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60 APPENDIX C Observations from the National Transit Database Each year through the NTD, FTA collects operating and ment income, incidental rental revenues earned from unused financial data, including the sources of funds used for operat- equipment and land, donations, grants received from private ing and capital expenditures for systems serving both urban- foundations, and development fees; and ized areas. Over 600 agencies in 450 urbanized areas over Taxes, tolls, and fees that are imposed by transit agencies 50,000 population report annually. In addition, reporting is that are independent political entities. Some transit sys- now required from rural systems receiving federal funds in tems are organized as independent political subdivisions FY 2006. NTD data and guidance for reporting can be found at with their own taxation authority. They can earn funds from taxes, tolls and fees that they are specifically authorized to NTD funding information is reported in four major enact to generate revenue to support transit programs and categories: projects. These are funds dedicated to transit at their source; they can only be used for transit. Other transit systems are a Directly generated funds; part of local or state government, as noted in an earlier Local government sources; section. The revenues to the transit systems raised through State government sources; and the taxing authority of the grantor governmental units are Federal government sources. reported as local or state funds. Transit systems are required to report the original source of Within the directly generated category are the following sources: all funding even when the funding is passed through another agency. For example, FTA Section 5307 funding that is admin- Revenues earned by the transit system as a business unit; istered and distributed by state departments of transportation Dedicated taxes--sales, property, income, gasoline, other; to small urbanized areas are to be reported as federal funds. Bridge, tunnel, and highway tolls; The category of directly generated funds is perhaps the High occupancy/toll lane tolls; and most unclear of the categories reported and is meant to capture Other dedicated funds. funds obtained from nongovernmental sources, including: In 2002, NTD started collecting information on tax rates Revenues earned by the transit system as a business entity for the dedicated tax sources. This requirement was dropped providing passenger service. These revenues typically are 2 years later because of reporting problems. Currently, no earned directly as the result of providing passenger service, information is reported to the NTD on tax rates. e.g., fare revenues, or as auxiliary revenues that are earned At a very general level, funding data in the NTD provide by activities closely related providing passenger service, e.g., a reasonable picture of the mix of local funding sources. bus advertising, station concessions, and parking fees at However, the reporting categories are broad and do not pro- stations; vide information on key characteristics or implementation Revenues earned by the transit system not closely related details such as the tax base, rates, yield or fluctuations, or sta- to providing passenger service. These funds are categorized bility under varied economic conditions. Also, the publicly as nontransportation revenues and, in many cases, are rev- available NTD data do not provide information on mecha- enues that could be earned by business entities not involved nisms that fall into the "Other Dedicated Funds" category that in providing passenger service. Examples include invest- might be new or innovative.

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61 Experience also suggests there are interpretation errors and Finally, access to and use of the NTD data are sometimes dif- definitional confusion among local NTD reporters that lead ficult. The data are presented in Excel spreadsheets and do not to some incorrect reporting on funding information. Three always follow the order of the data items used in the data forms. problems have been observed: Also, sometimes, the explanation of uncommon or unique sources of funds is not provided because it is difficult to share Reporting of federal or state funding as local government responses in a public database. funding from the general revenues. This can occur, for Given these weaknesses, the NTD does not inform potential example, when a transit system receives funding from the users fully on the characteristics, advantages, and disadvan- city's human services department and believes that the tages of alternative local or regional funding strategies, nor funding came from the city's general fund. If the transit sys- can it help guide informed consideration of specific sources. tem had checked the source of funding with the human However, with these caveats, the 2005 NTD data provide a services department, it may have found out that the fund- snapshot of what general sources of funding are in place at the ing came from a state or federal grant, a distinction that is local and regional level. of less consequence for this study; For overall capital investment, over two-thirds of local and Reporting of dedicated local funding as local govern- regional funds for public transportation came from "other" ment funding from the general revenue fund. Like the sources. The NTD did not provide information on what these problem noted above, this can occur when the transit sys- sources were except that they might include vehicle licensing tem makes, but does not confirm, an assumption about and registration fees, communications access fees, surcharges the source of funding. The reporting of dedicated parking and taxes, lottery and casino proceeds, and the sale of prop- fees as a general revenue fund source is an example of this erty and assets. The majority of these funds--$1.2 billion-- problem; and was reported by the New York MTA, however, and only nine There is evidence that often times sources entered as other systems reported revenues in this category. "other" should have more properly been reported under For overall operating support, after fares and earned the more specific funding categories, i.e., there remains income (55.4 percent), over two-thirds of the remaining some vagueness for reporters in the funding source defini- local and regional revenues are from sales taxes (43.3 per- tions, while at the same time routine computer checks of cent) and local general revenues (28.4 percent). "Other" data in "other" NTD categories are not effective. sources (16.2 percent)--property taxes (5.6 percent), tolls, gas taxes, and income taxes--provide the balance (6.7 percent). Like other NTD reporting issues, it is unknown how wide- The large proportion of funds entered in the NTD as "other" spread these problems are. Experience suggests that they are sources provides another indication of the limited usefulness not common and probably will not affect aggregate findings of the NTD as a tool in advancing consideration of new sources from NTD analysis for this project. on the local or regional level. However, this same experience suggests that it would be dif- Among the major features emerging from the national aggre- ficult to revise the NTD reporting system to collect more com- gate numbers are the following: prehensive information on local funding sources. It appears that inaccurate reporting of funds received from local govern- The revenue mix for transit capital investment and for oper- ments will always be a problem. The transit systems have lim- ations is distinctly different. ited resources and do not have the incentives to properly Local capital investment is predominantly from "other" research the sources of local funding. The NTD program also sources and sales tax revenues; and has limited resources and can only provide a general consis- Transit operations are supported largely from fares, sales tency review of the funding data reported. taxes, and local general fund revenues.