment and condo buildings are sprouting up along the SunRunner route. Local residents are parking downtown and catching the bus to get to the beach. Tourists are hopping on from their hotels instead of renting a car to get to dinner.

"There are people that are using it to go to the grocery store. They're actually using it for non-work related trips," Catala says. "I think that's instructive to what the larger transit systems have to start considering: They are no longer services just for commuters. They need to diversify their market opportunities."

And other communities in Pinellas County want to replicate the success of the SunRunner, Catala adds. To get the SunRunner up and running, top officials from the MPO met regularly with a team from the transit agency, and each of them in turn met with city officials. "The key to that process that made it work so well was the heartfelt, hard-fought negotiation with the municipality," Catala says.

"The message that I think is really important for planners is to hone those skills, the ability to curate people's opinions and get them on the same page. That's actually the really hard work of planners," he says. "The geometric elements, that's a version of math. You can use a lot of tools to get that done. But you can never get a tool to convince two people to agree or two communities to agree to a vision. That's hard work."

Daniel C. Vock is a senior reporter at Route Fifty, where he focuses on transportation and infrastructure. He has covered state and local government for two decades. He is based in Washington, D.C.