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116601 1 (1981-10-01)

handle is hein.gao/gaobacuyv0001 and id is 1 raw text is: V 71 i S F -, TRAFFIC QUARTERLY, Vol. XXXV, No. 4, October 1981, 541-556 C 1981 Eno Foundation for Transportation, Inc., Westport, Connecticut .Z I 116601 Transit's Growing Financial Crisis JAMES R. BONNELL Mr. Bonnell is a seiior evaluator in the U.S. General Accounting Office's Washington Regional Office and was the project manager for GAO's transit subsidy review. He joined GAO in 1965 and has been assigned to transportation-related work since 1978. he received a B.S. in accounting and a masters degree in public administration from the Pennsylvania State University. T HE U.S. General Accounting Office (GAO) is an arm of the Congress that reviews federal policies and programs and makes recommendations for improvements. The GAO recently reported on the federal transit operating assistance program and the growing transit financial crisis.' The purpose of this article is to summarize the results of GAO's review and suggest some actions that need to be taken if transit is to avoid serious financial problems. SOARING TRANSIT DEFICITS POSE SERIOUS FINANCING PROBLEMS Governments at all levels are facing a growing crisis in financing mass transit. As recently as the mid-1960s, transit systems nationwide were able to recover most of their costs through operating revenues. Since that time, however, the gap between operating costs and revenues has been increasing rapidly, as shown in Figure 1. Transit systems received over $3 billion in federal, state and local governmeht operating subsidies in 1980. By 1985, a U.S. Department of Transportation study estimates transit systems may need more than $6 billion per year in government subsidies.2 This projection assumed federal operating assistance would continue. The Reagan Administration has proposed phasing out federal operating assistance, which amounted to about $1.5 billion in fiscal 1. This article is drawn primarily from GAO's report, Soaring Transit Subsidies Must Be Controlled, CED-81-28, February 26, 1981, and testimony presented by Henry Eschwege, Director, GAO's Community and Economic Development Division before the Subcommittee on Investigations and Oversight,-Committee on Public Works and Transpor- tation, U.S. House of Representatives on June 23, 1981 during hearings on the financial and productivity problems-of urban transportation. 2. U.S. Department of Transportation report, An Evaluation of The Section 5 Program, December 1979. 541 7.5

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