More Money for Transit, But Fewer Riders

Public transit systems are getting a lot of money, but not as many people are riding them as before the pandemic. This is causing money problems for transit agencies. We look at why this is happening and what might change.
By Newsroom | Public Transit, Finance |

Public transit systems across the United States are navigating a complex financial landscape, marked by historically high funding levels juxtaposed with persistently low ridership and substantial budget deficits. Billions in federal and state investment have been directed toward transit, yet passenger numbers remain significantly below pre-pandemic levels. This disconnect raises questions about the efficacy of current funding strategies and the long-term viability of these essential services.

Funding Surges Amidst Rider Decline

Transit agencies have seen a notable increase in financial support. The Infrastructure Investment and Jobs Act has allocated substantial funding for public transportation and passenger rail over five years. Concurrently, states are investing billions, and federal funding has nearly doubled since the pandemic. Despite these infusions, transit ridership has not followed suit. As of mid-2024, ridership remained 28% below pre-pandemic levels, with some reports indicating similar trends throughout 2025 and into early 2026.

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Transit funding hits record highs as ridership languishes, new report questions return on billions - 1

  • Increased Funding Streams: Federal investments have surged, and state appropriations are at record highs.

  • Lagging Ridership: Passenger numbers have not recovered to pre-pandemic figures.

  • Fare Revenue Impact: Declining ridership has led to reduced fare revenue, a critical income source for many agencies.

The Fiscal Chasm: Billions in Deficits

While funding has increased, many transit systems face multi-billion dollar deficits. Reports from 2025 highlight nationwide deficits potentially reaching $6 billion. This financial strain forces difficult decisions for transit agencies. To maintain existing service levels, some are reallocating funds previously set aside for system improvements. Others are implementing fare hikes, the second such increase in as many years for some, like NJ Transit.

  • Deficit Magnitude: Estimates place nationwide transit deficits in the billions.

  • Operational Pressures: Agencies are using improvement funds for day-to-day operations.

  • Cost Pressures: Inflation is a significant factor, and labor costs, including fringe benefits, represent a substantial portion of expenses, with some systems spending 83 cents on benefits for every dollar on wages.

Ridership Patterns: Usefulness Over Spending

Analysis suggests that the recovery of transit ridership is tied more closely to the usefulness of the service rather than the total amount of money spent. Systems that continued to serve practical, everyday travel needs, rather than primarily commuter-focused demand, have seen better ridership recovery. Smaller cities, with fewer remote workers and a greater return-to-office trend, have generally experienced higher transit recovery rates compared to large metropolitan areas. Bus ridership has also rebounded more strongly than rail in many areas.

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  • Service Design Matters: The nature of service provision impacts ridership recovery.

  • Everyday Needs: Transit that serves daily commutes and practical travel is faring better.

  • Geographic Variations: Smaller cities and towns show stronger ridership rebound than major urban centers.

Uncertain Funding Futures and Policy Debates

The future of transit funding remains a subject of debate and uncertainty. Federal and state budgets are under scrutiny, and proposed solutions vary. Some legislative bodies are considering increasing dedicated transit payroll taxes, while others face voter rejection of transit funding measures. The political climate, including federal spending priorities, can influence the likelihood of additional financial lifelines.

  • Policy Proposals: Ideas range from payroll tax increases to voter-approved funding measures.

  • Voter Rejection: Some areas have seen public transit funding proposals fail at the ballot box.

  • Budgetary Scrutiny: Increased scrutiny of all state spending is a recurring theme.

Operational Challenges and Service Adjustments

Beyond financial strains, transit agencies grapple with operational challenges that can affect service quality and ridership. Labor shortages and concerns about safety, including rising crime rates on transit systems, have hampered efforts to restore full service and attract passengers. Some agencies are facing the prospect of layoffs and service cuts if immediate solutions are not found.

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Transit funding hits record highs as ridership languishes, new report questions return on billions - 3

  • Labor Issues: Shortages and high benefit costs present ongoing challenges.

  • Safety Concerns: Increased crime rates on transit can deter riders.

  • Service Reductions: Layoffs and cuts to routes or frequency are potential consequences of fiscal distress.

Expert Insights and Calls for Outcome-Based Funding

Experts suggest a shift in how transit funding is allocated. Prioritizing funding based on measurable outcomes rather than established practices could lead to better returns on investment. This approach encourages agencies to focus on delivering effective and efficient services that meet community needs, thereby potentially improving both ridership and financial sustainability.

"Going forward, states and transit agencies should prioritize funding based on outcomes."

Conclusion: A Crossroads for Public Transit

The public transit sector is at a critical juncture. Record funding levels have been insufficient to fully counteract the effects of pandemic-induced ridership declines and ongoing financial pressures. The persistent gap between spending and passenger numbers, coupled with substantial deficits and operational hurdles, necessitates a re-evaluation of funding strategies and service delivery models. Future investments may need to be more strategically directed, focusing on demonstrable outcomes and adapting to evolving travel needs to ensure the long-term health and utility of public transportation systems. The question remains whether current funding mechanisms and operational approaches can adequately address the complex challenges ahead.

Sources Used

Frequently Asked Questions

Q: Why are transit systems getting more money?
Governments are giving more money to help public transit, especially after the pandemic.
Q: Why are fewer people using transit?
Many people still work from home, and transit use is often linked to daily needs, not just commuting.
Q: What problems does this cause?
With fewer riders, transit agencies make less money from tickets. This leads to big money shortfalls and makes it hard to pay for services.
Q: What could help fix this?
Experts say funding should be based on results, like how well transit serves people's needs.
Q: Are all cities seeing the same thing?
Smaller cities are seeing more riders return than big cities, and buses are more popular than trains in many places.