Capital vs Operating
There are two very different types of funding for public transit--"capital" and "operating." Each goes to different uses, both of which are essential to transit being able to function.
A simple example is what's required for you to make toast with breakfast. Buying a toaster is an investment in kitchen capital; making toast is the operation. The basics are that simple.
Capital
In the context of transit, "capital" refers to physical things that are made, constructed, or used as a part of providing service. Tracks, stations, vehicles, facilities, and equipment are all transit capital.
Capital funding goes toward capital projects and is granted to transit agencies through a number of mechanisms.
- Federal "New Starts" grants are distributed from a pot, which varies in size from year to year, administered by the Federal Transit Administration (FTA), based on the merits of a transit project.
- Federal "formula funds" are part of money that's given annually to transit agencies based on a mathematical formula to determine what share an agency gets (this largely has to do with ridership). These funds typically go toward more regular capital programs, such as to buy new train cars or buses.
- State and local ("matching") funds are money offered by local governments to match federal dollars as part of agreements to match a certain amount of funding.
Examples of capital projects are:
- New buses and train cars to replace old ones
- Replacing aging parts and overhauling vehicles to make them last longer
- Fixing tracks to speed up trains and eliminate "slow zones"
- New signaling systems to improve safety
- Technology to allow real-time information to be transmitted from buses and trains to supervisors and riders
- Building new transit lines (subways/elevateds, commuter rail, light rail, bus rapid transit, etc.)
- Renovating stations to provide modern and comfortable facilities for riders
- Expanding existing transitways or adding new stations
The last major capital plan in Illinois was in 1999, and a new plan is needed as soon as possible.
Operating
Operating money, on the other hand, covers everyday operations, expenses, and general maintenance.
Examples of what operations money is used for in transit are:
- Paying people to operate trains and buses and providing competitive benefits to attract talented workers
- Buying fuel to run buses and locomotives
- Paying utility bills (including the electric bill to run electric trains)
- Vehicle maintenance and keeping up with wear-and-tear
- Infrastructural maintenance (keeping tracks aligned and smooth, sanding down flat spots on train wheels, replacing worn seats, etc.)
- Regular maintenance, such as washing vehicles, station cleaning and trash removal, replacing light bulbs, etc.
- Rent on leased properties
- Materials used for communicating with riders ("customer alerts," signs, etc.)
- Monitoring service reliability and effectiveness
The list really goes on--snow removal, counting passengers, analyzing trends, writing schedules, and on and on and on. But we'll stop there.
To keep fares reasonable (at a rate that would discourage anyone from using transit), transit is given money for operations just about everywhere in the world. This is accepted universally as a necessary public expense because transit benefits everyone (not just those who ride on transit every day).
For comparison, in our communities this expense is very similar to how we also pay for traffic signals/controls, trash pickup, police and fire protection (not to mention quality-of-life, like street cleaning, park maintenance, cultural events, etc.).
While some transit funding comes out the state's general fund, most transit operation is paid for by local taxes and, in large part, through rider fares.
Because when more people ride transit, congestion costs are lower and the communities are more thriving and vital, transit is much like any other public utility. It's a part of what makes an area able to function.
In 2007, the Chicago area won a major and decades-long battle to keep transit running, end a cycle of less service and worse congestion, and save people and businesses time, money, and vitality. But operating money is needed to enhance and expand existing services across the state, to institute new inter-city rail lines, and to expand and install transit wherever it's needed and will provide a public benefit.
Finding new sources of income to expand transit operations is going to be a major issue in the coming years and needs to be realized.
PDF)