Public transit officials fear coronavirus could send systems into ‘death spiral’

WASHINGTON >> Jeffrey Tumlin, who leads San Francisco’s $1.3 billion transit system, is in a hard spot.

Ridership on his transit system is down 70% citywide, reeling from the effects of the COVID-19 pandemic that has killed more than 138,000 in the United States alone and smothered the national economy.

His agency predicts $568 million in revenue losses over the next four years, and in an effort to stay afloat, he has had to eliminate half his city bus lines, unsure if they will ever come back.

In March, his department received $373 million from Congress as part of a $25 billion package to help public transit agencies across the country.

It was a one-time infusion of funds that staved off the worst — a potential deficit of $410 million by the year’s end that could have forced 1,400 transit workers to lose their jobs and deplete the agency’s rainy-day fund in three months.

But coronavirus cases are rising in more than three dozen states, and the first round of congressional aid is quickly drying up. Transit leaders in cities including Seattle, Los Angeles and Miami warn they need billions of dollars more in aid; otherwise, their systems could collapse.

“Unless the economy comes ripping right back, and there’s a vaccine, and social distancing is eliminated, we fall off the financial cliff in 2023,” Tumlin said. “That would result in such severe service cuts that it puts us on what is called the transit death spiral.”

As transit use plunged across the country because of the pandemic, the economy cratered into a recession, putting nearly 11% of Americans on the unemployment rolls and closing about 66,000 small businesses, dealing a blow to the sales and income tax revenues that many cities and states use to fund transit agencies.

The mix of forces has been brutal: Ridership has plummeted 90% on some of the nation’s biggest systems, including in New York and the San Francisco Bay Area. Reduced tax revenues are forcing state and local leaders to trim their transit subsidies. Transit agencies across the country are projected to rack up close to $40 billion in budget shortfalls, dwarfing the $2 billion loss inflicted by the 2008 financial crisis.

This could affect the industry forever, transit experts said, causing leaders to substantially cut service to match catastrophic drops in revenue. Capital projects meant to upgrade transit systems and reduce the risk of accidents would have to be delayed. Wait times could become so long that using public transit to commute may become unrealistic.

“For city economies as a whole, this is a threat to their viability,” said Ben Fried, a spokesperson for the TransitCenter, a philanthropic foundation that supports nationwide transit overhaul. “For some people, it’s going to put their job out of reach. If employers can’t count on workers having access to jobs, firms are going to choose to locate elsewhere.”

Transit leaders across the country are imploring congressional leaders to provide up to $36 billion in additional assistance.

They want to ensure subways, buses and rail systems across the country can weather a sustained decline in revenue and be ready as the economy and school system reopen.

“Our transit systems collectively move millions of students throughout the school year and are responsible for getting millions more people to work every day,” a coalition of 26 transit leaders wrote to Senate leaders Tuesday. “Without additional federal assistance, many of our agencies will be forced to make difficult decisions that will negatively impact the lives of essential workers and the returning workforce.”

Experts said big city transit systems are likely to be hit the hardest and quickest. Their operating budgets tend to depend heavily on rider fares and sales tax.

But small and midsize agencies, which tend to rely more on direct support from state and local governments or revenue sources like property taxes, will not be spared. They are most likely to see their worst budget woes creep up early next year.

And while the emergency federal funding has stopped transit systems from facing immediate doom, aid is predicted to dry up in five to eight months for big city networks, compared with 12 to 20 months for smaller systems, according to expert analysis.

“If the emergency response is not robust, and robust over a prolonged period of time, these agencies will be looking at long-term cuts to service,” Fried said. “It’s just really scary to think about where transit systems and transit riders are going to end up.”

Already, the situation is grim.

In New York, transit officials have characterized the financial crisis as a “four-alarm fire” that threatens to hobble the city’s transportation network and hamstring the region’s economic recovery.

Since March, when the pandemic ground urban life to a standstill and ridership plummeted more than 90%, the transit system has lost $700 million to $800 million in revenue every month. The transit agency now faces a $10 billion budget shortfall through 2022.

Already, the agency announced it would suspend its sweeping $54 billion plan to modernize the city’s antiquated transportation network — a move that risks plunging the system into disrepair, experts said. Transit officials have also warned of devastating cuts including trimming jobs, reducing service and increasing fares and tolls.

Midsize agencies have not been spared. Denver’s transit agency is cutting service by 40%. In New Orleans, where 14% of its transit workers have tested positive for the virus, fare revenue has dropped by 45%. Cleveland, where unemployment levels have reached 23%, will lose 14% of its revenue by 2021.

This could plunge systems into a “transit death spiral,” where cuts to service and delayed upgrades make public transit a less convenient option for the public, which prompts further drops in ridership, causing spiraling revenue loss and service cuts until a network eventually collapses.

And for many transit agencies, the pandemic came right as their systems were finally recovering from the 2008 recession.

“We all thought that was one of the worst things we’d see in our lifetime,” Beth Osborne, director of Transportation for America, a transit advocacy group, said of the financial crisis’s effect on public transit. “The pandemic is a much more profound, much more immediate impact.”

But the industry’s plight has not been forgotten by those on Capitol Hill.

In May, the House passed a coronavirus aid package that would dedicate an additional $15 billion in funding to transportation agencies.

The package has stalled in the Republican-led Senate.

Twenty-five senators, led by Bob Menendez, D-N.J., urged Senate leaders this month to include $32 billion in aid for public transit in the next coronavirus package the Senate is set to consider in the next two weeks.

“We must recognize the true costs of the coronavirus on our transit systems,” the senators wrote. “Decreased farebox revenue has continued longer than we anticipated two months ago, and the reduction in other revenue sources, such as local sales taxes, are deeper than anyone predicted.”

Sen. Mitch McConnell, R-Ky. and the majority leader, plans to take up another coronavirus aid package when the Senate returns from its recess Monday, but he has said that package will be far narrower than the previous round of relief, including liability protections for companies that reopen during the pandemic and funding for health care and education.

Transit leaders across the country warn that the longer Congress waits to act, the deeper the effects will be to their city’s bus, rail and subway systems.

“When they get around to it, they no longer are doing damage prevention,” said Karl Gnadt, managing director of the Champaign-Urbana Mass Transit District in Illinois. “The damage is already occurring.”