At this rate, Ohio will fully fund transit sometime in the 22nd century

e 79th rapid station

The nearly decrepit East 79th rapid station, which the Greater Cleveland RTA estimates will require $16-18 million in renovations to reach ADA compliance (courtesy of Cleveland.com).

Governor John Kasich released his biennial budget proposal for 2016-2017 last week, and there’s some good news for transit users in Ohio: the budget actually proposes increasing state transit funding! In this budget, the Governor lays out plans to increase the amount of money that the Ohio Department of Transportation allocates from the state’s General Revenue Fund to $8.3 million from $7.3.

This proposal represents the first year-over-year increase in state transit spending since 1998. Given that the state has reduced GRF spending on transit by an astonishing 83.5% since its peak in the year 2000, even this modest increase is kind of a big deal. While $1 million is a drop in the bucket in the big picture – it doesn’t even take the state back to 2011 funding levels – it may signal that Ohio is at least slowing the rate at which it has slashed transit spending. I mean, even a $1 increase would be notable in this environment.

ODOT transit funding study

But, about that bigger picture. Last December, ODOT released the preliminary results of a study it commissioned to explore unmet transit funding needs in the state. The report, from respected consulting firm Nelson Nygard, states that the state needs to double the amount of money it spends on public transit each year to meet projected demand. Moreover, just to fulfill unmet demand in 2015, ODOT would need to increase its transit spending by $289 million ($192 million in capital spending and $97 million in operating costs). As The Plain Dealer‘s Alison Grant noted at the time,

A decade from now, Ohio would have to be spending roughly double its $900 million annual outlay on public transit, or $1.8 billion, to meet expected demand. The ODOT study recommends that the state portion of the budget rise to 10 percent instead of today’s 3 percent.

In light of these realities, I decided to put the Governor’s budgetary outlay into perspective: does it really put Ohio on the right path to meeting transit demand? Does this increase in funding seem to represent an actual change in trends, or is it a minor blip for a state that will continue to lag behind its neighbors?

Placing Governor Kasich’s proposal in context

Let’s do some back of the napkin calculations, shall we? The Nelson Nygard study estimates that Ohio will need to spend $1.842 billion on transit from all revenue sources (rate payers plus municipalities, the state, and the federal government). In 2012, Ohio spent a total of $893.1 million. ODOT contributed $27.3 million, or approximately 3%, of this total, with $7.3 million from the GRF and $20 million coming from federal Flex Funds, which states can allocate to transit or highway projects. If the state increases is portion of total transit spending to 10%, as Nelson Nygard recommends, that would require a total investment of $184.2 million from ODOT, or an increase of 674%.

Accordingly, ODOT needs to come up with an additional $157 million in the next decade. Taking into account that the Governor’s current budget proposal would lock in spending levels through 2017, that reduces that time period from 10 to 8 years. So, to get to the levels suggested by ODOT’s study, Ohio would need to increase spending by $19.5 million per year, on average. That’s considerably higher than what the Governor is recommending.

Where would the Governor’s proposal leave us, then? Well, let’s consider 3 separate proposals. First, we will assume that the state increases GRF funding for transit by an average of $1 million per year (given that the state operates on a biennial budget cycle, this would likely mean that funding increased by $2 million each budget cycle). Second, let’s project that ODOT increases total transit funding by the same year-over-year rate that the Governor is proposing in his current budget. Going from $27.3 million to $28.3 million represents a 3.66% annual increase. Third, let’s be extremely optimistic and imagine that Ohio actually proposes increasing GRF funding for transit by the same rate as we find in 2016-2017 budget. Using the numbers provided, that would give us a 12.05% annual increase in GRF spending, which, of course, is little more than a pipe dream. But anyways.

Scenario 1: Increase of $1 million per year

This estimate isn’t exactly rocket science. Ohio needs to come up with another $157 million to meet projected needs for 2025. So at an annual increase of $1 million per year, the state is currently on course to meet 2025 demand in the year 2172. Now, that number is actually a bit misleading, because it doesn’t take into account inflation. As the total amount of money that ODOT contributes to transit grows, each $1 million funding increase gets proportionally smaller. Assuming a 2% annual rate of inflation (the average rate for the US economy since 2010), state funding would fail to keep pace with inflation starting in 2057. That would dramatically extend the end date for achieving full funding beyond 2172.

Perhaps even more depressingly, if we follow this same trend line, the state would not even return to year 2000 funding levels until 2052. Of course, that number once again fails to take into account inflation; the state would have to spend $60.93 million today to equal the real value of its $44.32 million investment in 2000. Another way of looking at it – the state’s current investment of $7.3 million is only worth $5.3 million in USD 2000. So, for Scenarios 2 and 3, let’s recognize that these quick calculations are nominal, not real, values. Real values would make things that much bleaker.

Scenario 2: Increase in total transit funding by 3.66% per year

If ODOT increased its annual GRF outlay for transit spending by 3.66% each year – a value which should keep pace with inflation, on average – the state would see its transportation funding reach $184.2 million in 2099, just in time to ring in the 22nd century. In nominal values, we would finally get back to year 2000 funding levels in 2063. This estimate is later than that from Scenario 1, as GRF funding grows at an annual rate greater than 3.66% through 2035 in that scenario.

Scenario 3: Increase in GRF funding by 12.05% pear year

Lastly, we get to run this wildly optimistic scenario, which has essentially no basis in reality. If the state continue to increase the amount of money it contributed from its general fund to transit spending at a rate of 12.05% per year, it would still take until 2043 to meet 2025 needs, in nominal terms. Hell, we wouldn’t even catch up to year 2000 funding levels until 2031! And just to emphasize how unlikely this scenario is, it would mean that, by 2068, the state would commit more just to public transit than ODOT will spend in total for 2015. Not happening.

Conclusion

Ultimately, as these scenarios demonstrate, Governor Kasich’s proposed increase in public transit funding hardly amounts to a drop in the proverbial bucket. And that’s only if it gets through the legislature untouched, which is highly unlikely. Keep in mind the Ohio House is more conservative than at any time in the state’s modern history, and the Tea Party generally frowns upon public transportation. Consider, for instance, the all out war on transit launched by the Koch brothers-funded Americans For Prosperity. It’s hard to see how Ohio can get itself on the right course in this current political environment.

I give the Governor credit for at least restoring a sliver of the transit funding that he has slashed since taking office in 2011, but we need to keep things in perspective. This state has consistently failed to support its citizens who rely on public transportation, and it will take a Herculean effort to fix the problem. Providing $1 million more per year is little more to putting a band-aid on a severed artery.