How is Transit Funded?

There are four primary sources for transit funding. Federal, State and Local governments are
most common sources of transit funds. Nationally, transit users, through fares paid when using
the system are another source of funding. There are also smaller contributors like collections
from paid advertisements on transit vehicles and property.

Most sources of transit funding are available to support one of two distinct purposes. Operations
funding supports the daily operations of the transit system, including labor, fuel, parts, and
supplies. Capital funding includes construction and maintenance of the system, and major
equipment purchase like buses and trains.

Federal Funds
Until 10 years ago, the federal government was a
strong source of funding for building and operating
transit systems. In 1998, the federal government
stopped almost all funding of transit operations and
reserved their funds primarily for capital purposes
including building transit infrastructure, buying
vehicles and funding major system expansions.

State Funds
When the federal government stopped funding
transit operations, some States filled significant
portions of that gap. Currently, the State of Illinois
provides operating and capital assistance to the
St. Clair County Transit District. At this time, the
State of Missouri does not have a permanent
program to provide a significant amount of routine
funding to transit.
Local Funds
Local communities are most often the primary
supporters of transit operations. Most often sales
taxes, and in some cases property taxes, income
taxes, and use taxes are utilized in communities
across America. In our region, transit is supported
by local sales taxes in Missouri and Illinois.
Passenger Fares
In our region riders pay about 21% of what it
costs to fund transit. On average, in the US
20% of what it costs to operate a transit
system is paid by the riders.
 Transit Funding in our Region
Metro’s ongoing financial challenges have resulted in slower growth in the development of our
regional transportation infrastructure than in many competing cities. Recently, operating shortfalls
forced Metro to reduce transit services.

Present Local Funding

Metro relies on operating revenue received by a ½-cent
transportation sales tax in St. Louis City and County which has
not kept pace with the increasing cost of operating the transit
system. The City of St. Louis appropriates 100% of a ½ cent
transportation sales tax to support Metro operations, which has
been stagnant since 1988.

At present Metro receives 50% of a St. Louis County ½-cent

transportation sales tax. Revenue from this tax has also not
kept pace with inflation in recent years. The lack of growth in
these revenue streams has offered little opportunity to provide
local matching dollars to potentially available federal funds.

St. Louis City and County also began appropriating sales tax
proceeds for capital expansion in 1994. These funds are
devoted almost entirely to the construction and debt payment of
major capital projects, like the recent Cross County MetroLink
extension.

Metro operates service in Illinois through a contract with the St. Clair
County Transit District, which is also supported in part by sales tax
proceeds collected in St. Clair County.

State Funding Opportunities

Many transit systems in the US receive significant capital and operating funds through state
appropriations. State funding can be utilized to provide match requirements for federal funding and
provide the potential for a more stable and expanded Metro System.

Federal Funding Opportunities

At present, the federal government provides transit funding through four primary mechanisms: Formula
Funds, Competitive Grants, Grant Programs, and Major Systems Expansions (New Starts). These
federal funding mechanisms do require a local funding match.