Public transit funding and transit use: a panel study of U.S. urbanized areas 2010–2019

Despite the potentially crucial role of public transit in addressing climate change, reducing traffic congestion, and providing affordable transportation options, it remains underutilized in the United States. Policymakers regard increasing investments in public transit as a crucial means to encourage public transit ridership and alleviate the negative consequences of auto dependence. In recent years, a tremendous amount of government funds has been allocated to transit agencies to make transit an appealing mobility alternative. However, transit use has been declining overall. This study investigates this disconnect by assessing the effects of federal, state, and local funding on transit ridership (unlinked passenger trips, UPT) and supply (vehicle revenue miles, VRM, and vehicle revenue hours, VRH). Using a comprehensive panel of over 400 Urbanized Areas (UZAs) from 2010 to 2019, we employ fixed effects, random effects, and instrumental variable models—leveraging political competition metrics (Swing County Population Share and Election Margin) as instruments for federal funding to address endogeneity—to isolate the impacts of distinct funding sources. The results reveal that federal funding serves as the strongest driver of transit metrics, primarily by fueling capital accumulation and asset expansion—a mechanism confirmed through our analysis of fleet capacity. However, the impact of funding is not uniform. We uncover a divergence in efficiency: while transit legacy cities maintain structurally higher baseline ridership, funding exhibits diminishing marginal returns in these large metropolitan areas compared to smaller, developing transit markets. These findings suggest that while federal capital grants are effective, maximizing national ridership requires tailoring allocation strategies to the maturity and scale of urban transit systems.