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            \Congressional                                                      ____
            ~  Research Service






Biden Administration Proposes Temporary

Operating Assistance Authority for Larger

Transit Agencies



March 31, 2023
In the FY2024 budget, the Biden Administration proposes allowing larger public transportation agencies
greater flexibility in the use of Urbanized Area Formula funds to cope with the larger operating deficits
caused by the Coronavirus Disease 2019 (COVID-19) pandemic. Currently, agencies in urbanized areas
with populations above 200,000 can use federal funds only for capital expenses or maintenance, unless
they operate 100 buses or fewer. This excludes the main operating expenses of labor and fuel. Small bus
agencies along with public transportation providers in small urbanized areas and rural areas are already
permitted to use federal funding for all types of operating expenses.
The Administration's proposal includes a few other elements: it would exempt operating expenses from
inclusion in transportation plans; it would allow federal highway program funding transferred (flexed)
to the public transportation program to be used for operating expenses; and it would also require a
maintenance-of-effort for state and local funding. Maintenance-of-effort requirements typically attempt
to address the possibility that federal dollars would replace state and local dollars. The FY2024 budget
does not propose changing the minimum non-federal matching share for operating costs, which at 50% is
higher than the 20% non-federal minimum for capital costs. However, current law generally allows flexed
highway funds to be used with a non-federal matching share of 20%.

Background

COVID-19  had an unprecedented effect on public transportation ridership, operating revenues, and public
transportation agency budgets. Taxes and tolls dedicated to public transportation agencies recovered
relatively quickly from the disruptions, but ridership and fare revenue have been slower to bounce back.
Ridership in 2020 was about half of what it had been pre-pandemic. Consequently, fares collected in 2020
amounted to $9 billion, down from $16 billion in 2019, and total operating revenue was $11 billion in
2020, down from $19 billion in 2019. Ridership remained at about 50% of its pre-pandemic level in 2021,
rising to 62% in 2022. Subway and commuter rail ridership declined more than bus ridership due to
COVID-19,  particularly early in the pandemic (Figure 1).

                                                                Congressional Research Service
                                                                https://crsreports.congress.gov
                                                                                     IN12135

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