Examining the Current and Future Demands on FTA’s Capital Investment Grants
2167 Rayburn House Office Building
This is a hearing of the Subcommittee on Highways and Transit.
Summary of Subject Matter
Chairman Tom Petri (R-WI)
December 11, 2013
Today’s hearing will focus on the Federal Transit Administration’s (FTA) Capital Investment Grants program, commonly known as “New Starts.”
Federal public transportation programs have traditionally provided financial support for capital costs and limited operating expenses to local transit agencies around the country. These programs complement our investments in highways and bridges in order to support an integrated national surface transportation network.
MAP-21 reauthorized federal public transit programs for two years and provided approximately $10.5 billion in annual funding.
The majority of federal transit dollars are funded out of the Mass Transit Account of the Highway Trust Fund. Of the 18.4 cents per gallon collected in federal gasoline taxes, 2.86 cents are deposited into the Mass Transit Account for these purposes.
In addition, approximately 20 percent of the federal transit programs are funded from the General Fund. The largest of these programs is New Starts. MAP-21 authorized $1.9 billion in each of the fiscal years 2013 and 2014 for the program.
New Starts is a discretionary grant program that has clear justification criterion and a transparent project selection process. Projects that are selected for funding must have a strong local financial commitment and achieve sufficient ratings in the justification factors, such as cost-effectiveness and the potential for economic development.
Projects currently funded through the New Starts program vary widely across types, regions, and costs. For example, on the high end, the New Starts program is currently contributing $1.5 billion towards a $5 billion rapid transit system in Honolulu. Two multi-billion dollar projects in New York City are also being funded. On the smaller end, the program also funds what are known as “Small Starts” projects. Small Starts must cost less than $250 million total and have a maximum federal share of $75 million. Current Small Starts projects include a Bus Rapid Transit project in Grand Rapids, Michigan, and a light rail expansion in Mesa, Arizona.
The program originally was intended to support new systems, or new extensions to existing systems, but MAP-21 significantly expanded New Starts eligibility. Projects that would expand the capacity of an existing corridor by at least 10 percent are now eligible for New Starts funding.
In November, FTA approved the first Core Capacity project to enter into project development: a $4.7 billion proposal to modernize the red and purple lines in Chicago.
With the expanded eligibilities, one could see a potential situation in which a handful of expensive projects in large urban areas could monopolize the New Starts funding over several years. This could come at the expense of funding opportunities for new public transportation systems in the rest of the country.
We must ensure that federal investment in public transportation projects through this program is appropriately targeted, equitable, and cost-effective.
Today’s hearing will focus on the changes MAP-21 made to the New Starts program. It will also examine how those changes are impacting current and future funding demands.
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