Funding Strategies for Twenty-First Century Transit

This chapter describes how stable, reliable federal funding in recent years is attracting even higher levels of stable, reliable non-federal funding, largely in the form of dedicated sales taxes at the local level. These trends are likely to prevail for the next six years. Beyond 2010, new strategies may need to be explored in order to supplement the current array of funding options because of flattening fuel tax yields. Public transportation in the United States is supported by four revenue sources: (1) federal funds; (2) state funds; (3) local funds; and (4) system-generated income such as fares, concessions, advertising, and real estate development. The trends described in this chapter suggest that federal motor fuel and locally dedicated taxes will continue to play critical roles in the first funding of public transportation. According to international benchmarks, considerable head room for future growth in motor fuel taxation is still available if the political consensus to act can be found. Beyond 2015, leveling or declining yields from federal fuel taxes, as well as expanding technology options, could increase adoption rates for pricing transport infrastructure in order to generate supplemental revenues, as well as to help balance travel demand. These longer-range pricing strategies are also discussed.