California and other state governments use funding formulas to apportion, or geographically distribute, billions of dollars of expenditures for government programs every year. Most previous research on funding formulas has not considered the geographic source of tax revenues, and therefore has not examined the geographic redistribution of funding. This study examines the pattern of geographic redistribution that results from the principal transportation funding formula governing the State Highway Account, and finds that 11 percent of California's highway funds were redistributed from the most densely populated counties to the less densely populated counties. The study concludes by questioning the continuing need for the densely populated counties in California to be subsidizing the financing of the sparsely populated counties. While there may be legitimate reasons for such redistribution, the degree of the redistribution may require reassessment.

Federal and state governments are funding formulas to apportion, or geographically distribute, billions of dollars of expenditures for transportation programs every year. Past studies sugest that successful targeting of such funding results in fairness toward all areas while lack of targeting results in favoritism toward some area over others. 

Transit agencies often pursue ostensibly race-neutral policies that, given both the cost structure of public transit and the systematic variations in ridership patterns by race/ethnicity, have racially disparate effects. This analysis explores this issue by examining whether the policies and practices of one agency -- the Los Angeles County Metropolitan Transportation Authority (MTA) -- have disparate effects on minority and white passengers. Using data either collected or reported by the MTA, this analysis finds that, as a group, minority riders pay substantially more for MTA services and receive lower average taxpayer subsidies than do white riders. Specifically, this analysis shows that:

1. Minorities pay a higher fare per mile for transit service than white patrons. Because (1) most MTA fares do not vary with distance and (2) minority passengers have shorter average trip lengths than white passengers.

2. The average public subsidy per minority MTA passenger is less than the average subsidy per white passenger. Because minority passengers, as a group, use fewer expensive-to-provide express and rail transit services and more inexpensive-to-provide local bus service than white passengers, the average taxpayer subsidy of minority passengers is lower than for white passengers.

As this study will show, these racial disparities stem largely from MTA policy decisions to (1) expand relatively expensive rail and commuter express services that serve a disproportionately white clientele and (2) adopt a generally flat fare structure that causes minority riders, who are more likely to make shorter trips on local buses, to cross-subsidize white riders, who are more likely to make longer trips on express buses and rail lines.