APTA: Public Transit Agencies Face ‘Severe’ Fiscal Cliff

One-half of 122 responding agencies say they are facing a Fiscal Cliff in the next five years, according to a May 2023 American Public Transportation Association (APTA) survey on future potential operating budget shortfalls that many of its public transit agency members are facing.

For the survey results, APTA established two categories for analysis: all respondents and large agency respondents (i.e., agencies with annual operating budgets greater than $200 million). Seventy-five percent of large agencies responded to the survey and all responding agencies represent nearly $32 billion of approximately $50 billion in total Fiscal Year (FY) 2021 transit industry operating expenses.

Key takeaways from the survey are as follows:

• Seven of 10 large agencies (71%) stated that they are likely to experience a Fiscal Cliff in the next five years.
• Most of those agencies that anticipate a Fiscal Cliff stated that the Fiscal Cliff would begin to hit in FY 2024 or FY 2025.
• The operating budget shortfalls that the largest agencies expect to encounter range from 10% to 30% of their operating budgets.
• Agencies facing a Fiscal Cliff rank finding new revenue sources (e.g., state and local funds or dedicated revenues) as more likely courses of action than cutting service or raising fares.

According to APTA, responding agencies were presented with a list of potential responses to operating budget shortfalls and were asked to rank them. Agencies, the association says, are “thinking proactively about how to retain riders and grow ridership and are aware that reducing service and increasing fares have negative impacts on ridership.” As one respondent commented, “as we are recovering ridership, fare increases and service cuts are not viable options.”

According to the survey, some agencies are considering longer-term solutions, such as pursuing local ballot initiatives to create dedicated funding sources, while seeking local or state funds to bridge the gap in the meantime.