In a nutshell:

• Improving regional transportation in Michigan’s urban areas will require actions from policymakers at all levels of government to change the way citizens view, govern, and fund public transportation. It will require more than just an influx of federal funding.
• That being said, lack of reliable funding is frequently identified as a major barrier to providing efficient and reliable services and contributes to declines in ridership. The federal Infrastructure Investment and Jobs Act allocates $308 million in increased funding for public transportation infrastructure in Michigan over the next five years.
• It remains to be seen how this funding will be used, but it provides an opportunity for transformational change in how public transportation is governed and provided. The question is if the federal funding can be mobilized to advance regional governance and policies that can lead to ongoing regional funding and support of public transportation. 

Providing effective and efficient public transportation services can prove difficult for local officials. It is a service that has devoted supporters and riders, but also one that is seen by some as a social welfare program for those too poor to drive. Governing and funding public transportation has been problematic for years due to government and provider fragmentation and difficulties related to funding when most transportation dollars go towards improving road and bridge construction and maintenance. Without effective provision, efficient services, and reliable funding, public transportation will continue to struggle to attract riders.

Importance of regional public transportation

In 2019, the Citizens Research Council took a close look at the need for and availability of regional public transportation services across the state. Our report concluded that improving regional transportation in Michigan’s urban areas will require changing the way citizens view, govern, and fund public transportation and will require actions from policymakers at all levels of government.

Public transportation in the United State has a perception issue and this has implications for how the service is provided. It is often viewed as a social welfare program for those too poor or otherwise unable to drive. In comparison, many European, Asian, and Canadian communities view these services as a vital public utility. Categorizing public transportation services as part of the social safety net rather than a public utility for the entire community has led to heavily subsidized services. As such, this limits the attractiveness of the service and makes it a more highly scrutinized political issue.

Additionally, public transportation governance is fragmented. Local governments, transit providers, regional governments (e.g., one or more counties), and the state all have some degree of authority and responsibility for these services. This can lead to confusion, gaps in services, overlapping services, and challenges for riders. The Research Council identified the need for regional policies related to transportation services, but also to planning and zoning, placemaking, economic development, and tax-base sharing. Regions need to decide upon their public transportation and mobility goals, and then make sure that state, regional, and local policies are aligned towards those goals.

While public perception and governance are important, the big issue with public transportation is finding adequate and reliable funding sources. Funding for transit comes from federal, state, and local sources as well as from fares and other revenue directly generated by a transit agency. The property tax, which is the main local funding source in Michigan, is insufficient to fund public transportation as it is over-burdened as a funding source for all types of local governments. Additionally, local revenues have been reduced even further during the pandemic due to the elimination of fares in many transit systems. 

In our report, we argue for the need for a regional funding model that includes multiple tax revenues and tax-base sharing across regions. This is no easy solution. Regional funding and tax-base sharing can be difficult in fractured communities. New local-option taxes in Michigan require state authorization and local voter approval (some may even require amending the Michigan Constitution).

Lack of reliable operational funding for public transportation underlies many of the problems associated with it. It is frequently identified as a major barrier to providing efficient and dependable services and contributes to continued declines in ridership and inability to attract choice riders (i.e., those that could drive, but choose public transit). 

Federal funding can help to solve Michigan’s problems with public transportation

The Infrastructure Investment and Jobs Act (IIJA) appropriates funding to address long-deferred infrastructure needs, including those related to transportation issues. The IIJA authorizes $550 billion over five years with Michigan in line to receive up to $4.3 billion in added federal funding over this time. 

This increased federal funding is allocated to four major program areas: transportation, broadband access, water system improvements, and electric vehicle charging. Over half of the new spending ($2.6 billion) is allocated to address transportation infrastructure. While the majority of this funding goes towards federal highway apportionments, the state formula funding for public transportation includes $308 million in increased funding over the next five years (a 43 percent increase from the previous five year appropriation).

This massive injection of federal funding comes with matching spending requirements; for public transit projects, dollars have to be matched 50 percent for operating funding and 20 percent for capital funding. However, as we highlighted in a blog last month, the state appears well-equipped to meet any match requirements due to a surplus of available state and federal revenue. 

Increased federal funding might not be enough to stop ridership declines

While the increased funding will provide more federal dollars for infrastructure projects generally and public transportation specifically, the question is will state and local leaders use this money to improve transit services across regions or will it just be more of the same. Our 2019 report found that the state needs transformational change in how we govern, provide, and fund public transportation and related services (e.g., planning and zoning) in urban regions, not just nicer facilities and added bus routes or more electric buses. The question is if the federal funding can be mobilized to advance regional governance and policies that can lead to ongoing regional funding and support of public transportation. Attracting riders is even more important now since the pandemic led to such a large decline in transit ridership.

In its 2021 report card for America’s infrastructure, the American Society of Civil Engineers estimated a transit backlog of $176 billion across the United States, which could grow to more than $270 billion by 2029. Further, the report found that 45 percent of Americans have no access to transit and much of the current system is aging with agencies that lack sufficient funds to keep existing systems in good working order. 

Transit ridership was declining before 2020, and that has only been compounded by the pandemic. Total public transportation passengers in Michigan declined from 82.1 million riders in 2018 to 81.4 million in 2019 and 51.6 million in 2020. Ridership declines are exacerbated by service cuts, trip delays and reliability issues resulting from revenue shortfalls.

The federal infrastructure bill addresses some, but not all, of public transit’s problems. The funding could broadly improve accessibility for rail line extensions or, more likely in Michigan, new bus routes; it will allow transit providers to make investments in bus electrification and facility improvements. While capital funding to build new bus stations and add bus routes is important, what transit systems really need is ongoing money for operations. Ridership is unlikely to increase without a sustained investment in operations that will allow for more reliable, frequent transit options for riders. This will require increased ongoing funding for operations, whether that funding is federal, state, local, or some combination.

Others question if the federal investment is even necessary or wise. Transit ridership was declining before the pandemic hit; if transit-friendly land use policies aren’t implemented along with increased funding, it may not be enough to encourage ridership. Critics of federal transit spending suggest that public transportation provides local and regional benefits and should not be funded with federal dollars. They also suggest that it remains to be seen how transit ridership will recover from the pandemic that has led to more choice riders working remotely and no longer making their transit commute.

Public transportation in Michigan needs an overhaul

Whether you believe that federal funding for public transportation is needed or you think transit should be funded at a local or regional level, it is clear that public transportation in Michigan needs an overhaul. The state needs to eliminate the fractured governance around public transportation services and pursue regional policies that promote the type and level of services desired in each community. This includes finding ongoing, reliable sources of regional funding. The increased federal funds could be the boost needed to improve public transportation in Michigan if used to start the process of changing from many, fractured local transit providers to regional transportation communities pursuing regional goals.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the Citizens Research Council of Michigan is properly cited.