Facing Fiscal Cliffs, Transit Stays Focused on the Long Game

By Kevin Desmond, Principal + National Director, Transit and Rail

The Covid pandemic deeply disrupted the nation’s transit industry, with effects that are likely to be felt for years to come. Although ridership is slowly, if unevenly, recovering in the US, substantial uncertainty remains about future transit demand, particularly for large metro regional networks oriented around the old Monday through Friday peak commuter patterns.

Expectations for prolonged depressed farebox revenue combined with expiring federal emergency financial aid—a looming “fiscal cliff”—is pre-occupying transit agency c-suites and board rooms. The math is simple: annual expenses will soon far outpace available revenues, threatening core agency services. The irony of this phenomenon is that it is most pronounced for the major systems that had heavy ridership and industry-leading farebox recovery—before the pandemic, a leading performance metric. As a former transit agency executive, I confronted the prospect of near-term budget gaps as a matter of course, but the fiscal cliff many systems now face is decidedly different.

This environment is testing transit agency resilience and creativity. New revenue tools must be evaluated and presented to legislators and regional taxpayers in ways that communicate appealing value propositions. To this end, planners are recalibrating service networks to address new understandings of community transit needs and customer experience, and strategic planners are envisioning how new mobility products can be further integrated into agencies’ services.

At Sam Schwartz we are working with our transit clients as they grapple with this generational crisis. Three mega-regions across the country are advancing transit improvement strategies even as they advocate with stakeholders for fiscal relief.

CHICAGO: TRANSIT IS THE ANSWER

Chicagoland’s Regional Transportation Authority’s (RTA) recently-adopted five-year strategic plan, Transit Is The Answer, takes a two-pronged approach to confront the region’s looming fiscal crisis—which could amount to a combined $730 million annual revenue shortfall by 2025-26 for CTA, PACE and Metra, or 20% of their operating budgets. The plan, a product of considerable public and stakeholder engagement, lays out the reality of the region’s critical fiscal challenges and builds the case for new revenue tools that are not as reliant on fares.

Wisely, the plan also presents a new value proposition with a robust, customer experience-focused action agenda that would improve system safety, accessibility and customer information features, introduce more seamless and equitable transit fares, and accelerate the transition to zero emission operations while continuing to make long-planned capital investments and evolve the network to meet changing demands.

SAN FRANCISCO BAY AREA: REGIONAL NETWORK MANAGEMENT

The San Francisco Bay Area’s expansive transit network was hit hard by the pandemic, and now several of the region’s agencies are forecasting annual operating deficits in the hundreds of millions, most notably BART, the region’s heavy rail spine, which estimates the gap in the range of 20-40% of its operating budget.

But even with the cliff looming large, the region’s Metropolitan Transportation Commission is bullish on transit’s central role in key long range policy outcomes. Its recently adopted Regional Network Management (RNM) strategy will spur long-term ridership demand by stepping up regional service integration. The MTC will take on a new role as the network manager, working closely with the 27 transit agencies to conceive a connected network plan, enhance fare integration using its planned Clipper 2 fare payment system, coordinate and support surface transit priority projects, implement consistent signage and wayfinding, and pursue other actions intended to improve customer experience and create conditions for long-term ridership growth.

NEW YORK CITY: EXTENDING TRANSIT’S REACH

Transit is often called the lifeblood of New York City and there is nothing that could stifle circulation more than failure to resolve the MTA’s projected $2.5 billion annual operating deficit beginning in 2025. Amidst this staggering public policy challenge, the MTA has astutely maintained its focus on improving customer experience. For example, the MTA is redesigning its bus routes to keep up with demand patterns and land use changes, testing new subway cars, and advancing a range of tools to expand access to its family of services.

Of particular note is the recently released Bike, Pedestrian and Micromobility Strategic Action Plan, “Extending Transit’s Reach.” The plan outlines strategies to improve station access and mobility, increase multimodal integration, enhance safe routes to transit and bridges, offer demand management incentives, and build policy and program support necessary for successful project implementation. Crucially, the plan acknowledges that improving connectivity and service integration requires broad-based partnerships across the MTA’s vast service territory.

This is a time of great uncertainty for transit—but also great promise. While the pandemic has triggered a potential fiscal crisis of enormous proportions, it has also prompted decision makers to rethink how systems can better serve existing customers and attract new ones. It has, moreover, catalyzed a greater focus on the central role convenient and reliable mobility plays in meeting equity, climate, and economic development objectives. Agencies have a once-in-a-generation opportunity to reshape the role of transit in our major metropolitan areas; as recent developments in the Bay Area, Chicago, and NYC demonstrate, many of them are looking to use this moment to do just that.