Federal shutdown freezes transit funding

Register now

WASHINGTON – A freeze in Federal Transit Administration grants caused by the partial federal government shutdown is forcing public transit systems to draw on cash reserves and, in some cases, line up alternative financing.

Federal funding for mass transit totaled $16.1 billion in the 2018 fiscal year that ended Sept. 30, with $13.6 billion of it coming from FTA and the remainder from railroad programs.

The formula aid and grants go to systems ranging from small rural agencies that operate only a handful of buses to large mass transit systems in cities such as New York and Chicago.

“Nobody has stopped any service,” said Paul Skoutelas, president and CEO of the American Public Transportation Association. “I think that’s a last resort for these agencies. But everyone is beginning to feel the difficulties of trying to meet payments to vendors, normal kinds of operating expenses. In some cases just moving projects forward for project approvals.”

Skoutelas couldn’t predict when service disruptions might begin because each transit agency has a different financial situation.

The reliance of transit agencies on federal funding varies. “In many cases they need those dollars and there’s no one there to answer the phone and activate release of funds,” he said. “Grants are either waiting to be approved or have been approved.”

The Capital District Transportation Authority in Albany, N.Y., estimates it will incur $10,000 in interest costs for using a $4 million bank line cover maintenance costs which are ordinarily paid for with federal funds, according to spokeswoman Jaime Watson.

The Monterey-Salinas Transit District in California also is considering lining up alternative financing because a $1.5 million federal grant may not be available in time to pay for the delivery of five buses in March.

Monterey-Salinas also is experiencing a delay in completing the documents needed to request bonds for a $10 million bus operations and maintenance facility jointly funded through an FTA grant and financing from the U.S. Department Agriculture Community Facilities program.

The USDA staff who are needed to review the documents have been furloughed.

Monterey-Salinas CEO Carl Sedoryk said his agency is owed about $8 million in federal operating funds its uses for driver wages and fuel.

Sedoryk said his agency is using cash reserves and looking for alternative financing. "None of these strategies are sustainable for the long term and raise the cost of providing much needed transit services to the thousands of workers, students, seniors, soldiers, persons with disabilities and veterans who depend on MST every day to get them to work, school, and medical appointments,” he said. “Without a functioning federal government our transit and mobility programs will have to be drastically reduced or discontinued."

NJ Transit has outstanding bonds that are directly repaid by federal grant reimbursements, but the securities are structured with debt-service reserves or advanced set-asides of debt-service payments that “mitigate a medium-term interruption of federal funds,” Moody’s Investors Service said in a report last week.

The Chicago Transit Authority reported no direct effect on its day-to-day operations from the federal shutdown.

“But there is a real and growing concern related to federal funding for our construction projects,” CTA spokesman Brian Steele said in an email.

“While the federal government is shut down, CTA is not receiving federal grant funding to pay for ongoing expenses—a crucial source of funding,” Steele said. “If we don’t see a resolution shortly, CTA will need to look at how we utilize our limited resources. This delay is not sustainable, and we hope to see resolution shortly.”

For reprint and licensing requests for this article, click here.
Government shutdown Government finance Transportation industry DOT New Jersey Transit Chicago Transit Authority Washington DC
MORE FROM BOND BUYER