Editor’s note: this article originally appeared on Urban Wire and is republished with permission.
Every year, the federal government provides more than $100 billion in transportation funding for states, cities, and towns to maintain and improve their streets, highways, transit systems, and railways. But the Highway Trust Fund, which the government uses to fund those investments, is running out of money. Now, Congress is discussing how to reauthorize various transportation programs, given that financial crisis.
In recent days, the Trump administration has made its preferences known. The administration’s proposal to address the growing gap between trust fund revenues and federal spending is to reduce spending on public transportation and shift toward a “user pays” system, in which car and truck users pay the costs of the investment.
Specifically, the administration is reportedly proposing two major changes:
- Eliminate the trust fund’s mass transit account, which distributes about $15 billion annually to transit agencies for operations and capital needs.
- Prevent states from “flexing” federal highway funds for transit, which some states, such as Pennsylvania, do to assist their transit agencies.
These changes, which must be approved by Congress, would slash transit agencies’ budgets, cutting funding by 15 to 20 percent overall according to my analysis, leading to reduced services, delay of urgently needed repairs and improvements, and higher costs of living for millions of Americans. These cuts would disproportionately hurt rural and small communities and would still fall far short of addressing the highway trust fund’s revenue crisis.
To truly make transportation effective and affordable for Americans, Congress should take the opposite tack: increasing support for the nation’s transit systems.
Defunding transit won’t solve the Highway Trust Fund’s revenue crisis
Currently, Highway Trust Fund revenues largely come from gas taxes, which have stayed at the same rate since 1993, even as fuel economy has increased. As a result, inflation-adjusted revenues for the HTF have declined substantially, but Congress has increased spending on surface transportation. Injections of more than $200 billion in federal general fund revenues—largely collected from income tax receipts or sourced from debt—have compensated for the shortfall.
Assuming these conditions continue, the Congressional Budget Office estimates that the trust fund will collect $436 billion less in revenue between 2025 and 2035 than Congress outlays for spending on surface transportation. To fill this gap, Congress would have to allocate substantial new subsidies as part of a reauthorization law.
The feds spend more on surface transportation than they collect
The Trump administration’s proposal to cut transit funding would not come close to solving this problem. Budget office projections show that the gap between all HTF revenues and highway spending alone will continue to grow rapidly over the next decade, outpacing expected transit spending by a total of $194 billion between 2027 and 2035. In other words, fully eliminating transit funding would not cover the shortfall, and Congress would still need to identify massive new sources of subsidies for highways.
Eliminating all federal spending on transit would still leave a $194B gap
Further, the “user pays” principle promoted by the Trump administration doesn’t account for the large negative externalities produced by highway investment or the positive externalities produced by transit.
Highway investment is notably associated with increased pollution, which worsens health outcomes, and higher rates of transportation-related injuries. Transit investment, however, cleans the air and reduces traffic to a degree that almost covers the costs of the subsidies it receives.
Yet neither these highway-related costs nor these transit-related benefits are accounted for in current user fees.
Defunding transit would increase costs of living and hurt smaller communities
Public transit is an essential lever of mobility for millions of Americans, including the estimated one-third of the population who cannot rely on a car to fulfill daily needs because of age, disability, or cost.
Transit also saves millions of people thousands of dollars each year by enabling them to live without a car or allowing them to drive less. Cutting federal funds for transit and the resulting cuts in transit service would likely make thousands of Americans’ lives less affordable, as they would need to buy and maintain cars, while contributing to increased congestion and pollution.
People who ride transit live in all sorts of communities, and transit agencies in rural and small urban areas are the greatest relative recipients of federal support. My analysis of the National Transit Database shows that, for the typical transit system in rural areas, the federal government provided 45 percent of operations funds and more than 70 percent of capital funds in 2024. That’s a far higher share than transit systems in the largest urban areas.
In some small urban areas, like Anniston, Alabama; Bowling Green, Kentucky; Helena, Montana; Jonesboro, Arkansas; and San Angelo, Texas, federal funds cover most transit agency operating costs, paying bus driver wages and covering the cost of fuel. Without federal funds, these agencies may dramatically reduce service or even cut their bus routes entirely, depriving thousands of residents of access to jobs, schools, groceries, and health care.
Transit agencies in rural areas depend more on federal support
Affordable transit requires more federal support, not less
Congress should provide more funding to transit agencies, not less, to increase affordable access to jobs, groceries, and health care. Communities like Cincinnati, which invested in improved transit service, attracted significant new ridership and gave people an affordable travel option. Focusing on highway investment will reinforce pollution and congestion problems established by previous federal spending allocations.
Reauthorization of federal transportation funding should focus on improving the system’s effectiveness and acknowledge the problems that come when the federal government funds only highways. Congress will need to find additional funds to support this allocation, but there are plenty of options to fill the gaps in the Highway Trust Fund without undermining the nation’s transit systems.
