Public transportation in the United States evolved gradually, and general control of these systems has alternated over time between private and government control. In the early part of the 20th century, private companies operated most public transportation systems in the United States, with government involvement largely limited to regulation. Local governments would award exclusive operating franchises to streetcar and bus companies. In return, these monopolies would commit to maintaining service and fare levels.
This arrangement changed after World War I (1914-1918) in response to a number of factors. Automobile ownership grew steadily throughout the early part of the century and provided strong competition to public transportation. In the 1930s the economic difficulties of the Great Depression slashed revenues, and transit companies began to lose money. Service on many routes was eliminated, and eventually the companies gave up their financial participation by agreeing to public buyouts.
After World War II (1939-1945), a period of expanded automobile ownership combined with the rapid growth of suburban communities prompted another decline in public transportation use. To counter this decline and salvage the existing public transportation systems, the financing of U.S. public transportation shifted to the federal, state, and local governments, as well as to special governmental agencies called transit authorities. Increasing costs and declining ridership led these government agencies to raise fares and increase public subsidies in order to maintain the transit systems. The federal Urban Mass Transportation Act of 1964 provided federal funds for upgrading equipment. Government support continues to be an important source of funds for public transportation. By the end of the 1990s, half of the funding for public transportation systems operating in the United States was being supplied by the federal government. Public transportation agencies raised about a quarter of the needed money from taxes, tolls, and fees, and state and local governments provided the rest.
Public transportation planning is a complicated task, especially since over the years many systems have evolved and grown beyond their original designs. New additions to transportation systems are expensive, and building these additions is often disruptive to existing roads or city structures. Each new system must be carefully planned. Population, employment density, prospects for growth, per capita income, car ownership, and ultimate cost are just some of the factors that must be considered when planning public transportation systems.
Planners of bus service must take into account numerous factors, such as past operating practices and procedures, coverage of the current system, local fare prices, land use, population density, employment density, street patterns, and availability of off-street rail transit. Planning of rail transit is more complex, because of the large number of options and the higher costs involved. Key factors include maximization of ridership, efficiency of operations, potential to foster new residential and commercial developments, and cost of construction. No simple formula can determine where a system should be built.