By Chris Zeilinger
It’s Local Support that Drives the Bus
February 3, 2025
When money talks, it pays to listen. In the preceding chapters, we’ve seen that places made great by their transit are diverse, but share some key attributes. These include the provision of frequent and reliable fixed-route bus service, offering this service in ways that generate high ridership, and providing transit service that is attractive to – and used by – a community’s “middle class” population. That kind of transit service requires serious outlays of cash. Your ability to generate and sustain that flow of cash will determine whether your transit service helps make your community great, or if you’ll be confined to a cycle of mediocrity.
Generating significant sums in support of transit isn’t easy, and isn’t always possible, but it can be done more often than you might have imagined. It’s infinitely easier if you’re in a state where generous amounts of state-generated funds are distributed meaningfully and equitably to all the public transit systems in the state, both rural and urban. Transit finance is a much greater challenge when the state funds its public transit providers minimally, sporadically, episodically, or not at all.
But as we noted in Chapter Two, you cannot have great transit without some noticeable degree of locally generated transit funding, even if you’re able to attract and enjoy generous levels of funding from your state government. There’s no one right way to do this, nor any secret sauce, nor any magic bullets. There are a range of familiar – and important – local transit funding mechanisms that make a difference in helping sustain great transit and great communities. The most successful instances draw on a combination of local funding strategies. Let’s look at a few of these.
Champaign-Urbana Mass Transit District, Illinois
The “MTD” serves an urban area with 147,452 residents, delivering more than nine million unlinked passenger trips in 2023 (61.30 UPT per capita). It also provides rural public transit in the less-urban portions of Champaign County. The fact this urban area is home to the University of Illinois Urbana-Champaign’s 59,000-student campus is significant. Even more significant is that U of I students pay a $59 fee every semester for transportation, which channels nearly $10 million a year into the MTD’s coffers.
If the U of I fees were the leading source of local revenue for the MTD, you might not be surprised. But – surprise! – the students’ fees are NOT the transit system’s top source of funds. There’s also a dedicated property tax which generates upwards of $11 million a year to the transit district. Many urban areas with populations below 200,000 use their Federal Transit Administration formula funds to help cover a portion of their transit operating costs. But at the MTD, their federal funds generally are directed toward the district’s capital budget. This is possible because Illinois provides generous amounts of operating funds to all the urban and rural transit systems in the state, including the MTD. In fact, Illinois’ state funding covers more than 60 percent of the MTD’s operating budget, dwarfing the significant amounts collected from property taxes and U of I student fees.
Tompkins Consolidated Area Transit, New York
It’s common for private nonprofit organizations to be the providers of public transit in rural areas. It’s less common for an urban area’s principal provider of public transit to be a nonprofit organization, but that’s what we see in Tompkins County, home to the city of Ithaca, Cornell University, and TCAT. The Ithaca urban area has a population of 59,102; TCAT provided more than 2 million UPT in 2023 (37.61 UPT per capita). Although it’s a “501(c)(3)” charitable nonprofit, TCAT does not rely on individuals’ donations to cover its budget (but don’t let that stop you from making a tax-deductible contribution to TCAT, if that’s what you want to do). Instead, the major pillars of TCAT’s operating budget include equal “ownership stake” contributions made annually by the city of Ithaca, Tompkins County, and Cornell. Those payments are a little under $1 million apiece.
In addition, Cornell also directs another $3 million or so to TCAT, in return for free fares for faculty, staff and first-year students (and discounted fares for other Cornell students). Ithaca College (with about 6,000 students) provides a more modest amount of funds to TCAT, for which Ithaca College’s students, faculty and staff all get free transit.
The city, county, and collegiate support for TCAT adds up to a lot, but it’s not enough to cover the whole transit budget. New York State DOT’s State Transit Operating Assistance program (STOA) directs state-generated funds on a formula basis to urban and rural transit systems around the state; STOA funds typically cover 25 to 30 percent of TCAT’s budget. And, as is common for transit systems in smaller urban areas such as Ithaca, TCAT also turns to its formula-based FTA funding for about 20 percent of its operating budget, but that still leaves much of the Ithaca area’s FTA funding available for meeting capital needs.
AppalCART, North Carolina
In Chapter Six, we briefly discussed the transit service AppalCART provides in Boone N.C., but now we’re going to look under the hood, and examine its financial structure. You’ll recall that AppalCART is an autonomous entity housed within Watauga County government. Its service is concentrated in the Boone urban area, which has a population of 26,306. AppalCART’s ridership is about 1.5 million trips per year (54.34 UPT per capita), primarily on account of Boone-based Appalachian State University and its 21,000 students.
In many ways, the financing structure for AppalCART and its $5 million operating budget resembles those of TCAT and the Champaign-Urbana MTD. The city of Boone has a line item for AppalCART in its annual budget, through which there is an annual transfer of around $100K into AppalCART’s coffers. Watauga County has transit-dedicated slivers of its sales tax and its mortgage recordation tax; these tax receipts generate just under $100K a year for AppalCART.
