As funding coming from legislation passed during the Biden administration winds down, transit systems are contending with a new set bureaucratic hoops including public safety requirements conveyed in letters from U.S. Department of Transportation Secretary Sean Duffy.
Per his
"The expectation is that New York City Transit will address this matter promptly to ensure compliance and avoid further Federal Transit Authority enforcement actions up to and including redirecting or withholding funding."
A similar letter was sent to the Washington Metropolitan Area Transit Authority
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Federal grants for transit typically require municipalities to provide matching funds that are often leveraged with public financing. The public transit sector has been struggling to recover from the pandemic which put a crimp in farebox revenues.
"There has been some recovery in passenger ridership levels across the nation. It varies by region and by system," said Kurt Forsgren, managing director, sector lead S&P Global Ratings.
"There has been a general recovery, and that's continuing with more return-to-work mandates by employers."
The comments came during panel discussion produced by the Volcker Alliance and the Penn Institute for Urban Research on Tuesday.
S&P is currently maintaining negative outlooks on three major transit systems, the San Francisco Municipal Transportation Agency, Bay Area Rapid Transit and the Chicago Transit Authority.
"That means there's a one in three chance that the rate could go down for the next couple of years," said Forsgren.
Leslie Richards, former general manager of the Southeastern Pennsylvania Transportation Authority notes a budget shortfall over $200 million.
Federal funding freezes are raising concerns in cities designated as sanctuary cities including Chicago, which is awaiting federal funding for a major airport project.
"We've got a $12 billion expansion of O'Hare that is just getting underway that's counting on nearly $400 million of federal money that has been committed," said David Greising, president and CEO of the Better Government Association.
"The one that everybody's watching very closely is the extension of the Chicago Transit Authority's Red Line."
Flat funding levels for transit and increased ridership levels in some markets factor into a transit equation that includes new requirements by the Trump administration.
"The administration has frozen funding for some transit projects and just released guidance to review and potentially re-scope or cancel discretionary programs going back as far as 2021 that address climate equity, environmental justice, cycling and electric vehicles if the project sponsors have not yet signed grant agreements and obligated funds," said Polly Trottenberg, former DOT Deputy Secretary who served under Secretary Buttigieg.
"This is the first time an administration has tried to cancel or re-scope projects en masse that have already been awarded funding through a competitive application process."
"It adds a new level of uncertainty for a federal surface transportation program that typically operates in somewhat stable ways in five-year cycles of Congressional authorization and funding," she said.
