Why and How to Fund Public Transportation

Arizona PIRG Education Fund

This document provides an overview of why transit should receive government funds and how those revenues should be raised. It also briefly discusses some ways to ensure that transit spending can best fulfill its policy goals.

Most transit systems face recurring shortfalls in their operating budgets. Part of the problem is changing political demographics. America’s population increasingly lives and works in the suburbs where transit appears less relevant and its benefits less direct. Decades of transportation, housing and land-use policies have encouraged transit-unfriendly patterns of spread out development. Policies also do not require cars and trucks to bear the enormous social costs that they create from pollution, congestion and accidents. Transit may appear less relevant to most Arizonans, but it is more necessary than ever.

When transit gets people out of their cars, the result is less congestion, less pollution and fewer accidental injuries and deaths.

Transit does have other benefits. Rail, bus, and trolleys provide travel options. These can be crucial for low-income or middle-income residents who live far from job centers and desire more affordable transportation options. Transit can also make a big difference for people with limited mobility. Even for people who do have a car and ordinarily drive, transit provides a valuable option when big events make parking difficult or the car is in the shop. Transit can also provide local economic stimulus by attracting more people to a community, making it a destination for shoppers and employers.

New funding for public transportation can come to states from a variety of different sources. These include: sales taxes, general revenues, development fees and additional funds from the federal government. Alternative levies can be designed to simultaneously raise revenue while also ensuring that commuters pay their fair share of the social costs caused by driving. Increased passenger fares, on the other hand, are typically a poor source of additional revenues because they deter riders.