Bolstering Ohio’s Economy through the Implementation of a Dedicated Funding Source for Public Transportation
This is the sixth installment of GOPC’s six-part series: Getting Ohio to Work: Reaching Opportunity through Public Transportation. Click the following links for the first, second, third, fourth, and fifth blogs.
In Ohio, public transportation is primarily funded at the local level through taxes that vary by county. Eight counties in Ohio, including Cuyahoga, Franklin, Summit, and Montgomery, assess a transit “rider” tax of up to 1.00%, which is an additional tax on the state and general county sales taxes.[i] Other counties fund capital and operations through local property and income taxes. In total, about half of all public transit funding comes from local funds, followed by a quarter of funding through federal dollars, and fares generating around 15%.[ii] In FY2012, just 3% of Ohio’s total investment in public transportation was through state contribution. State funding support has not significantly increased since this low.
The state of Ohio currently capitalizes on two sources of funding for public transit: federal flex dollars and money allocated from the GRF. Combined, these funding sources generated a total of $39.5 million in fiscal year 2018. Federal dollars through the Federal Highway Administration (FHWA) allow Ohio to “flex” $33 million per year in the current two year budget. These funds can be used for capital projects, such as funding the purchase of new public transit equipment like vans or heavy duty buses. See below for a chart that shows federal “flex” dollars that Ohio has capitalized on over the past few years.
The state has also allocated money from the General Revenue Fund (GRF), which is sourced primarily through state income and sales taxes. In the current budget, Ohio has allocated an annual $6.5 million of GRF funds towards public transit for FY18 and FY19. See below for a graph that shows Ohio’s declining allocation of GRF funds for public transportation.
With the line-item for GRF transit lower than it has been since the 1980s, and FHWA flex funding for transit not enough to meet demand for service, Ohio should implement a dedicated transit funding source. Twenty-five states around the country devote specific taxes and fees to transit funds, commonly referred to as a “Public Transportation Fund” or “Multimodal Fund.”[iii] The allocation of funding ensures that there is not only a funding source for public transportation at the state level, but also that it is dedicated, and therefore, cannot be allocated elsewhere. Having a dedicated source of funding usually brings a sense of predictability because transit is not directly competing with other line items for general, unrestricted, dollars. This budget predictability allows agencies to do long term budget forecasting and gives agencies comfort to make large, transformative investments that require repayment over several years.
In Ohio, a new source of dedicated funding of at least $30 million per year could support local agencies’ operating and capital expenses. Dedicated funding could also provide dollars for innovation and improvement, such as redesigning service routes to better connect riders with where they work or centralizing dispatching for dial-a-ride services.