In the United States, federal funding for public transit often accounts for a large proportion of a local agency's budget, especially for capital investments. For this reason, local governments can be expected to plan a portfolio of projects that maximize federal contributions. This study examines the financial effects of federal transit subsidy policy on local transit investment decisions. Data from a System Planning Study for the Geary Corridor in San Francisco are used as an illustration. It is found that federal transit subsidy policy provides financial incentives for local decision-makers to select capital-intensive investment options that may not be efficient or effective. While federal financial incentives are not the only factor influencing local investment decisions, some reform of the current subsidy policy may be necessary to reduce the incentive for ineffective use of public resources.

Choices among alternative transit capital investments are often complex and politically controversial. There is renewed interest in the use of performance indicators to assist in making rational and defensible choices for the investment of public funds. To improve the evaluation of rail and bus performance and provide more useful information for transit investment decision-makers, it is important to use performance indicators that fairly and efficiently compare different transit modes. This paper proposes a set of inter-modal performance indicators in which service input, service output, and service consumption are measured by total cost, revenue capacity miles/hours, and unlinked passenger trips/miles respectively based on economic principles and evaluation objectives. The proposed improvements involve the inclusion of capital as well as operating costs in such comparisons, and the recognition of the widely varying capacities of transit vehicles for seated and standing passengers. Two California cases, the Los Angeles – Long Beach Corridor and the Market/Judah Corridor in San Francisco, are used for testing their usefulness in the evaluation of the efficiency and effectiveness of rail and bus services. The results show substantial differences between performance indicators in current use and those proposed in this study. The enhanced inter-modal performance indicators are more appropriate for comparing the efficiency and effectiveness of different modes or a combination of transit modes at the corridor and system levels where most major investment decisions are made.

Choices among alternative transit capital investments are often complex and politically controversial. There is renewed interest in the use of performance indicators to assist in making rational and defensible choices for the investment of public funds. To improve the evaluation of rail and bus performance and provide more useful information for transit investment decision-makers, it is important to use performance indicators that fairly and efficiently compare different transit modes. This paper proposes a set of inter-modal performance indicators in which service input, service output, and service consumption are measured by total cost, revenue capacity miles/hours, and unlinked passenger trips/miles respectively based on economic principles and evaluation objectives. The proposed improvements involve the inclusion of capital as well as operating costs in such comparisons and the recognition of the widely varying capacities of transit vehicles for seated and standing passengers. Two California cases, the Los Angeles – Long Beach Corridor and the Market/Judah Corridor in San Francisco, are used for testing their usefulness in the evaluation of the efficiency and effectiveness of rail and bus services. The results show substantial differences between performance indicators in current use and those proposed in this study. The enhanced inter-modal performance indicators are more appropriate for comparing the efficiency and effectiveness of different modes or a combination of transit modes at the corridor and system levels where most major investment decisions are made.