Navigating Uncertainty in Federal Transportation Policy

Mass transportation systems support mobility, economic growth, and equitable access to opportunity across American cities. Yet today, just months into President Donald J. Trump’s second term, transit agencies nationwide are bracing for a period of acute uncertainty. With significant policy reversals, staffing cuts, and the suspension of previously awarded federal funds, cities are being forced to reconsider how they plan, finance, and operate public transportation.

To address these emerging challenges, the Penn Institute for Urban Research and the Volcker Alliance recently convened a Special Briefing: The Future of Mass Transportation under Trump and the GOP. The conversation, moderated by William Glasgall, Volcker Alliance Public Finance Advisor and Penn IUR Fellow and Eugénie Birch, Co-Director of Penn IUR and Planning Professor at Penn’s Weitzman School of Design, brought together national experts to assess the changing federal policy landscape and its implications for transit systems nationwide.

Polly Trottenberg, former U.S. Deputy Secretary of Transportation, framed the stakes: under the Biden administration, mass transit was viewed as a national priority—essential for mobility and economic resilience. Legislation like the American Rescue Plan and the Bipartisan Infrastructure Law channeled billions into transit systems, fueling recovery and modernization efforts in cities large and small.

Now, much of that progress is in jeopardy. The Trump administration has already taken steps to freeze discretionary grant programs and reduce staffing at the Federal Transit Administration. These actions signal a significant shift in direction and have sparked concern among transit leaders.

Leslie Richards, former CEO of SEPTA and current Professor of Practice at Penn’s Weitzman School of Design, warned that systems like Philadelphia’s face daunting fiscal challenges. SEPTA is staring down a $200 million shortfall this year alone, raising the prospect of fare increases and service cuts that could ripple across the region’s economy.

The pressure is not limited to the Northeast. David Greising, president of the Better Government Association, spoke to Chicago’s precarious position. A major federal grant to extend the CTA Red Line is now in question, and a broader restructuring of the region’s transit systems may be necessary to address a growing funding gap projected to reach $1 billion annually in the coming years.

Still, there are bright spots. On the West Coast, Randy Iwasaki, CEO of Iwasaki Consulting Services, noted that California transit agencies have seen ridership bounce back to pre-pandemic levels. Planning for global events like the 2026 World Cup and 2028 Summer Olympics continues to drive investment. Iwasaki also highlighted how innovations—such as autonomous vehicles and artificial intelligence—can support more efficient and responsive systems.

From the municipal finance perspective, Kurt Forsgren, Managing Director and Sector Lead at S&P Global, shared that while the public transit sector currently holds a “stable” outlook, it is still navigating complex challenges. S&P revised its outlook in September 2024, citing a national recovery in ridership, cost-cutting measures by transit agencies, and—most notably—the growth of dedicated tax revenues, particularly sales taxes, that in many cases outpaced losses in farebox revenue.

“We raised the ratings on about seven transit operators in November 2024 due to this strengthened tax support,” Forsgren noted. “Still, not all systems have solved for the 'Y' in their budget equation—how to reach sustainable operating balance now that federal relief has largely been exhausted.”

Forsgren emphasized that long-term stability depends not just on local tax bases or service cuts, but on deeper political questions: How do we, as a nation, view transit? Is it a public good deserving of subsidy, or a user-pays system that still requires federal support for capital investment? The answers to those questions will shape credit ratings, investment flows, and transit viability for years to come.

Throughout the briefing, speakers emphasized the need for continued collaboration among federal, state, and local partners, as well as the private sector. Transit-oriented development, smart infrastructure, and data-driven planning will be critical tools for navigating an uncertain future.

As Richards concluded, “When you look at cities where people want to live and work, they have strong, healthy transit systems. I don’t see a future without them.”