Will Trump Defund Transit? What’s Really at Stake

Why a Highway Rule Change Threatens Green Transit

Federal transit money currently underwrites everything from new subway cars in Boston to rural bus routes in the Midwest. Between 2020 and 2024 alone, the Federal Transit Administration processed 505 grants across 190 congressional districts, split almost evenly between Republicans and Democrats. That’s not a niche program; that’s the backbone of how U.S. cities and towns keep people moving.

Now the Trump administration is pushing a proposal to eliminate the mass transit account of the Highway Trust Fund and block states from using highway formula dollars for transit projects. If Congress folds this into the next Surface Transportation Act, those changes would kick in October 1, 2026.

This matters because public transportation isn’t just about getting from A to B. It’s a core piece of any serious green technology and climate strategy: cutting emissions, reducing car dependence, and supporting AI‑driven smart mobility systems. Pulling federal support now would slow or stall some of the most practical climate solutions we actually have.

In this post, I’ll break down what’s on the table, who gets hurt, and how cities, agencies, and climate‑focused businesses can respond — including how digital and AI tools can keep transit and green mobility moving even in a tougher funding environment.

What the Trump Proposal Actually Does

The proposal does two big things that directly cut federal funding for public transportation:

1. Eliminates the Mass Transit Account of the Highway Trust Fund.
2. Prohibits states from using highway formula dollars for transit, bike, or pedestrian projects.

For 40+ years, that transit account has been a core deal: Congress raised the gas tax, and a portion of that money was dedicated to public transportation. President Ronald Reagan signed it in 1983, explicitly framing it as a way to finish the interstate system and support the transit needs of U.S. cities.

Under today’s rules:

• Fuel tax revenues are notionally split 80% highways / 20% transit.
• In practice, transit has never truly received the full 20% share, but under the Infrastructure Investment and Jobs Act it’s around 18.2% of Highway Trust Fund spending authority.
• States can “flex” certain highway funds toward transit, complete streets, and active transportation.

Kill the transit account and ban flexing, and two things happen immediately:

• New rail and bus projects stall because local matches and ongoing operating plans assumed federal participation.
• State DOTs are forced back into a roads‑only model, even when they’d rather invest in transit or safer streets.

Transportation for America didn’t overstate it when they said this would “annihilate state and local transportation budgets.” They’re right — especially in metro regions that depend on federal formula dollars to modernize aging systems.

Who Actually Loses? (Hint: Not Just Blue Cities)

There’s a common myth that federal transit money is basically a subsidy for big blue metros. The data doesn’t back that up.

David Schneider, who spent two decades in data and research at the Federal Transit Administration, analyzed FTA grants from FY 2020–2024:

• 505 grants across 190 congressional districts
• 93 grants in districts currently represented by Democrats
• 86 grants in districts represented by Republicans

His point was blunt: ending the mass transit account and blocking highway dollars from going to transit would hit Republican and Democratic districts almost equally.

And we’re not only talking subways in Boston or New York.

Suburban and Rural Impacts

Suburban and rural areas routinely use flexible highway funds to:

• Launch or expand intercity and regional bus service
• Build park‑and‑ride facilities that reduce solo driving
• Add demand‑response shuttles for seniors and people with disabilities
• Support vanpools to job centers and industrial parks

Cut that off, and a few things happen fast:

• Workers lose options. Commuters without cars, or with one car shared across a family, lose access to jobs and training.
• Health access shrinks. Rural transit that gets people to regional hospitals or clinics is suddenly on the chopping block.
• Local congestion worsens. More people are pushed back behind the wheel, even where a transit solution would be cheaper and cleaner.

Schneider summed it up well: highway transfers to transit are “a valuable investment” that benefit motorists and riders alike through less congestion and less pollution.

Why Transit Funding Is a Climate and Green Tech Issue

If you care about green technology, you have to care about how we pay for transit. Buses and trains are where climate policy and tech actually hit the street.

Here’s the thing about federal transit cuts: they don’t just shrink service; they delay or derail green technology adoption throughout the transportation system.

1. Transit Is One of the Fastest Ways to Cut Emissions

Transportation is still the largest source of U.S. greenhouse gas emissions. Every time a city upgrades a bus corridor or extends a rail line, it’s not just a mobility investment; it’s a carbon reduction project.

When funding dries up, you see:

• Fewer bus rapid transit and light‑rail projects
• Slower adoption of electric buses and railcar fleets
• Delayed electrification of depots and maintenance facilities

For green‑tech companies building charging systems, batteries, fleet management software, and optimization AI, this is a direct hit to your future customer base.

2. Smart Cities Need Data‑Rich Transit Networks

Our broader Green Technology series keeps coming back to a core pattern: data + infrastructure = real impact.

Modern transit systems are:

• Instrumented with sensors, GPS, and telematics
• Managed through AI‑powered scheduling and dispatch
• Connected into mobility‑as‑a‑service (MaaS) platforms that combine buses, trains, micromobility, and even carshare

Starve agencies of predictable federal dollars, and they don’t just cancel vehicles or lines. They also cancel or defer the digital and AI investments that make service efficient and climate‑friendly.

Concrete examples:

• AI route optimization that can cut fuel use and deadhead miles by 10–20% never gets procured because the agency is in survival mode.
• Predictive maintenance systems that extend vehicle life and reduce waste are delayed “until we have funding certainty.”
• Real‑time passenger information that nudges people out of cars (“Your bus arrives in 3 minutes”) becomes a “nice to have” instead of a default.

