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Ailing transit agencies to keep pandemic funding in debt ceiling deal

By Admin

Reported by Ian Duncan and Justin George for The Washington Post.

Beleaguered transit agencies will keep access to unspent pandemic aid even as billions in other federal relief funding was pulled back in the debt ceiling deal, a special reprieve that reflects the deep problems still facing the nation’s bus and train networks.

A push by House Republicans to drain dozens of federal accounts of unused coronavirus relief funds set off a race among transit agencies in recent weeks to sock away remaining money. As much as $3 billion in transit aid was at risk, according to the most recent Transportation Department data, although the final figure probably would have been smaller as agencies tagged more money for spending.

Congress pumped money into the transportation industry during the pandemic, providing tens of billions in aid to transit agencies, airlines, airports and road builders. But while drivers quickly returned to roads and airline passengers rushed to book travel again, transit ridership has recovered slowly. That has left bus and rail agencies dependent on the federal lifeline, with major transit providers expected to rely heavily on pandemic funds to top off their budgets in the coming year.

Greg Regan, president of the Transportation Trades Department, a labor coalition, said the money is sorely needed as transit agencies face tight finances.

“Pulling back this funding would have worsened an already tenuous situation for everyone who depends on our transit systems,” he said.

Among the biggest risks is what experts call a transit death spiral, in which agencies have to make service cuts to balance their books, only for those cuts to push away more riders, deepening the problem.

It’s not clear who secured the protection of transit money, but labor unions representing transportation workers had pressed the White House to guard the aid. It was spared even as some unspent money for highways and the aviation industry will be taken back.

The White House did not respond to questions about the funding.

Jazmine Kemp, a spokeswoman for Rep. Dusty Johnson (S.D.), one of the Republican negotiators for the agreement, said protecting pandemic aid was not a priority for the congressman.

“If anything, he would’ve preferred to see it all cut,” she said.

A sliver of unspent funding for airports, about $180 million, would be rescinded, according to the American Association of Airport Executives, as would funding for other parts of the aviation industry. State transportation departments stand to lose as much as $2.3 billion under the debt ceiling deal.

But those other modes of transportation are on far steadier financial footing than transit. The aviation industry has long stopped relying on federal help, notching record revenue in recent months despite its struggles to manage a swifter-than-expected recovery in travel demand.

Similarly, state highway funds never incurred the revenue hits that were forecast early in the pandemic, and then they received a significant boost from the infrastructure law. Transit agencies also gained access to new capital funds in that package, but the pandemic aid can be used to pay wages and other operational bills — costs that transit agencies say they desperately need to cover.

The American Public Transportation Association said that once it became clear that House Republicans were targeting the aid, states and transit agencies rushed to earmark outstanding federal funding, a step that would protect it from being clawed back even if not spent.

Amy Thompson, a spokeswoman for the group, said that as much as $1.5 billion was earmarked through that process in recent weeks and that the outstanding amount is probably less than $1 billion. Thompson said the association continued to urge agencies to tag the money as the deal came together, in case there were efforts to amend the legislation as it moved through Congress.

The Senate passed the bill late Thursday, and President Biden is expected to sign it soon.

Transit agencies are grappling with how telework has reduced office commutes, once a core part of their ridership.

In the Washington area, Metro’s rail system, built more than 40 years ago to carry federal workers into D.C. from the suburbs, has lost nearly half of its ridership. The transit agency received nearly $2.4 billion in relief, which has been used to supplement more than a quarter of Metro’s annual budget since the pandemic began.

Without it, the agency would have been forced to make cuts, which at one point included discussion of shutting down Metrorail during weekends.

While ridership is increasing, it remains far below pre-pandemic levels as personnel costs continue to rise. The agency is projecting a more than $700 million funding gap in fiscal year 2025 that will escalate annually, prompting Metro to ask regional leaders for a stable source of permanent funding.

“We have obligated all of our Covid funding and our congressional delegation is aware of that,” Metro spokeswoman Sherri Ly said in a statement.

Other large transit agencies have either exhausted their pandemic relief or, like Metro, are about to run out. The Massachusetts Bay Transportation Authority, which operates Boston’s primary transit system, is devoting the rest of its money to payroll in both the current and upcoming fiscal years, the agency said. The Chicago Transit Authority is using its remaining funds to cover labor and other operating expenses. It has spent about $1 billion, or 45 percent, of the federal relief funds it has received. The CTA said it expects to spend all of the money by early 2026.

Bay Area Rapid Transit, which operates the San Francisco-area rail system, has $600 million in relief money left, all of which is being used to backfill lost ridership.

“BART is stretching the federal assistance funds as much as possible to extend our fiscal runway,” BART spokesman James K. Allison said in a statement.

New York’s transit system already has spent its relief money, according to the Metropolitan Transportation Authority. Ridership is rebounding more quickly than for many other agencies, while state and city governments are providing hundreds of millions of dollars in one-time and annual funding.

The deal reached between House Speaker Kevin McCarthy (R-Calif.) and Biden seeks to limit the growth of federal spending. It doesn’t affect the funding for roads, bridges and transit in the $1 trillion infrastructure law.

Rep. Rick Larsen (Wash.), the top Democrat on the House Transportation Committee, said he supported the debt ceiling deal because it would avoid a default on the federal debt while allowing infrastructure investments to continue to move ahead.

“The bipartisan understanding that Congress must continue investing in our infrastructure at historic levels is a testament to the [bipartisan infrastructure law’s] success supporting tens of thousands of projects across the country,” he said in a statement.

The deal also includes changes to the federal permitting process for projects, which the American Society of Civil Engineers said could help speed up investments in infrastructure.

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