Talk of a looming "fiscal cliff" and increasing funding for transit are hot topics in California this year, but as with everything about California the story is very different depending who's talking.
The San Francisco Bay Area, for example, had some of the highest transit ridership in the state before the pandemic, and many of the area's transit agencies had a high farebox recovery rate. That is, they tended to get more of their total revenue from the fares paid by their passengers than other agencies like LA Metro, which relies more on other funding sources like local tax measures. The Bay Area agencies were rightfully proud of this high recovery rate; after all, transit agencies are required to meet a certain level of fare collection to receive funding from the state. That fact has contributed to this becoming a defacto measure of the quality of the transit service and of the agency itself.
But in the post-pandemic environment, the agencies that relied most heavily on farebox recovery were the ones that suffered the most when ridership cratered, and they are also the ones who have struggled financially in the wake of the slow return to work. That "fiscal cliff" that transit advocates warned about was real, but it affected transit agencies unevenly.
Nevertheless, California's transit financial policy follows from a premise of "fairness" that says: when the state gives out money, everyone should get a share of it. "The logic of financial policy says that we like to spread money around," said UCLA professor and Institute of Transportation Studies (ITS) Director Brian Taylor at a SPUR talk on the topic.
"But state policy favors distributing money to voters, not transit riders," he said. That means that population-based distribution of revenue only seems fair on the surface. It could end up benefiting a few bus lines in areas where public transit is much more expensive and inefficient, for example - think suburban sprawl - more than the heavily used, struggling transit services in areas where it is desperately needed and heavily relied on by large portions of the population.
"We shouldn't imply that every transit system is in the same situation, because they're not," said Taylor.
Taylor was participating in a blue-ribbon panel made up of "some of the top transit thinkers in the state," according to SPUR's Transportation Policy Director Laura Tolkoff. Its focus was on what the state's role in transit is versus what it should be. A quick recap of transit funding history by Juan Matute, Deputy Director of UCLA's ITS, outlined the early use of state transit funding for deferred maintenance, which then expanded to include some operations but always with the goal of self-sufficiency; the idea was to keep strict limits on transit subsidies.
Thus the situation where farebox recovery became a major marker of how well a transit agency is performing.
"Those strings attached to transit funding are outdated," said John Gahbauer, ITS Research Consultant. "There have been cases where that policy has incentivized an agency to reduce service in order to increase their funding, for example" - not the outcome anyone is looking for. He suggested that one way the state could help build transit would be to remove farebox recovery ratios from funding formulas.
There is certainly precedent: according to Gahbauer, no other state uses farebox recovery ratio as a performance measure for funding.
Meanwhile state goals have been changing and expanding, increasing expectations of what a transit agency is and what it is supposed to do. Rather than just be a service carrying as many passengers as possible, transit is also supposed to help the state clean up the environment, meet climate goals, provide mobility in an equitable way, update technology to make fare payments easy and inexpensive, keep riders and operators safe and vehicles clean, and even provide services and outreach to houseless people who use the system as a rolling shelter.
California's existing transit funding policies are not aligned with many of these goals, according to Gahbauer.
Both Taylor and Matute made connections between transit and housing. The difficulties transit is facing is "connected to our failure to build housing," said Taylor. Now California has begun pushing cities to build more affordable housing, via policy and zoning changes. "That's been controversial and caused a lot of pushback," said Taylor, "but it will also help increase transit ridership." That is because building more affordable housing in dense urban areas where transit makes the most sense will solve many problems: housing, transit efficiency and costs, and mobility.
But the state has not yet adopted the same kind of advocacy in regards to transit. Kari Watkins, a UC Davis engineering professor, pointed out that if the goal is to increase transit ridership - to meet climate and mobility goals, for one - "we have to make it an easy choice - as easy and convenient as driving." That will only happen when transit is faster and less expensive than driving - which means driving needs to be made slower and more expensive to the individual driver. Her suggestion was to make transit a priority in everything, including infrastructure and funding, and especially in terms of the amount of space allocated to it.
"It's important for the state to recognize it has some complicity in this situation" in which policies and regulations have encouraged ever-widening sprawl and car dependency, said Matute. The whole situation sets up an argument that general fund dollars could be used for transit operations. He suggested the creation of a new funding program specifically to subsidize operations in high-priority corridors where housing policies are triggering density bonuses, for example.
He also outlined a scenario where the default would be to prioritize high-quality transit in everything. In CEQA, in planning, in building; where the default is that even a bus shelter is automatically approved, for example. "Right now there are few consequences for local jurisdictions that complicate that process for transit agencies," he said.
A statewide, transit-first policy, in writing, would incorporate all of these notions.
For more on the way transit funding works in California now, read "Options for the Future of State Funding for Transit Operations in California," a research paper by Gahbauer, Matute, and Taylor.