It’s important to have that local government buy-in from the city and the county, but the major sources of AppalCART’s operating funds are: (i) Appalachian State University, which collects $89 per semester from every student for transportation, yielding close to $2 million in funds to AppalCART, (ii) the state of North Carolina, whose Rural Operating Assistance Program supplies AppalCART with $1.3 million, and (iii) the Federal Transit Administration, whose state-administered “Section 5311” program provides another $1.4 million in transit funds to AppalCART.
Roaring Fork Transportation Authority, Colorado
Remember what I said at the beginning of this chapter, about how “money talks”? Well, RFTA, with an $88 million operating budget this year, must have a lot to say. Mainly, though, it has a lot to do, as a rural transit system can put a lot of transit service on the streets and highways with that kind of cash. As a reminder of what was noted about RFTA in the previous chapter, it serves a rural area with 42,224 population. Its buses provide around 5 million trips per year (125.44 UPT per capita). RFTA also owns a 41-mile trail alongside part of its bus rapid transit route atop a former railroad alignment, owns several complexes of workforce housing in the Roaring Fork Valley, and helps fund the regional bikeshare program.
Here’s how a transit system in a tourist-rich, high-cost rural area can generate close to $88 million in transit operating funds:
- $40.0 million is derived from a dedicated sales tax collected throughout RFTA’s service area, plus another $500K from local use taxes dedicated to RFTA
- $18.3 million is derived from a dedicated property tax millage collected throughout RFTA’s service area
- $17.2 million is paid by the member municipalities in which RFTA is contracted to provide local transit service
- $4.8 million in passenger fares and related revenue
- $1.4 million in state and federal transit operating assistance (but the bulk of RFTA’s FTA funding is used for capital assistance)
- $1.2 million in revenue from service contracts provided outside of RFTA’s member jurisdictions
- $900K of rental income from RFTA-owned housing developments and
- $2.9 million of investment income, as well as many smaller sources of income
What These Numbers are Telling Us
The four communities and their transit agencies discussed above are remarkable in many ways, but have some important things in common, in addition to the robust transit service they all enjoy. Here are four points that stand out:
1. Local funding is essential.
There’s no one “perfect” local funding mechanism, but there needs to be significant funding that is directed toward transit through some combination of line items in local governments’ budgets, local taxes that are dedicated to transit, and farebox receipts or their equivalent. If there’s a large college or university in town, contributions from student fees and/or the academic institution’s budget will make a huge difference, both in terms of ridership and in terms of the transit agency’s budgetary bottom line. By the way, it’s quite alright to derive funds from a dedicated tax and local government contributions, or from a college’s budget and from student fees. The key thing is to reach the bottom line, and to provide the service that makes your funders, including individual taxpayers or college students, feel they’re getting their money’s worth from the service you provide.
2. State funding is almost essential.
As long as it’s reliable from year to year, the state’s mechanism for generating its share of transit funds doesn’t matter too much. What’s important is that these funds are at least somewhat generous, and are allocated to transit systems throughout the state, including smaller cities and rural communities in the state. For the sake of helping achieve great transit (and, in all fairness, of securing support for transit funding across the greatest number of state legislators), it’s particularly helpful if a significant portion of the state’s transit funding is distributed on a formula basis. While there are a few urban areas that enjoy great transit in states with no (or very little) state-provided transit funding, these spots – most notably Honolulu, Maui County, Las Vegas, Anchorage and Reno – seem to stand out for other reasons.
3. Federal funding plays a key role, but doesn’t dominate the ledger.
Each of the four great transit systems explored in this chapter – the Champaign-Urbana MTD, TCAT in and around Ithaca, North Carolina’s AppalCART, and RFTA in the mountains of Colorado – receives millions of dollars in funding from the Federal Transit Administration each year, but their FTA funds never account for more than a quarter of their operating budgets, and it’s common for great transit systems to use all, or nearly all, of their FTA funding for capital assistance, even when operating costs are an eligible way of using those funds.
4. Transit is seen and offered as a common good for all in the community.
Communities and their local officials can place tremendous value in transit, and this value can be reflected in the generation and distribution of transit funds. But let’s recall that budgets are a statement of priorities and the community’s investment in these priorities. When transit is regarded as an asset the entire community can use, voters are more likely to favor the imposition and renewal of transit-related taxes, and are more likely to be supportive of their local officials’ decisions to allocate dollars in furtherance of their transit services. But as soon as transit is perceived as a service for a specific subset of the community, the foundation of its support becomes vulnerable to crumbling. This is an ongoing risk that faces those smaller cities whose transit operations are geared around colleges or universities, but it’s also a risk in those places where transit is perceived as (or may actually be) an extension of healthcare, senior services, or programs for low-income households or other “vulnerable” populations.
Over the next few chapters, we’ll be examining how great communities address the ways of providing transit that speaks to the priorities of their voters and elected leaders. We’ll start with some explorations of how we can address what’s often call the “coverage vs. frequency” debate in transit service design and delivery. Then we’ll return to that question of how great cities and towns can succeed in providing transit for those who need it the most.
The Community Transportation Association of America (CTAA) and its members believe that mobility is a basic human right. From work and education to life-sustaining health care and human services programs to shopping and visiting with family and friends, mobility directly impacts quality of life.