How are local governments funding public transit in a time of tight budgets? Solutions range from creating public-private partnerships, to finding matching federal funds, to funding upgrades to current systems with local sales taxes. And don’t forget congestion pricing, used successfully in London and tried for the first time in the United States in New York, starting January 2025.
Is public transit still a widely used travel option since the pandemic? The American Public Transportation Association (APTA) reports that after falling to 20 percent of pre-pandemic levels in April 2020, ridership recovered to 85 percent of pre-pandemic levels in the first four months of 2025. National ridership has increased 25 percent since 2022. As cars and gasoline have gotten more expensive, transit starts to seem like a better bargain, said Paul Skoutelas, president and CEO of APTA.
The high cost of homes near public transit, shown in a joint report between NAR and APTA, reinforces the desirability of transit.
Preference for Walkable, Transit-Oriented Neighborhoods
“NAR housing preference studies have shown growth over the last 20 years, that more and more people want to live in walkable neighborhoods,” said Todd Litman, executive director of the Victoria Transport Policy Institute in British Columbia. Those neighborhoods often have better access to transit.
“In transit-oriented communities, more people can work,” Litman said. “There’s a productivity gain by having multiple transportation options.”
In a 2024 report, Litman looked at different options for funding public transportation. Including discounted bulk passes, property taxes, sales taxes, vehicle fees, utility levies, expanded parking pricing, and station rents from public-private developments, among others. Each was found to have advantages and disadvantages.
One conclusion, said the report: “Recent experience indicates that many citizens will support tax increases to improve public transit services.” The experience of a few cities that have done that is discussed below.
Even people who don’t use public transit benefit from investment in it because of “reduced traffic and parking congestion, improved safety, reduced need to chauffeur non-drivers, energy conservation and emission reductions, and increased regional economic development,” wrote Litman in a 2014 report on funding options for public transportation. Those benefits all still apply after the pandemic.
Federal Programs: Road Diets and TIF
The least expensive way to ease travel and improve safety in metropolitan areas doesn’t require investment in light rail or bus rapid transit. It’s what the Federal Highway Administration calls road diets, or roadway reconfigurations. They usually involve “converting an existing four-lane undivided roadway to a three-lane roadway consisting of two through lanes and a center two-way left-turn lane.”
A federal program that has helped several localities pay for public or private projects is the Federal Highway Administration’s Tax Increment Financing (TIF) program. Authorized in nearly every state, TIF allows public and private projects to borrow based on future increases in real estate value resulting from the completed projects. The improvements made with the help of TIF money raise land value and encourages new development. Some state laws specifically authorize the use of TIF for transportation. The intent is for TIF money to be directed to underdeveloped or distressed areas.
If a state or city uses a program like TIF, the federal investment is for capital expenditures such as buying new rail cars and buses, said APTA’s Skoutelas. Local governments pay for operations. Project Connect, Austin’s first light rail line, includes TIF, he said. So does Seattle’s Sound Transit light rail line.
“Many of our systems are positioned well with local sales taxes,” Skoutelas said. “San Antonio, Houston, Salt Lake City and Denver systems use sales tax as a local match for federal dollars or to fund projects on their own.”
Here is a more detailed look at cities that have passed tax increases to fund transit upgrades.
Cleveland: BRT Brings $9.5 Billion in New Investment
Like many industrial cities, Cleveland was in the economic doldrums before the recession of 2008. But one of its major bus lines very much needed an upgrade, said Maribeth Feke, programming and planning director for the Greater Cleveland Regional Transit Authority. The bus was overcrowded and slow, with a lot of stops and problems running into other bus traffic. The original plan was for light rail, but cost made that impractical.
Opening in 2008, the Cleveland HealthLine BRT — so named because it brings workers and patients to the Cleveland Clinic and University Hospitals Cleveland Medical Center — has been an economic lifeline for the region, bringing $9.5 billion in new investment. The system connects the region’s two largest employment areas, Downtown and University Circle.
