Earlier this week, Streetsblog had news of a House bill that would allow regional transit agencies such as New York’s MTA to spend up to 30 percent of their federal grants on operating costs. Under current law, federal money goes toward capital investment.
This bill, sponsored by St. Louis Democrat Russ Carnahan, is a bad idea.
State and local officials already face too much pressure from constituents and interest groups to keep transit fares down, sacrificing long-term investment to plug operating deficits. This bill would make an even bigger pot of money vulnerable to this temptation.
A provision in the bill calling for localities to increase their own operating spending to win the right to divert federal funds to operating costs actually makes this problem worse, because it would give the states and cities another incentive to divert funds from capital spending.
And, a federal pot for operating costs would allow some states and cities, including New York, to continue to punt on reforming out-of-control union labor costs.
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