Motives for Defunding DART, Explained - Part 3

Why can't we just get more money?

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Texas Transportation Code, Chapter 452 is the statute that defines DART as an entity. It stipulates everything about how DART operates in terms of governance, leadership, revenue collection, and taxation.

Section 452.407 outright prohibits DART from imposing a property tax. This limits its taxation powers to sales and use tax, as specified in section 452.401. As for the property around the stations that DART owns, they are also limited by state law. Section 452.108, subsection (e) stipulates that all DART properties must be used for a public purpose. So there’s no way for DART to create a mega food hall or shopping district right off a station to generate rental or retail revenue - it’s up to the member cities or private developers to do it and DART gets only the sales tax generated from it.

DART Is Almost Solely Dependent on Sales Tax.

In 2024, 78% of DART’s revenue came from the 1 cent sales tax. Other revenue came from fares, federal grants (which vary wildly year to year), ad revenue, and miscellaneous sources.

Zero dollars came from the State of Texas. Other metropolitan transit authorities such as Trinity Metro, DCTA, Houston METRO and Austin’s CapMetro likewise receive little to no state funding for their operating budget. However, transit agencies in rural areas or small cities receive substantial subsidies from the state and federal government. These are typically used for dial-a-ride services, paratransit, or subsidized uber vouchers, usually with daily/weekly/monthly usage limits.

Sales tax dependency protects an authority in some ways, as it is immune to legislative fights as seen in the case of SEPTA. But it is also at the whim of economic forces outside their control - during a recession, there is less revenue, which the authorities have to plan for. In DART’s case, they assume a 7 year cycle and adjust their budget accordingly.

In Other Agencies, It’s Usually a Mix, But the State Helps

Looking at the United States, most transit agencies of any size rely on state funding for a big portion of its budget.

We can take the Chicago area for example. It is denser than DFW, but it has a similar number of residents - so theoretically, the same number of ‘customers’. But the Regional Transportation Authority (RTA), which governs the Chicago Transit Authority (CTA), Metra, and Pace, is also tasked with funding the public transit of the outlying suburban cities surrounding Chicago. So in a way, it is more similar to DFW than one might think.

The RTA institutes a scaling sales tax between 0.5% and 1.25% based on what services are provided in a given area. The city of Chicago also instituted a Real Estate Transfer Tax for providing further funds to the Chicago Transit Authority. The RETT (1.4%), sales tax (42%), and fare revenue (19.8%) combined with state funding (16.9%) was not enough to maintain operations in 2026. Like many agencies around the country, RTA has experienced large cost increases since COVID and ridership hasn’t recovered to pre-pandemic levels. Emergency federal COVID funding was also running out, which was being used to fill budget holes.

In late 2025, the Illinois State Legislature came in to comprehensively restructure the state funding mechanism to fully fund agency operations at the end of 2025, recognizing that public transit was a vital part of the economic engine of the state. They did this by dedicated sales tax from motor fuel, an increase in sales tax, and revenue from the road fund. This bill included changes in governance, organization, and service planning to make a more cohesive transit authority in the entire Northern Illinois region and also had items to improve transit in other parts of the state.

Here is a chart based on 2023 data on the share of state funding in transit agencies around the nation:

Comparison between MBTA (Boston), SEPTA (Philadelphia), MTA (NYC), WMATA (DC), LA Metro, RTA (Chicago), and DART

Are There Private Transit Systems? How are They Funded?

Japanese railway systems are famously privately owned. But it is important to note that the majority of rail lines were built before privatization, so the bulk of the capital costs was already paid for by taxpayers. The companies that manage the railways also act as real estate developers - they own the land on and around their stations. It incentivizes them to make the area into destinations worth going to and frequenting. This, combined with the density of Japanese cities, create a positive feedback loop that increases ridership and revenue from these real estate developments.

Not all Japanese rail is profitable, however, as many of the lesser used rural rail systems are run at a deficit, especially as populations decline in those areas. As a result, the more profitable metro lines subsidize the rural lines, and in some cases, federal and local funding is provided to keep the line afloat.

Coming Back Home

Texas metropolitan transit authorities are unique in that they are almost wholly dependent on sales tax. Even looking globally, this is typically not the case, as there are examples in other countries where the most successful transit systems are completely publicly funded with no fares to the end user, with a mixture of federal and local funds. It’s no secret that properly done mass transportation is extremely expensive - perhaps more expensive than what a group of local municipalities can bear with their constrained finances.

Consider that the streets, roads, and highways that we put our cars and trucks on operate under that principle - cities utilize millions of dollars of county funds to finance construction and maintenance of their local roads. TXDOT is projecting $146 billion for the next 10 years for the highways. The federal government will spend several times that for interstates. Why would it be any different for trains and buses?

If state or federal funding isn’t feasible due to the political climate, there are other local funding options that can be taken that don’t need the legislature to write a new bill. Several options are being explored by member cities at this moment, as shown in the table below.

DART’s “Value”

In our next writeup, we’ll go over the perceived “value” DART brings to member cities, and the factors affecting it. Does DART work in the cities? Why does it work? Why doesn’t it?

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