Controlling Soaring Mass Transit Operating Subsidies

Gao ID: 115591 June 23, 1981

Comments were presented on mass transit operating subsidies. Congress first authorized using Federal funds to help pay for mass transit operating expenses in 1974. Since then, a total of about $4.6 billion has been obligated through fiscal year 1980, most of which was used for transit operating expenses. Even with present subsidies, transit systems are experiencing severe financial problems and problems in attaching and retaining commuters. Two of the main reasons given for the growing subsidy demands are that: rapidly rising transit operating costs are not being offset by productivity improvements; and transit systems have adopted and maintained unrealistically low fares even though operating costs are increasing. To improve transit operations, GAO recommends that the Secretary of Transportation direct the Urban Mass Transportation Administrator (UMTA) to: develop and issue policy guidelines defining the role and responsibilities of UMTA in encouraging transit productivity; develop and undertake specific actions to improve transit productivity; require, as a precondition of approving an application for transit vehicles, that the applicant have an effective preventive maintenance program or implement one before transit vehicles are delivered; issue policy guidance to help transit systems assess the cost effectiveness of expanding service in suburban areas; thoroughly study, evaluate, and demonstrate the results of using part-time labor to cope with peaking problems; help encourage transit systems to adopt more realistic, efficient, and equitable fare policies by taking certain steps to have local areas place greater emphasis on the role of passenger fares as a source of transit revenue; issue a fare-policy statement indicating that UMTA desires local areas to give greater consideration to passenger fares as a revenue source and to develop efficient and equitable fare policies; improve headquarters oversight and supervision of regional office activities; assure that grants are promptly closed out and the remaining grant balances deobligated and either lapsed or reapportioned; give top priority to determining the agency's needs for an automated information system; and give priority to determining the amount of apportionments available to urbanized areas and State governors.

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