The Cleveland HealthLine BRT has been an economic lifeline for the region, bringing $9.5 billion in new investment.
“We tore up everything from building base to building base,” said Feke. “We put in sewer lines, new sidewalks, trash receptacles. Power lines were upgraded.”
The HealthLine was financed in part by the Federal Transit Administration’s New Starts, part of the Capital Investment Grants program. Another source, late in the process, was the sale of naming rights for stations. The Cleveland Clinic and University Hospitals have a 25-year sponsorship. Naming rights for individual stations have also been sold to organizations such as Huntington Bank, Medical Mutual and Cleveland State University.
“We had regular meetings with the larger stakeholders,” said Feke. “That was critical to getting this funded through the federal process.” Transit officials often met with the Cleveland Clinic, major developers and business leaders, and eventually stakeholders changed their development plans. The University law school, business school and school of education were all put on the Euclid Ave. corridor, where the HealthLine ran.
“Euclid has a large number of historic buildings,” Feke said. “So, they were able to use local, state and national tax credits to fund the renovation. Stations and buses were designed to complement the historic corridor.”
The result is 7 miles of roadway improvements on Euclid Avenue and a 2.3-mile transit zone downtown, all resulting from the city’s initial investment of $50 million. The American Society of Civil Engineers called the HealthLine a “game changer” for rapid transit.
Columbus LinkUS: Preparing for Region’s Growth
Columbus showed they were ready to pay for a transit upgrade when 57 percent of voters agreed to double the transit tax from 0.5 cents to 1 cent.
When voters approved the tax increase in November 2024, “they saw a clear return on investment,” said Monica Tellez-Fowler, CEO of the Central Ohio Transit Authority (COTA). “This wasn’t just more buses; it was about increasing overall service by 45 percent. We committed to 14 new or improved lines by the first five years of LinkUS.
“The region is forecast to have 1 million more people by 2050,” said Tellez-Fowler. “We want to be ready.
To bring LinkUS to fruition, COTA partnered with more than 40 municipalities, not solely to improve rapid transit but also to create more than 500 miles of improved
sidewalks, trails and bikeways. On the transit side, LinkUS will help build or improve 14 bus lines and build at least 5 rapid transit corridors. The system will also add up to 8 new COTA//Plus zones, similar to Uber and Lyft, where residents can request on-demand rides.
One reason to choose BRT, Tellez-Fowler said in an interview with local radio station WOSU: It will move as quickly as light rail at one-sixth of the cost.
In May 2025, just a month after revenue from the new sales tax started coming in, COTA expanded late-night service past midnight so second- and third-shift workers could use public transit to get home. In July, COTA’s Board of Trustees approved $30 million in funding for the first round of sidewalks and trails.
“We’re designing complete multimodal corridors,” Tellez- Fowler said. "Between improved transit service and more back-to-work orders, COTA ridership is up 10 percent over last year."
Longer term, success for LinkUS will be “a central Ohio where people can move easily without needing a car,” Tellez-Fowler said. “I’m seeing people want more options — a population that wants to ensure they can age in place. Younger people want to live in the city, but they don’t want to have to buy a car. Families want options so they don’t have to have two or three cars. And, congestion is only going to get worse if we don't expand mobility options.”
Persistence and Partnership Key to Nashville Transit Initiative
Nashville’s 15-year path to dedicated transit funding underscores how persistence, coalition-building and community outreach can pay off. After a failed attempt in 2018, the city returned to voters with the mayor’s “Choose How You Move” initiative. Backed by Greater Nashville REALTORS® (GNR) and a broad alliance of stakeholders, the campaign secured approval for a half-cent sales tax increase in 2024. The campaign benefited from polling, community outreach events and a regional transit summit supported by NAR Smart Growth grants. Late in 2023, Forbes magazine had given us the dubious distinction of having the hardest commute in the United States,” recalled Ryan Adcock, government affairs director at GNR in a NAR May 2025 interview. “That national, negative attention about daily life in our city was only going to have a detrimental effect on the housing market.”
