Date: February 15, 2023
Author(s): John Gahbauer, Juan Matute, Brian D. Taylor
Abstract
California supports transit with operating subsidies through Transportation Development Act (TDA) funding. However, these subsidies are not directly linked to an agency’s performance, and they do not provide transit agencies with any direct incentive to improve performance, efficiency, or effectiveness other than to avoid a (seldom enforced) financial penalty. TDA funding is often uncoordinated within regions, and its disbursement is not well aligned with the state’s contemporary social, economic, and environmental goals for transit. Moreover, for transit to be effective at meeting any of these goals, it needs riders above all else—and while the TDA is an important source of operating revenue for agencies across the state, the TDA does not directly support agency actions that increase ridership. On the contrary, the TDA’s funding eligibility threshold requirements (the “farebox recovery ratio” and CPI cost escalation cap) at times gives transit managers an incentive to cut service.