A record number of Americans are saving thousands per year by using public transportation from one day per week to living car free. In 2007, a 50-year record was set of 10.3 billion transit trips per year, saving over 4 billion gallons of car gasoline use. 2008 will set a new record that may approach 11 billion trips as more commuters leave their cars parked to brave standing-room-only train and bus rides.
Public transportation and corporate commute programs have helped America finally reduce its dependency on oil, with vehicle miles traveled reduced for the first time. Now, our financial crisis is putting this in jeopardy.
Although public transportation is rescuing Americans, will Americans rescue public transportation? Record ridership, shrinking tax revenues, frozen funds, and fuel prices are overwhelming transit budgets. Where more routes and buses are needed, cutbacks are instead being made.
This Tuesday votes in 33 states will make decisions about the fate of transit funding. In California, decided will be the fate of California’s High Speed Rail.
The American Public Transportation Association (APTA) called on Congress on October 29 to pass economic stimulus legislation that includes funding public transportation projects to create new jobs. APTA has identified 559 public transit “ready-to-go” projects, worth $8 billion, from Chicago to Atlanta, and from NY to LA.
Testifying before the House Committee on Transportation and Infrastructure, APTA Chair Dr. Beverly Scott, who is also general manager and CEO of the Metropolitan Atlanta Rapid Transit Authority (MARTA), testified, “We simply must get our economy back on track, and the most important way to do that is to create new jobs, and give our citizens the tools they need to find jobs and keep working.”
Dr. Scott continued, “Not only do transit systems need assistance for capital projects, transit providers also need help to maintain their current services. Transit systems across the United States are being forced to choose between raising passenger fares or cutting service to make up for shortfalls in local funding and the increased cost of diesel fuel this past summer. The burden is so great that 35 percent of public transportation providers who responded to another recent APTA survey have been forced to cut or plan to cut the level of passenger service they provide in spite of the growing demand. Transit needs to be part of the solution to – not the victim of – the current economic crisis. This could not happen at a worse time. Public transportation ridership has grown dramatically this year, and we need to continue that growth.”
Even the collapse of AIG is having a devastating effect on transit. Dr. Scott as testified, “From the early 1990s to 2003, the Federal Transit Administration urged transit systems to enter into innovative financing deals known as Sale-in/Lease Out and Lease-In/Lease Out (SILO/LILO) transactions. These transactions helped transit systems finance large, capital intensive projects by selling their assets to investors and leasing them back. The transit agencies received up-front one time payments in consideration for future tax benefits for the investors, until these transactions were prohibited in 2003. To secure these transactions, sale proceeds in the form of Treasury securities were placed into an account that AIG and a small number of other insurers guaranteed. Under the terms of the contracts, transit agencies are responsible for replacing the guarantors of the secured assets if they fail to maintain a certain bond rating- often ‘AAA’ status. Unfortunately, because AIG and the other insurers have lost their ‘AAA’ rating, and there are no available financial institutions to replace them, the equity investors are able to find the transactions in default. Under this scenario, through no fault of their own, transit agencies could be forced to pay hundreds of millions of dollars in fees to make the investors whole. The banks have the opportunity to gain 100 percent of the tax benefits that have been disallowed, which would in turn devastate transit agencies, which will be required to pay more than $2 billion to the banks immediately.” Congressional Testimony
Will we keep America moving, our will be go back to being stuck in our cars in gridlock, burning billions of dollars of extra gasoline from countries that are glad to take our money?
John Addison publishes the Clean Fleet Report.
