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WASHINGTON – Restrictions on the U.S. Department of Transportation’s (DOT) Urbanized Area Formula Grants negatively impacted Fargo’s Fiscal Year 2024 funding for its public transportation system. The restrictions now apply to Fargo because of the region’s population growth to over 200,000 people, which graduated the from a Metropolitan Planning Organization to a Transportation Management Agency. Unfortunately, this designation has removed a large degree of Fargo’s flexibility in using these funds, resulting in a budget shortfall for the city.
During a Senate Banking Committee Hearing on Wednesday, U.S. Senator Kevin Cramer (R-ND) questioned Christopher Coes, DOT Acting Under Secretary of Transportation for Policy, on the restrictions impacting Fargo’s transportation budget.
The DOT’s restrictions largely prevent Fargo’s formula funds from being used for operating expenses, which has caused significant financial challenges for the city. Cramer expressed his concerns over the perverse incentives the restrictions represent and noted the importance of not punishing communities for their growth.
“I was at a groundbreaking ceremony for the expansion of the Hector International Airport in Fargo. Fargo of course, is our most populous city in North Dakota,” began Cramer. “The mayor, Tim Mahoney, […] brought this to my attention that Fargo had gone […] from 199,999 people to 200,000 […] He noticed this reduction in formula funding, or at least in the amount that Fargo got now. […] So as we dug into it a little more we learned that there are in fact rules, laws, that govern how you can just distribute these funds and transit funds based on size of a community.”
“My concern is that there's a little bit of a perverse incentive in that formula that actually discourages growth,” Cramer continued. “I just described this situation, told you this story. If you have some thoughts about it, ideas on how we could either legislatively or through a budget process, or whatever discretion the agency would have to sort of not punish communities like Fargo, and see if there's a better way to do this.”
Coes committed to working with Cramer to ensure public transportation systems have the necessary flexibility to meet the needs of their communities.
“We need to give transit agencies their ability to leverage not only the pent-up demand that they're seeing in the private market, but also the unique needs of their residents as we do these travel demands,” said Coes. “So, we would love to work with you, as we say with Senator Van Hollen, to look at how we can make sure the formula programs, particularly on the transit side, particularly these larger systems, have the flexibility they need to meet the changing environment, which again comes back to people want to live in great quality neighborhoods.”