The Proportion of Flexible Funding Used on Transit Projects Has Been Relatively Low

Overall, from the enactment of ISTEA in late 1991 through 2006, the  relative amount of flexible funding used for transit projects, either directly  through FHWA or through transfer to FTA, has been low, averaging less  than 3 percent of the total federal-aid highway program and 13 percent of  available flexible funding. Figure 6 shows the proportion of  FTA funding in each state that came from transferred STP and CMAQ  funds. Of the flexible funding transferred to FTA from 1992 through 2006, more  than half was used on purchases of vehicles—both rail cars and motor  vehicles such as buses—and on projects related to rail lines or bus lanes. The heaviest users of transferred flexible funding on transit—urbanized  areas with populations of over 1 million—spent 55 percent on these types  of projects. Projects for Flexible Funding Are Often Selected through a Competitive Process, Particularly at the Local Level

Of the 10 urbanized areas included in our case-study review that have  decision-making authority for flexible funding, 7 selected projects for at  least some of these funds using competitive processes in which all  eligible project types were considered, including highway, transit, bikeway  and pedestrian, and others. Projects competing in the  alternative transportation category were evaluated based on congestion  reduction, air quality benefit, and the fuel efficiency of the mode of  transportation. Flexibility Enables State and Local Officials to Fund Their Highest Priorities, Which Is Advantageous Due to Demand for Transportation Funding

As a result of the broad eligibility of STP and CMAQ funds, states and  urbanized areas can use a multimodal approach to transportation  planning, selecting projects that they believe best address their  transportation priorities—whether a road project, a transit project, or  projects such as intelligent transportation systems or traffic demand  management strategies. Officials with the MPOs  and state transportation departments we met with said that due to its  broad, multimodal eligibility, flexible funding considerably benefits their  ability to plan and fund their transportation programs, particularly  because of the challenge of finding sufficient revenues to pay for  transportation improvements. DOT generally  agreed with the report’s findings. These officials  provided technical clarifications, which we incorporated in the report as  appropriate. Appendix II: Objectives, Scope, and Methodology

To determine the degree to which flexible funding has been used on  transit and how this use varies across states and urbanized areas, we  analyzed data from FTA and FHWA. To determine how states and urbanized areas have made decisions about  what projects to fund with flexible funding and what the outcomes of  these decisions have been, we selected 9 states and 12 urbanized areas for  case-study reviews. We collected and reviewed: (1)  documentation from the case-study states and urbanized areas, including  information on state and metropolitan planning processes, the criteria and  procedures used in project selection competitions, and projects funded  using flexible funding; (2) federal regulations and guidance related to  transportation planning and the CMAQ and STP programs; and (3) prior  reports on the use of flexible funding by states and urbanized areas.
Why GAO Did This Study

The Intermodal Surface Transportation Efficiency Act of 1991 introduced two highway programs--the Surface Transportation Program (STP) and the Congestion Mitigation and Air Quality Program (CMAQ)--that may be used on both highway and transit projects and that are referred to as "flexible funding" for the purposes of this report. GAO was asked to examine (1) the degree to which STP and CMAQ funding has been used on transit and how this use varies across states and urbanized areas, and (2) how states and urbanized areas decide which projects to fund with STP and CMAQ funding and what the outcomes of these decisions have been. To address these issues, GAO analyzed data on flexible funding used on transit projects from the Federal Transit Administration (FTA) and the Federal Highway Administration (FHWA) and spoke with officials in selected states and urbanized areas about their project-selection processes for flexible funding and the outcomes of these funding decisions. States and urbanized areas were selected based on their prior use of flexible funding. GAO is not making recommendations in this report. The Department of Transportation generally agreed with the report's findings and provided technical clarifications, which were incorporated in the report as appropriate.

What GAO Found

Since the 1991 creation of the two flexible funding programs this report examines--STP and CMAQ--$12 billion from these programs has been spent on transit projects, either directly through FHWA or through transfer to FTA. This spending on transit represents 13 percent of the apportionments for these programs since 1992 and 3 percent of the total federal-aid highway program. However, the amount of FTA funding used in some states has been augmented significantly by these funds; in four states, funds transferred from these programs to FTA made up 20 percent or more of total FTA expenditures. Nearly 80 percent of transferred funds have been used in urbanized areas with populations over one million, and the most common uses of these funds include purchases of transit vehicles such as buses and rail cars, and projects related to rail lines or bus lanes. The 9 states and 12 urbanized areas in our case study review had formal processes for selecting projects for flexible funding. Of these, 7 urbanized areas and 4 states selected projects for all or some of these funds through competitive processes in which projects for different transportation modes were evaluated and selected using established criteria and input from transportation stakeholders. States and urbanized areas that did not use competitions selected projects based on transportation priorities and plans. Regarding the outcomes of decisions on how to utilize flexible funding, state and local officials told us that the broad, multimodal eligibility of this funding program enhances their ability to fund their transportation priorities, particularly in light of the challenge of finding sufficient revenues to pay for transportation improvements.