Capital Investment Grants (New Starts)
(Transit CIG)
Department of Transportation63+ transit projects in pipeline; cities planning light rail, bus rapid transit, subway expansions
Summary
The Capital Investment Grants (New Starts) program, run by the Federal Transit Administration, is the main federal funding source cities use to build or expand light rail, subway, and bus rapid transit systems. The FY2027 budget proposes cutting this program by $486 million, a 25% reduction, meaning fewer new transit projects would receive federal grant commitments, though projects with existing signed agreements would still be funded, just at a lower overall level.
Who Is Affected
More than 63 transit projects currently in the federal review pipeline are affected, including cities planning new light rail lines, bus rapid transit corridors, and subway expansions. Major projects with existing Full Funding Grant Agreements, such as the Hudson Tunnel Project, the Second Avenue Subway Phase 2 in New York City, and the Chicago Red Line Extension, would still receive funding but under tighter overall program limits, according to industry analysis of the FY2027 request.
What this cut would actually mean
With less money for new commitments, many cities earlier in the planning pipeline, those still doing engineering and environmental reviews, would likely see their projects delayed for years or dropped entirely, since local governments often cannot cover the federal share themselves. Construction jobs tied to these projects would be postponed, and residents in growing metro areas would wait longer for promised transit lines meant to ease traffic and expand access to jobs; federal reports note that the CIG program funded around $3.8 billion in transit construction grants as recently as FY2025, showing the scale of projects now competing for a smaller pool of money.
Sources
- Department of Transportation FY2027 Funding Request (CRS Report R48947) — Congressional Research Service report describing the FY2027 request to reduce FTA's Capital Investment Grant Program annual appropriation, part of a broader 23% cut to DOT's budget.
- White House FY 2027 Budget Proposal Summary — Summary noting the FY2027 budget reduces FTA capital investment grants to $1.2 billion, $485 million below FY2026 enacted levels.
- Federal Transit Policy & Funding Update — Industry analysis identifying the Hudson Tunnel Project, Second Avenue Subway Phase 2, and Chicago Red Line Extension as major projects with existing Full Funding Grant Agreements under the CIG program.
- Capital Investment Grants Program (FTA overview) — FTA's official description of the Capital Investment Grants program, which funds heavy rail, commuter rail, light rail, streetcars, and bus rapid transit projects.
- GAO-25-107672: Capital Investment Grants Program — GAO report noting that millions of Americans use public transit daily and that in FY2025 the CIG program funded about $3.8 billion in grants for transit construction projects.
- Federal Transit Funding Crisis Looms Before 2026 Deadline — Report noting that as of August 2025, dozens of CIG projects (New Starts, Small Starts, and Core Capacity) were in various stages of federal review, representing billions in requested federal assistance.
Administration's Stated Rationale
“New transit project commitments reduced; existing Full Funding Grant Agreements honored at lower level.”