America's deepening economic crisis intensifies budget crisis in public transport industry

In a September 26th posting to his blog The Transport Politic, titled When the Recession Strikes, Little Maneuvering Room for Better Transit, Yonah Freeman highlights the growing crisis of America's public transportation industry.

This kind of analysis is quite important, because it brings the current near-universal crisis into proper perspective, and also rebuts transit opponents who try to seize on these difficulties to claim that it all proves that transit is a failure and, besides, transit management is basically a lot of corrupt, bureaucractic bunglers who "wste" money on expensive projects such as rail.

"The recession has not been kind to transportation agencies anywhere in the country" the analysis points out.

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The loss of local revenues from dedicated taxes has in many places required agencies to reduce bus and rail operations - even with the significant aid that accompanied the 2009 Stimulus bill. But long-term consequences have been even more problematic for the hundreds of expansion plans either under construction or planned; in metropolitan areas from Dallas to Denver, previously funded projects have been put on hold.
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As examples, Freeman discusses ites the cases of Seattle and Charlotte:

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Seattle's Sound Transit is the most recent to announce its own problems: Last week, the agency revealed that its fifteen-year estimates for revenue collection established just two years ago would be 25% lower than expected. This means that a once $18 billion proposal to extend the region's light rail system to the north, east, and south would have to be truncated by $3.9 billion, up from a $3.1 billion shortfall predicted just six months ago.

Though the region's construction programs already in construction and in advanced planning - University Link and East Link, respectively - remain on schedule, a further extension of light rail facilities south into South King County has been put on hold. A new transit investment in the region's northern corridor may no longer come in the form of light rail but instead in something less expensive, like improved buses. The creation of a new commuter rail link along the east side of the region has been suspended. All this in spite of the fact that Sound Transit has been able to literally quadruple ridership over the last ten years thanks both to the implementation of light rail beginning last year but also the improvement of regional bus and commuter rail services.

Seattle should comfort itself in the realization that despite all of these cutbacks, it is in a much better situation than cities elsewhere in the country. Example number one: Charlotte, whose countywide transit expansion program was revealed in the late 1990s and whose first light rail line has had high ridership, is facing a virtual shutdown in new construction because it has rightfully chosen to prioritize keeping its bus services afloat over spending on rail expansion.
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Freemark's analysis makes an interesting case for placing much of blame for the financial crunch on reliance on relatively volatile sales-tax-based revenue rather than on other more stable revenue sources:

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Most cities have been especially affected by the recession because of their reliance on the sales tax to provide revenue. Of the recent referendums on transit expansion programs, almost all have involved a 1/2 cent or one cent increase in that tax; few cities have looked to other forms of revenue, like an income tax or a payroll tax. The consequences of this decision, however, have been devastating because sales tax revenues have fallen considerably as a result of the recession and the reduced standard of living experienced by the majority of Americans over the past few years.
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As an alternative, Freemark cites his own previous financing recommendation, which he describes as "A more stable financing program for transit, using other forms of taxation, [that] would ensure that planned projects actually get built." <>

Examining this further, Freeman's analysis discusses the challenges of pursuing revenue alternatives to sales tax funding:

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The practically universal reliance on the sales tax is a "realistic" response to the sense that it is the most politically palatable form of taxation available. Because municipalities and regional entities are interested in producing stable coalitions in favor of transit expansion, they are required to institute revenue devices that are both regressive and unstable. That's often because the business community - powerful in every area - is opposed to more progressive forms of taxation that threaten the salaries of their top executives. For many politicians, a sales tax is the most reasonable way to go about increasing funding. In addition, in many states, the idea of a special local or regional income tax is simply out of the question.

For cities like Seattle and Charlotte, what follows in an inability to proceed on schemes that were developed just a few years ago. But perhaps these cutbacks are simply the name of the game; it's not like an increase in revenue through an income tax is even much of a feasible possibility.

Thus the current enigma: Should cities that had large transit ambitions scale them back due to having less money than once expected, or should they push for new revenue sources? The first option could be difficult to reconcile in the eye of the average citizen who voted for a sales tax increase on the assumption that he or she would experience significant improvements in transit service as a result. The second option seems unlikely to be supported by voters who are being asked to pay twice for something they were told could be accomplished after the first tax alone.
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Finally, the analysis emphasizes the political dilemmas these revenue constraints are engendering for transit systems across the country:

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This situation puts transit agencies in a bind since they now appear as if they lied to the public when they promised certain amounts of spending during previous referenda. A more honest assessment of their travails would recognize that budget predictions are always predictions and nothing more; the severity of the recent recession was not something that was planned. Nonetheless, the public is rarely particularly sympathetic to the difficulties of government agencies.
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