Program: Bus transit division (Section 116)


Federal Funds:



Special Revenue Funds:





Program Description:

This appropriation funds subsidies of up to 50 percent of the operating expenses incurred by local public transit systems in urban areas, and up to 60 percent of expenses in communities with populations below 200,000.  Funds can be used for both operating and capital expenses in non-urban areas.

Recommended Action:

This program should be eliminated.  Public transit programs are the most expensive way to move people from one point to another.  They require substantial operating and capital subsidies to remain financially viable in serving their tiny share of the market.  According to the 2000 decennial census, only 4.57 percent of commuters use public transit to get to work, down from 5.12 percent in 1990.  Despite subsidies totaling a half a trillion dollars since 1960, public transit use in America has declined year after year for at least the last four decades.  As low as the national share for public transit is, Michigan’s is even lower.  In the Detroit metropolitan area, only 1.82 percent of commuters used public transit, while only 0.82 percent of commuters used public transit in the Grand Rapids metropolitan area. These compare to 7.43 percent for all metropolitan areas.[7]

Compounding the problem of low use is high cost.  As public monopolies protected from private-sector competition, public transit systems have little incentive to economize, and the consequence is high operating costs. Public transit absorbs 20 percent of all federal transportation spending while carrying less than 5 percent of commuters to work.

State public transit subsidies could be terminated and cities required to operate their own systems on a break-even basis by reducing costs and increasing revenues.  Costs could be reduced by renegotiating labor contracts, dropping underused routes, contracting existing services to more efficient providers, and allowing qualified private operators to compete for passengers.  At the same time, fares could be set to cover newly reduced operating costs.  Savings: $170,300,000.