As SWTA gears up for the spring and for upcoming advocacy engagement in Washington, D.C., several federal policy initiatives are emerging that could significantly shape the future of public transportation. While most state legislative efforts across the SWTA region remain pending for 2026, multiple developments at the federal level are already underway and warrant close attention.

These initiatives have the potential to influence transit funding flexibility, long-term investment levels, and how agencies plan for operations, capital improvements, and workforce sustainability.

Status: Introduced in August 2025; currently before the U.S. House Transportation & Infrastructure Subcommittee on Highways and Transit.

What It Would Do:
The Transit Funding Flexibility Act would amend federal transit funding rules to allow recipients of Urbanized Area Formula Program funds to use those dollars for operating costs associated with equipment and facilities, not just capital expenses.

This proposal addresses a long-standing challenge for many transit agencies—particularly rural, small urban, and Tribal systems—where available federal funds are often restricted to capital uses, limiting agencies’ ability to support day-to-day operations. If enacted, this change could provide agencies with greater financial flexibility and improved operational stability.

The federal surface transportation authorization, which governs highways, transit, safety, rail, and related programs, is scheduled for reauthorization in 2026. Current programs under the Infrastructure Investment and Jobs Act (IIJA) run through 2026 and authorize approximately $108 billion in overall transit investment.

National stakeholder organizations, including the American Public Transportation Association (APTA) and other transit advocates, are actively engaging lawmakers on priorities for the next authorization. Key topics include: 

Increasing overall transit and passenger rail funding

Adjusting formula funding distributions 

Expanding eligibility for operating assistance

Preserving and strengthening existing transit programs 

Exploring greater flexibility between highway and transit funding 

Considering new policy concepts, such as transit-oriented housing support

While the final scope of the reauthorization has yet to be determined, the process is expected to bring substantial discussion—and potentially significant changes—to federal transit policy.

Senate appropriations legislation for FY2026 covering Transportation, Housing and Urban Development, and related agencies.

Annual appropriations of bills establish funding levels for the Federal Transit Administration (FTA) and directly impact grant availability, program priorities, and the pace at which funds are distributed. Decisions made through this process will influence transit funding in the near term while longer-term reauthorization discussions continue.

As Congress approaches recess and prepares for the next legislative cycle, the most significant federal transit policy items to watch include:

H.R. 5024 — Transit Funding Flexibility Act

The 2026 Surface Transportation Reauthorization process

FY2026 federal appropriations affecting transit funding

SWTA continues to monitor these developments closely and will engage with members, partners, and federal stakeholders as discussions evolve. Additional updates—including advocacy priorities and engagement opportunities—will be shared as more information becomes available.

Big conversations are ahead. Watch for upcoming SWTA announcements on Bull Feathers in Washington, D.C