America's public transportation systems are approaching a financial precipice, as pandemic-era federal relief funds continue to dwindle. Transit agencies across the nation are working to tackle budget shortfalls to prevent service reductions, fare increases, and worker layoffs. States across the US are navigating this crisis with an interesting mix of short- and long-term solutions that may inform the next generation of funding strategies for traditional and innovative transit solutions.
In Illinois, the Regional Transportation Authority (RTA), which oversees Chicago's transit system, faces a $770 million fiscal cliff beginning in 2026. The RTA has been lobbying the state legislature for $1.5 billion in additional annual operations funding for the region’s system in a bold proposal called the Transforming Transit vision. The plan calls for expanding certain programs, while also implementing operational efficiencies including route optimizations and administrative consolidation, to grow ridership and stretch existing funds further. The idea is that the return on investment from proactive expansion would balance budgets, while responding to service cuts could prove more costly in the long run. A decision must be reached by the end of Spring Session (coming up at the end of May) to avoid 40% service cuts across the Chicago Transit Authority, Metra, and Pace.
Massachusetts and Minnesota are pushing comprehensive, forward-looking approaches for transit funding thanks to recently established dedicated funding sources. In Massachusetts, Gov. Maura Healey created the “Transportation Funding Task Force” last year to develop a long-term, sustainable funding plan for transit across the state, using funds from the 2022 voter-approved "millionaire's tax,” which generates billions of new dollars annually for transportation and education. The Task Force’s recommendations are now being put into action in Gov. Healey’s proposed FY 2026 budget, which would provide an additional $1.9 billion for transportation across the state, including funds for large-scale projects like West-East Rail, new subway cars and rail track improvements for the MBTA, as well as new buses, fare-free services, and innovative transit options throughout the state.
Minnesota has pursued a similarly ambitious but differently structured approach. In a laudable advocacy success story, transit supporters secured bipartisan support in 2024 for a comprehensive transportation package that includes $2 billion for new public transit programs, including new light rail lines, intercity rail services, and improvements to local bus services. Whereas Massachusetts’s new transit funds come from one single revenue source, Minnesota is using some existing revenues as well as a slew of new, smaller revenue-generating sources, including a retail delivery fee, a transportation sales tax for the Twin Cities, a sales tax on motor vehicles, as well as a new gas tax, indexed to inflation, which in total will generate $1.1 billion over the next two years. While the Minnesota Legislature is considering reducing the scope of these investments this year due to new state budget deficits, organizers are advocating to reject legislation that would potentially roll back some climate initiatives, including cuts to funding for transit, walking and biking infrastructure.
Meanwhile Pennsylvania is facing a unique challenge due to the partisan split in control of its state legislature. Last year, after failing to reach a long-term funding deal with state Senate Republicans on transit, Democratic Gov. Josh Shapiro and other Democrats in the Pennsylvania General Assembly agreed to a $47.6 billion state budget that included a one-time boost of $80.5 million to transit agencies. Gov. Shapiro later used executive powers to shift $153 million in federal highway capital funds towards the Southeastern Pennsylvania Transportation Authority (SEPTA), which faces the most acute funding challenge of any transit agency in the state. These lifelines have allowed Gov. Shapiro and the General Assembly to continue negotiations on a long-term state funding solution that balances operational reforms, innovation, and sustainable revenue, which could pass this year. This challenging negotiation is sparking ideas from both Democratic and Republican leaders, including a proposal to merge mass transit administration and management in Pittsburgh with nearby counties into a consolidated regional transit system; privatizing operations of certain bus lines; and exploring several new revenue sources, including regulating and taxing slot-like skill games and cannabis businesses as well as setting new rental car and leasing fees.
Clearly these funding challenges are requiring states to step up and reassess how to improve transit. But these funding battles are also inspiring agencies to think big—both at the federal, state, and local level—about new ideas for where funds can come from for the next big transit project.