3. Car Dependence Is the Most Expensive Path

Evergreen Action’s Liya Rechtman nailed the broader impact: forcing states back into a cars‑only system locks households into the most expensive option.

Cars require:

• Upfront vehicle purchase or lease
• Fuel (or electricity), insurance, maintenance
• Parking costs — both public and private

Strong transit networks, especially when backed by digital trip‑planning and payment tools, give people cheaper options. That’s not just climate policy; it’s household cost‑of‑living policy.

The Politics: “Roads and Bridges” vs Real Mobility

House Transportation and Infrastructure Committee Chair Rep. Sam Graves put it plainly:

“We're not going to be spending money on murals and train stations or bike paths or walking paths. We're going to spend money on traditional infrastructure, that's roads and bridges.”

This is the old frame: roads and bridges are “real” infrastructure, while transit, bikes, and walking are extras.

The reality? That thinking is outdated and bad for business.

Why This Frame Fails Cities and States

Most metros are already dealing with:

• Record congestion returning post‑pandemic
• Exploding maintenance backlogs on highways and arterials
• Housing affordability crises linked to long, car‑dependent commutes

Pouring every dollar back into general‑purpose lanes just means:

• More induced demand (traffic comes roaring back a few years after a highway expansion)
• Higher long‑term maintenance liabilities for states
• Fewer riders for transit systems that are trying to modernize and go zero‑emission

Rep. Rick Larsen, the committee’s ranking member, pushed back hard, calling these proposals “harebrained ideas” that ignore the fact that millions of people rely on transit every day and that transit investments create and support jobs.

He’s right. From a strictly economic and climate standpoint, transit should be front and center in any national infrastructure portfolio.

How Cities and Agencies Can Respond Strategically

If these federal cuts move forward, smart players won’t just shrink and wait. They’ll rethink their funding stack and double down on efficiency and data.

Here’s what that can look like in practice.

1. Build a Strong Local and Regional Funding Base

We’re already seeing voters step up: local ballot measures in 2025 approved billions in transit funding across multiple regions. That trend will accelerate if federal money dries up.

Transit agencies and city leaders should:

• Design dedicated local revenue streams (sales taxes, payroll taxes, congestion charges, value capture districts)
• Create transparent project pipelines so voters can see exactly what they’re funding
• Pair each dollar of local funding with a clear emissions and equity impact story

Business leaders and green‑tech vendors can actually help make this case. When your product depends on thriving transit — say, EV bus chargers or AI fleet software — you have a stake in those local revenue measures passing.

2. Use AI and Data to Stretch Every Dollar

If operating money tightens, efficiency stops being a buzzword and becomes survival.

High‑value moves:

• Demand‑responsive service optimization: Use AI to match vehicle supply to real‑time demand so low‑ridership routes aren’t burning fuel and labor for empty buses.
• Integrated mobility platforms: Combine public transit, shared e‑bikes, scooters, and carshare in one app, nudging people toward the lowest‑carbon, lowest‑cost combinations.
• Dynamic pricing and incentives: Offer off‑peak discounts or rewards, managed by AI, to spread demand and reduce fleet needs.

I’ve seen agencies cut operating costs per passenger by double‑digit percentages just by cleaning up schedules and applying basic analytics to AVL/APC data. With federals at risk, that kind of work goes from “innovation pilot” to core business strategy.

3. Prioritize Projects That Advance Climate and Equity Together

When money is constrained, some projects won’t make the cut. The ones that survive should:

• Deliver clear emissions reductions (mode shift from cars, electrification)
• Improve access to jobs, schools, and healthcare for underserved communities
• Be data‑trackable, so you can prove results to local voters and skeptics

Tools that calculate GHG per dollar invested, or access to opportunity per mile of service, help you rank projects objectively and make a stronger case to regional boards and taxpayers.

This is where green technology shines: routing engines, accessibility analytics, and emissions modeling give you the evidence to justify why a transit corridor upgrade beats one more general‑purpose highway lane.

What This Means for the Future of Green Mobility

If Congress adopts the Trump proposal as written, federal funding for public transportation will become less stable and more politically fragile just as cities are trying to adopt zero‑emission fleets and AI‑enabled smart mobility.

That’s bad policy — but it’s not the end of green transit.

The pattern we’ve seen in other areas of climate and green technology is likely to repeat here:

• Federal retreat creates local innovation. Cities and regions that can will build their own funding mechanisms and partnerships.
• Technology fills some of the gap. AI, data, and electrification can make each transit dollar more effective and each vehicle more productive.
• Public expectations shift. Riders who’ve gotten used to real‑time apps, contactless payment, and integrated mobility won’t quietly accept a return to 1990s‑era transit.

For agencies, cities, and climate‑focused companies, the smart move now is to plan as if federal support might weaken while still fighting hard to preserve it. That means:

• Locking in local and regional funding that matches your climate goals.
• Investing in green technology and AI that proves transit can be clean, reliable, and cost‑effective even under budget pressure.
• Making the economic and emissions case for transit relentlessly — to business leaders, voters, and yes, skeptical legislators.

Public transportation is one of the most effective climate tools we already have. Defunding it in 2026 would push the U.S. further from its emissions targets, deepen car dependence, and slow down real‑world adoption of green mobility tech.

There’s a better way to approach this: treat transit as critical infrastructure, fund it like we fund highways, and use technology to make it smarter every year. The question now is whether local leaders and the green technology ecosystem are ready to step up if Washington steps back.