The recent financial crisis and the resulting recession have forced over four-fifths of the transit systems in the United States to either reduce services or increase fares due to a sharp decline in government revenue both at the local and state level. According to a survey by Rosenbloom (2010), services during non-peak periods have been reduced by around 60%, services during rush hour by 55% and reduction in the number of transit routes by over 42%. In fact, the survey goes on to demonstrate that such changes have been implemented in over 60% of the transit systems.
Between 2009 and 2010, over eight out of ten largest transit systems in the country estimated a serious shortfall in budget over the next 2-3 years. Many of these transit systems have been forced to reduce personnel. Besides, 50% of these transit systems have diverted their funds from capital use towards maintaining operations, thus preventing effective maintenance and upkeep of these systems (Katz, 2010).
As a result of these recent issues, decline in funding is causing much discomfort and affecting the lives of millions who depend on the transit system for their daily needs. Schultz (2010) says that the primary issue facing transit systems in the massive shortfall in funding from local and state authorities.
Transit funding in California The state of California has supported the transit system at all levels through various means. In terms of funding, California remains one of the top providers of revenue ($2.3 billion in 2008) even after excluding funding from federal and local sources. A major chunk of the funding comes from the excise and sales duty imposed on the sale of fuel. While most of the revenue derived through this method is spent on improving the roadways in the state, California is historically known to set aside a major part of the remaining funds for use by the transit system. For example, 0.25% of the income from sales tax is used by the transit system. Under the guidelines of the Transportation Development Act (TDA) of 1971, these funds are provided through a number of transportation funds that are established in each country within the state (Tolley, 2011). Additional revenue left over from the excise duty on gasoline is also diverted to public transport. This has however been difficult to maintain during recent years due to the huge budget deficit being experienced by the state government. As a result, such excess funds are now included into the state’s general fund. While voter preference to such practices has been negative, the excess funds continue to be diverted away from public transit. On the other hand, local agencies generate funding for the transit system by levying taxes for transit through their respective counties. These transit taxes can range anywhere between 0.5% and 1% and still exist despite the intense public disapproval against additional taxation. The imposition of these taxes, however, requires a two-thirds majority for approval by the concerned county. The importance of transit funding for the public is evident from tax schemes approved in 2008 by voters in the counties of Los Angeles and Santa Clara (Dittmar, 2010). In early 2011, the incumbent governor Jerry Brown put forth his strategy to maintain government spending on public transit at a constant level. However, Murray (2009) warns that funding for the transit system may decline over the next six years if local citizens remain reluctant to approve temporary hikes in taxes. There are also issues from pending legislation whereby the Republicans have been pressing for a reduction in spending on transportation. Hecker (2009) says that such a move would seriously affect state agencies like the Los Angeles Metro that depends on federal inflows for constructing new transit routes. Stanley (2008) believes that although income from sales tax has been increasing since mid-2010 due to the economic recovery, the flow of funds to the transit systems has been very slow. This has put a serious strain on