The Reality of Trump’s Transit Budget Proposal
With Budgets, Context Is Key
At first glance, President Trump’s “skinny budget” proposal appears abysmal for transportation and especially transit. With $2.4 billion in cuts proposed to hit the Department of Transportation, it’s no surprise the budget has been criticized for how it will affect transit agencies across the country.
But context is key. Trump’s proposed cuts of $2.4 billion do not — and cannot — touch most of the federal money that state and local governments receive for transportation — formula funds that are doled out based on population and other factors. The vast majority of the federal transportation budget comes from the Highway Trust Fund, a separate $60 billion fund that receives money from the federal fuel tax, a source of funding that will be secure through 2020, via the FAST Act of 2015. About $10 billion of that $60 billion goes toward transit, and the remaining goes toward roads and bridges. Most of this money is used to maintain the existing system.
What Trump’s budget proposal does affect, however, is discretionary spending. And that’s a big deal for new transit projects. Today, about $18.6 billion in discretionary dollars go toward transit-related programs like TIGER, the Capital Investment Program, and Amtrak every year. If passed, Trump’s budget would cut that $18.6 billion down to $16.2 billion. And the reality is that this spending has major economic benefits, from reduced commute times for workers, new real estate development around stations, and even better sales for local businesses because better transit and new development brings more people to neighborhoods.
So What’s at Risk?
So while most transportation funding is secure — about 97 percent of total dollars would remain intact — what’s most alarming is the three percent on the chopping block. Trump has proposed to cut some of the most innovative, effective, and popular programs in all of transportation and eliminate most of the funding for new and expansion transit projects, including:
- The Transportation Investment Generating Economic Recovery (TIGER) grant program that funds multi-modal projects ($500 million)
- The Capital Investment Program that funds rail, street cars, and rapid bus lines (about $1.1 billion)
- Federal subsidies for Amtrak long-distance routes, which will essentially end service to rural areas without state supported lines ($600 million)
These are exactly the types of investments the federal government should be making. These programs reward innovative transportation projects that reduce congestion, get workers to the office faster, and give people more travel choices. They are also some of the most efficient and effective federal programs, popular with both Republicans and Democrats, urban and rural.
Take TIGER, for example. TIGER has significant economic and environmental benefits and gives people more transportation choices, all while leveraging a significant amount of state and local funds — by a three-to-one ratio — because project sponsors must have local sources of funds. These projects already have broad state and local funding and support — the TIGER grant is truly the final piece of the puzzle.
That is the definition of the federal government getting the most bang for its buck.
Without TIGER, projects like the innovative U.S. 36, which builds highway managed lanes and bus rapid transit in Colorado, either would be vastly less effective or simply wouldn’t be built at all. The project reconstructs U.S. 36 to provide commuters of all modes — drivers, transit riders and cyclists — with better commute options. Colorado built the project with a $10 million TIGER grant, which according to the US DOT, was used to “…anchor the other elements of a robust $307 million financing package that includes a broad mix of State, local and Federal funds.”
TIGER grants are highly competitive: in a typical year, states, municipalities, and transportation agencies in all 50 states apply for 10 times as much funding as is available.
Congress unsuccessfully tried to cut TIGER before — in 2012 the House voted to eliminate it, but the Senate objected and instead funded it at $500 million. During her confirmation hearing, new US DOT Secretary Elaine Chao even praised TIGER: “From all of my meetings with members of Congress there seems to be one area of great agreement and that’s the utility of the TIGER grants.” She also said, “I look forward to reviewing it and seeing how much could be devoted to it.”
As for eliminating the Capital Investment Program for new projects, cities across the country, big and small, red and blue, are vying for these funds. Light rail in Phoenix, Dallas, and Durham; Bus Rapid Transit in Milwaukee and Indianapolis; street car in Fort Lauderdale; and bus and rail in Minneapolis and Seattle are just a few. Without funding from the Capital Investment Program, it’s unlikely any of the transit projects in these places could move forward.
We have to ask: What is the goal of 3 percent in cuts if it’s eliminating some of the most effective programs? Is it worth it?
Trump’s Cuts Are Unlikely to Make It through Congress
It is Congress, not Trump, who has the final say on the budget. Many House and Senate members from both sides of the aisle have gone on record over their concerns with the cuts. Rep. Hal Rogers (R-KY), the former chair of the House Appropriations Committee stated: “I am disappointed that many of the reductions and eliminations proposed in the president’s skinny budget are draconian, careless, and counterproductive.” He also reminded us, “Congress ultimately has the power of the purse.”
As did Senator Chuck Grassley (R-IA) a member of the Budget Committee who said, “I’ve never seen a president’s budget proposal not revised substantially.” In fact, most of President Obama’s proposed budgets included hundreds of billions in new transportation investments that never saw the light of day.
It’s also unlikely any Democrats would vote for the cuts in Trump’s budget proposal.
But even if Congress doesn’t eliminate the full $2.4 billion that Trump proposed, a compromise would still mean deep cuts to transit and virtually kill any new and expansion projects.
Public-Private Partnerships Are Loans, Not Grants
President Trump repeatedly made a promise on the campaign trail to invest $1 trillion in infrastructure. So far, he’s been light on the details other than the program would likely be a mix of tax credits and public-private partnerships. That type of financing generally doesn’t work for transit or projects, especially those in rural communities.
A public-private partnership is not grant funding; it is financing, a loan that must be repaid. This means projects would need to generate revenue. While no form of transportation currently pays for itself in full (not roads, planes, or transit), toll roads in urban areas are the best candidate for public-private partnerships because they attract a high volume of drivers who pay tolls that can then repay the private financing.
It is very difficult to finance roads in rural areas or transit, bike, and pedestrian projects through public private partnerships. Unlike a toll road in a dense, urban area, rural roads have fewer drivers and simply do not have the traffic volume to generate enough toll revenue to repay the private financer for the cost of construction and maintenance.
The same goes for transit. To fully fund the cost of bus or rail lines, fares would have to be set too high for consumer demand or for low-income workers to afford. As for bike and pedestrian projects, they generate no direct revenue at all. But as a nation we choose to make these investment because they provide an economic, safety, and quality of life benefit to everyone from reduced traffic on roads, improved air quality and more potential for development.
As a country, we should be investing in transportation projects for long-term economic vitality by providing access and opportunity, not for the short-sighted purpose of turning a profit.
The Future of Transportation Goes Beyond Trump
A bigger concern is the overall direction of the nation’s transportation, a trend that reaches far beyond just the new White House administration. During the 2012 MAP-21 federal reauthorization process, the House almost voted to eliminate the mass transit account entirely.
Further, Mick Mulvaney, Director of the Office of Management and Budget, said of Trump’s proposed transportation cuts: “We believe those programs [to be cut] to be less effective than the package we’re currently working on.” Can that be taken to mean Mulvaney doesn’t believe TIGER, Amtrak service in rural areas, or the transit Capital Investment Program are effective, since he’s proposed to eliminate these programs?
The Bottom Line
Federal funding for transit may not be going anywhere, but based on Trump’s budget proposal, his emphasis on public-private partnerships, and larger political trends aimed at stymying long-term transit investment, it’s clearer than ever that the programs most in danger are the programs most worth keeping alive.
