Infrastructure bill provides a boost to public transit, but sustainability remains elusive – Bill in Brief

The American Society for Civil Engineers estimates there is a USD 176bn transit investment backlog, a deficit that is expected to grow to more than USD 270bn through 2029 and to USD 500bn by 2039. To improve the situation, parts of the USD 1trn Infrastructure Investment and Jobs Act (IIJA) provide approximately USD 107bn to the Federal Transit Administration (FTA), including USD 39bn in new funding for public transit over the next five fiscal years (FY22-FY26).


While the IIJA provides a healthy down payment on public transit infrastructure investment, it falls short of providing a comprehensive solution to the existing deferred maintenance. According to the TransitCenter, a recurring annual investment of USD 20bn would be required to properly fund transit service.
Below is a table with the key public transit programs funded by IIJA.
Federal assistance is provided primarily through the public transportation program administered by the Department of Transportation’s FTA. The federal public transportation program was authorized from FY16 through FY20 as part of the Fixing America’s Surface Transportation (FAST) Act. A one-year extension of the FAST Act was enacted for FY21 (ended 30 September 2021). The next five-year authorization—the Surface Transportation Reauthorization Act of 2021—has only been temporarily funded through 31 October.
Public transit faces a vexing set of challenges: inadequate service, limited access, delay and ridership declines. All exacerbated by COVID-19 and require a political will of risking re-election to tackle legislatively. As we move forward, the key issue to address is the funding of operations on annual basis. If that baseline can grow, there’s a possibility of addressing deferred maintenance in a substantive way.
The municipal market can benefit from additional funding for public transit through stronger credit fundamentals for mass transportation systems nationally and increased economic activity in the regional areas served by these systems.
In Process
On 10 August, the US Senate passed on a bipartisan basis the USD 1trn IIJA, also referred to as H.R. 3684. The IIJA focuses on “hard infrastructure.” The IIJA will not get a vote in the House of Representatives until the fate of the USD 3.5trn “soft infrastructure” legislation proposed by congressional Democrats is resolved.
On 28 October, President Joe Biden announced an agreement for USD 1.75trn on the soft infrastructure legislation. As these negotiations continue, Debtwire Municipals, through our Bill in Brief series, will write periodic summaries on elements of the IIJA that directly affect state and local governments.