Staff recommends Council forward a recommendation of approval of the Billings MET Transit Financial Sustainability and Governance Study to the Policy Coordinating Committee (PCC) on the study. Approval of the study does not commit the City of Billings or any other entity to take the actions or recommendations outlined in the study. The PCC is scheduled to take final action on the study on July 21, 2026. 

Billings MET Transit undertook the Financial Sustainability and Governance study to examine whether its current governance structure and funding approach are sufficient to sustain transit service into the future, as well as support growth of the system. In recent years, MET Transit improved service, including a network redesign that increased frequency and reliability, which resulted in significant ridership growth across the City. At the same time, the City of Billings and the surrounding area continued to grow with the potential for the Billings Urbanized Area to absorb the Laurel Urban Cluster in the upcoming census. Because of these factors, along with growing interest in additional service both within and outside of Billings, the study was commissioned to provide insight into future potential actions to sustain and grow transit service. The study explores alternative governance models, recommends potential funding sources including a transit fare analysis, and briefly explores return on investment factors for transit service. Council received a presentation of the Billings MET Transit Financial Sustainability and Governance Study at the July 06, 2026 Council Worksession.

Billings MET Transit operates as the designated direct recipient of Federal Transit Administration (FTA) transit funds within the Billings Urbanized Area (UZA), a small urban designation applicable to urbanized centers with populations between 50,000 and 200,000. As the designated recipient, MET administers and utilizes federal funding under a wide range of FTA regulatory requirements, with several sources of funding directly tied to the UZA boundary and the population and land uses within; this boundary is updated with each Federal Census. The boundary is currently separated from the Laurel Urban Cluster by less than two (2) miles; however, development along the I-90 interstate corridor has the potential to join the Billings UZA and the Laurel Cluster within the next census cycle. The absorption of the Laurel Cluster by the Billings UZA would introduce an additional jurisdiction into the urban transit framework as Laurel currently operates public transit service, which has direct implications for funding, service delivery and governance structure.

Regarding funding, MET Transit receives local funding from a number of sources but primarily through a dedicated property tax mill that has been in place since 1978. Recent state level legislation significantly impacted mill revenues across the entire City, leading to stagnating revenue supporting transit. Stable local funding is essential to continue to provide required local match to federal dollars received and to support both transit operations and capital. Facing decreased revenue and recent cost escalations including labor costs, general inflation, and fuel price increases, MET's most recently approved budget requires significant reserve fund use to cover expenditures for the upcoming year. If no action is taken, reserve accounts are projected to decrease to insufficient levels within 5 to 7 years. Without additional funding opportunities, MET Transit will not only be prevented from expanding service, but may also face reductions to existing service. 

Because of these considerations, MET Transit commissioned a study to explore alternative governance models appropriate for a multi-jurisdictional urbanized area, as well as explore funding opportunities to support the transit system. 

The study explores potential governance and funding scenarios supporting transit service; no direct fiscal effects will result in the approval of the study.

The MET Transit Financial Sustainability and Governance Study included a study review committee that included members of the Aviation and Transit Department of the City of Billings, the Metropolitan Planning Organization (MPO - City of Billings), the Lockwood Steering Committee, the City of Laurel, Yellowstone County, Allies in Aging, and School District 2. The study also included outreach to the area community regarding desire for transit service relative to current service areas.

Council may:

• Forward a Recommendation of Study Approval to the Policy Coordinating Committee; or
• Forward a Recommendation of Study Non-Approval to the Policy Coordinating Committee.

A Recommendation of Approval does not commit the City to future actions outlined in this study; rather, this study provides details and guidance for possible future scenarios regarding funding and governance as related to Billings MET Transit and public transit in the Billings area. Any recommendations made in the study would require further action from the Council for implementation.