Key West Transit Development Plan FY2025-2034

10.3 Financial Strategies for Implementation

10.3.1 Local Funding Local funding from the City of Key West plays a critical role in supporting Key West Transit services, as it is used to leverage State and Federal funds. This funding can be used as a “Local Match,” which is required for most State and Federal operating grant programs. Currently, KWT’s local funding comes from various sources including parking fees, parking fines, fare collections, advertising (both onboard and at bus shelters), motor fuel tax rebates, a lease agreement, and interlocal agreements for the Lower Keys Shuttle. These local revenues make up 36.5% of the current revenue budget. This poses challenges because operating grants typically require a 50% local share. With such a small percentage of local funding, the system could face constraints over the next ten years. To adopt the priority service enhancements in the Short-Term Plan, it will be necessary to increase local funding as a match for State and Federal operating funding grants on an annual basis, starting in FY 2026. This increase will ensure that the city can leverage additional funds from higher levels of government to improve and expand transit services. To further support these initiatives, the city could consider establishing a transit municipal services taxing unit . This unit would generate dedicated funding for transit services through property taxes, ensuring a steady revenue stream to maintain and expand transit service and infrastructure. Other options include implementing a tourism tax to provide funding. Given Key West’s popularity as a tourist destination, a small tax from the cruise lines, hotels or other accommodations could generate substantial revenue. This tax would leverage the city’s tourism industry to support public transit improvements, benefiting both residents and visitors.

Another option is introducing a sales tax specifically earmarked for transit projects. A portion of the sales tax rate, dedicated to transit development, would spread the financial burden across a broad base, making it a sustainable funding source. 10.3.2 Federal Transit Administration About: The Federal Transit Administration (FTA) is responsible for providing financial and technical assistance to local public transit systems. The agency administers various programs to support and improve public transportation across the country. Some applicable FTA transit programs which KWT qualifies for (and currently utilizing some) include: Non-Urbanized Area Formula Grants (Section 5311): This program supports public transportation in non-urbanized or rural areas. Funding is allocated to states, which then distribute it to local transit agencies serving rural communities. State of Good Repair Grants (Section 5337): This program focuses on maintaining and rehabilitating existing public transportation infrastructure. It helps transit agencies address the backlog of maintenance needs and keep their systems in a state of good repair. Bus and Bus Facilities Formula Grants (Section 5339): This program provides funding for the replacement, rehabilitation, and purchase of buses and related equipment, as well as the construction of bus-related facilities. Capital Investment Grants (New Starts, Small Starts and Core Capacity): These programs fund major transit capital investments, including new and expanded fixed-guideway systems, such as commuter rail, light rail, and bus rapid transit. Projects are evaluated based on factors like cost-effectiveness and environmental benefits.

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Transit Development Plan FY 2025–2034