The dedicated funding, expected to generate more than $100 million annually, is already fueling neighborhood-level improvements — safety upgrades at intersections, additional sidewalks and a stronger multimodal network. “At its core, it’s about making neighborhoods, and by extension, our industry, safer,” said Adcock. “This will transform Nashville’s current transit system to one that is safer, easier and more efficient for pedestrians, cars and buses, cyclists, wheelchair users, and families with strollers.”
Denver: Tax Increase Brings Light Rail and BRT
Farther west, where cities are generally more spread out and people are more dependent on cars, tax increases for transit may be a harder sell. Denver passed one in 2004, but a change in the project’s scope meant not all projects were completed.
Henry Stopplecamp retired after eight years as assistant general manager of capital programs at Denver’s Regional Transportation District (RTD). He worked at RTD for 23 years. In 2004, voters approved a 0.4 percent regional sales tax to finance the FasTracks program. It included 122 miles of new commuter rail and light rail, 18 miles of BRT, and 21,000 new parking spaces at rail and bus stations.
Why did voters agree to pay for all this with a tax increase? “Voters knew exactly what they were getting,” said Stopplecamp. “We had a track record of delivering on time and on budget.”
But operating costs went up, and a couple of the projects were not completed because of increased costs for steel, copper, right-of-way, and additional requirements from the stakeholders, Stopplecamp said. RTD learned a useful lesson.
“Before you make a commitment to a budget, get all ingredients in place for major stakeholders so you know exactly what you’re expecting,” he said. RTD ended up having to upgrade the drainage and improve signals and infrastructure.
“These are all good things, but they weren’t originally budgeted,” said Stopplecamp. The stakeholders also wanted grade separation, and the technology on several units changed from diesel to electric — all of which increased the budget.
New York: Congestion Pricing Meeting Its Goals
Congestion pricing, a policy to charge drivers a fee to drive into the most congested part of Manhattan, was controversial before it started. Critics called it elitist, hitting low-income and blue-collar workers who lived in the suburbs and outer boroughs and worked in the city. They predicted it would flood the outer boroughs with traffic from drivers trying to escape the fee.
But the law passed the New York legislature in 2023, asking the Metropolitan Transportation Authority (MTA) “to design a congestion reduction program that addressed the crippling gridlock New York experienced in 2018 and 2019 and raise money for public transit,” said Juliette Michaelson, MTA chief of staff and strategic planning. Gov. Kathy Hochul paused the program days before it was set to begin in June 2024, worried about a political backlash. But it went into effect after the November election, with the toll cut from $15 to $9.
The congestion pricing program was declared a success with cars driving into the congestion relief zone below 60th Street down 14 percent.
Now, Gov. Hochul praises the program as a success, with cars driving into the congestion relief zone below 60th Street down 14 percent. There’s less gridlock on the bridges and in the tunnels into the city, and transit ridership is up across all modes. Revenue is on track to reach $500 million in 2025, allowing the MTA to advance $15 million in capital improvements on its subway, bus, Long Island Rail Road, and Metro-North Railroad systems.
MTA is working to ensure equity in the program.
“Ninety percent of people who work in the Central Business District take transit,” said Michaelson. “People who drive are much higher income, or they work at night.” Overnight, the toll is $2.75 since there’s less congestion then.
There is also a discount for people who need to drive into the city regularly, Michaelson said. After the first 10 trips, they are charged $4.00.
Measures of car traffic, pedestrian traffic and building data show “there are fewer cars but more people” in the city, said Michaelson. “That’s because New York’s transit system is so robust that people have options. This would be very difficult to implement without robust transit and good alternatives.”
It’s a reminder that every city is a little different when it comes to which transit options make sense. But most transit officials would probably agree with APTA’s Skoutelas when he said, “We’ve been behind [in investing in public transportation]. We should be providing people with choices in mobility.”
