Urban mass transit faces declining federal funds

Funding the buses, subways, and commuter trains that move Americans around in the nation's urban centers is undergoing radical changes. Cuts in federal spending, the expense of maintaining sometimes decaying infrastructure, large employee costs, and rocketing liability-insurance rates have taken a toll on public transit around the country.

The result has been hefty fare increases and reduction of services in some places. But the problems also have resulted in innovative ideas in financing a public service that nationally has seen an increase in users in the past six years.

Before the 1960s, most mass transit was owned and run privately. During the '60s, local governments took over failing systems, with massive aid from the federal government.

However, as part of the drive to reduce its budget deficit, the federal government has proposed a whopping 65 percent reduction in funds for mass transit in fiscal year 1987, from $3.5 billion to $1.2 billion. In the absence of funds from other sources, municipal leaders say, the proposed cut in federal assistance will have immediate impacts on the local level.

The National Conference of Mayors recently surveyed members on the anticipated effects of the proposed federal cuts.

According to Leonard S. Simon, the assistant executive director of the mayors conference, 83 percent of the cities surveyed said there would be fare increases. Nearly 40 percent said the increase would be at least 50 percent above current levels. Seventy-five percent said there would be route reductions, and 69 percent said there would be a reduction of overall services.

One proposed solution is ``privatization,'' or returning large parts of the nation's mass-transit systems to private ownership. No one believes public transit will fully return to the private sector, but a ``balancing of the scales'' is occurring.

The Department of Transportation's Urban Mass Transit Administration (UMTA) is urging increasing use of the private sector to make mass-transit systems more efficient.

UMTA has proposed a rule that would require a certain percentage of services provided and projects undertaken by each transit authority to be open to competitive bidding. In fiscal year 1987, that percentage would be 5 percent, and it would escalate to 20 percent by 1990.

But those with a stake in mass-transit funding are somewhat skeptical about privatization.

Says Mr. Simon of the National Conference of Mayors, ``No matter what level and what type [of innovative financing] is tried, none could ever be successful enough for the federal government to walk away.''

Reagan administration officials insist that they will do no such thing, despite the administration's call for deep cuts in federal spending on mass transit. They argue that increasing privatization will lessen the need for deep subsidies.

Jayne Kirkpatrick of the American Public Transit Association says the administration's focus on privatization is just a smoke screen for getting out of the transit business. She points out that many systems already use private contractors to run bus lines or rebuild infrastructure.

There is no way to make a profit in mass transit, she says. ``Our question to proponents is what has changed since the early '60s when many private companies folded?''

Public-transit advocates note that cutting ``unprofitable'' service would have the hardest effect on those who most need public transportation -- the poor, the elderly, the handicapped.

But since it is not likely that there will be funding growth at the federal level, and transit systems will be fortunate to hang onto what they have, there is much interest in new funding ideas that go beyond privatization. The Conference of Mayors has held a series of meetings around the country on financing public transit.

At a recent meeting in New York City, William Shore, president of the Regional Plan Association, advocated greater reliance on earmarked funding sources, instead of yearly grants from general revenue, for mass transit, and taxing groups that benefit most from mass transit, including motorists and land owners whose property values are enhanced by public transit.

The liability-insurance crisis has also hurt transit systems. Ms. Kirkpatrick has heard of systems with insurance increases ranging from 500 percent to 2,000 percent. Some communities have started pooling resources available to pay liability judgments or starting their own insurance programs.

Despite all the gloom, says Mr. Simon of the National Conference of Mayors, public transit is still a growth industry.

``People want it, need it, and will pay for it,'' he says.