Public transit bond issuers and finance officers are juggling several balls to keep their systems afloat as post-pandemic ridership continues to lag, and transportation funding shifts in Washington while cities raise questions about transit investments.
"We're struggling right now, budgetarily, to make sure that we're providing as much frequency as we can, but also recognizing the fiscal reality that we have," said Andrew Kramer, vice president of finance for Dallas Area Rapid Transit.
The comments came during a panel discussion at the Government Finance Officers Association Conference on Sunday.
As of last September, DART has $3.73 billion in outstanding bonds.
Its service area is supported by 13 member cities, covers 700 square miles with bus, streetcar and rail routes lacing through Dallas and its suburbs.
About 75% of DART's funding comes from sales tax collected via a tax increment reinvestment zone, the Texas version of tax increment financing.
Many transit systems faced a fiscal cliff as pandemic relief funds ran out, while DART has a different problem.
"The problem for us isn't the fiscal cliff, it's a political cliff," said Kramer. "The tension between what are the taxes that we're collecting in our member cities and what their economic objectives are, but also, how do we balance that in a region that is growing on the periphery, not on the inside?"
Kramer cited an example of how the friction between member cities and the transit agency has spilled out.
One city doesn't like DART, he said. "The city manager spent $30,000 in overtime to have his staff go out count everybody on their buses and trains" in an effort to prove nobody was riding the buses so the city could back out of the funding agreement with DART.
Intercity Transit, based in Washington state, serving the Olympia area, has been functioning as a zero-fare agency since 2020. It encompasses 19 bus routes covering 94 square miles.
"One of the reasons that we felt comfortable trying out zero fare is once you backed out the cost for collecting fares, it represented somewhere between 2% to 3% of our of our revenue," said Nick Demerice chief marketing and outreach officer for Intercity Transit.
Intercity Transit has never issued any debt and relies on sales tax revenue from the state to keep the wheels turning.
Labor costs are the major issue in Olympia. "We've just been through a really lengthy labor negotiation with our drivers union," said Demerice.
"When we're operating the bus, the most expensive thing on that bus is the driver. Whether that's a passenger van, a Toyota Corolla, or a 40-foot coach."
The Virginia Railway Express runs two train lines from the Northern Viriginia suburbs into Washington, D.C., along the I-66 and I-95 corridors on railways owned by freight carriers CSX Transportation and Norfolk Southern.
In 2022, VRE leveraged a $119 million tax-exempt bond sale to help expand the capacity of the Long Bridge that connects Washington to Virginia.
The VRE has recovered some ridership numbers thanks to the return to office movement and is supported by federal, state and regional grants along with subsidies from member jurisdictions.
VRE expects its operating costs to rise faster than revenues and pegs the gap at $11 million annually through 2040.
"We are in the throes of trying to sort of reimagine the VRE," said CFO Mark Schofield.
Schofield believes VRE's financial future is in the hands of the jurisdictions supporting it, which includes independent cities and connected counties.
"They (member jurisdictions) were able to leverage a relatively small contribution into a very high quality transit provider," he said.
"As we get less from the fare boxes, we have the uncertainty of state money, and how are they going to be able to contribute to what they want the area to be?"
