Short and long term funding sources

Discussion last Thursday at the Regional Transit Task Force (RTTF) meeting mostly revolved around Metro’s funding issues, and particularly how it relates to the State. You can see the meeting’s presentation here and my live blogging here. Genesee Adkins, King County’s state and federal relations manager summed up what most of us know, government at all levels is hurting, especially now that the federal stimulus funds are drying up.

After her presentation RTTF members started discussing what they think Metro should do. Almost all members agree that over the next few years Metro needs to seek a more sustainable funding source. Where the disagreement lay was what Metro should do in the short term. Should it go to the state this legislative session and ask for both a long term and short term funding source, like a vehicle license fee that expires in a few years, or should it only focus on the long term funding source?

The argument for going this year, which was echoed by the biggest transit advocates, is that Metro provides a basic public service and must be maintained. Alternatively the argument for going next year was that Metro needs to first implement the RTTF’s recommendations, essentially proving to the public and state that Metro is doing everything it can to become more efficient. I think both sides made good arguments, especially in light of the Senate and Governor Gregoire’s hostility towards transit.

During the next meeting RTTF members will hash this out so stay tuned.

42 Replies to “RTTF on Metro Funding”

  1. If Sherwin doesn’t mind, I posted this earlier, but think it’s more appropriate here.
    I thought technology gains meant higher efficiency, but that doesn’t hold true for transit.
    HOW COME?
    (from Metro/ST combined bus/trolley bus statistics available on-line)
    In 2000 bus service cost $2.91 per boarding, and $88.38 per hour.
    In 2008 bus service cost $3.67 per boarding, and $123.45 per hr.
    Thats a 40% increase. The total operating budget went up 52% (from 287m to 438m)
    More riders you say? That went up 30% (from 99m to 127m riders)
    Inflation you cry? Well, the CPI-U for Seattle Metro area only rose 20%.
    Have the fancy bells and whistles transit has been buying these last 8 years really been paying off, or just driving the cost to move a body from A to B through the roof?

    Martin responded with less productive service additions, and I pointed to marginal costs of adding riders. Erik probably hit the nail on the head, with benefit costs.

    Metro needs to have good answers for all this before sticking their hand out for more money every couple of years.

    1. You can’t use the CPI as a measurement of the impact of inflation on Metro. It specifically measures prices of goods purchased by urban consumers; it’s just not relevant to apply to a government infrastructure entity.

      We should be looking at costs of electricity and fuel have risen, cost of maintenance, cost of new labor, changes in service, capital expenditures… you can’t deduce anything from the price of a basket of grocery store goods.

      1. OK, you win!
        Bring on the $20 tabs, higher property taxes, more sales taxes, a share of road tolls, MVET, higher fares, and ‘other unspecified new taxes’.
        (note to self, don’t use CPI-U for anything)

      2. Oh come on, Mike. You’re constructing a false dilemma. CPI-U is a useful measure when you’re talking about certain things affecting consumers. It’s computed by averaging the retail cost of a standardized basket of goods. This means it already includes factors that might also influence the operating cost of Metro, like increasing costs of diesel.

        There is no universal inflation barometer because there’s no such thing as “the” inflation rate. Inflation is an emergent economic phenomenon that appears at different rates in different sectors. It’s not like the federal government periodically decrees that dollars are now worth a set fraction of their value across the board.

      3. Case in point. The price of food at the grocery store and in restaurants has been increasing in spite of “zero inflation”. The necessities of live increase in price because people have to have them, while unnecessary furniture and electronics suffer the “deflation” that everybody’s worrying about.

    2. The average cost of diesel in 2000 it was $1.50 per gallon, while in 2008 was $3.80 per gallon. That’s an increase of 250% which has to account for at least *some* of that operating cost, no?

      1. Electric trolleys are “different”. They make scheduling harder; you need specially-trained mechanics; you need a special contract with SCL for wire maintenance; you need to buy separate buses; etc.

        From the point of view of Metro executives, who probably ride the bus an average of zero times a week, getting rid of the trolleys would just make things simpler.

        As far as the weekends: That’s just an artifact of the fact that our current trolley fleet can’t go off-wire. If they need to do maintenance on part of the street, you can’t just divert the buses, you have to switch to diesel. Same goes for maintenance on the wires (to the extent that there’s an alternate route to the power station, of course). If/when we buy new buses, unless we really screw up, this won’t be a problem.

      2. There is also a separate union to deal with (IBEW) when it comes to maintaining the wire. Lose the wire and you get rid of a union contract, which is the wet-dream of most MBA’s and accountants.

      3. I haven’t seen proof that Metro has a whole wants to eliminate the trolleys. One auditor put this idea in his report, and some faction of Metro’s maintenance workers are pro-diesel, but the Metro leadership hasn’t said they intend to eliminate trolleys. It’s just one idea they’re considering, alongside refurbishing or increasing the trolley network.

    1. No. Sales taxes (especially on a basic commodity like fuel) are extremely regressive. I don’t understand this state’s fascination with the sales tax, it’s about the worst thing you can do if you care at all about tax equality.

      If you want more funding, look to passing the income tax next month, or raise property taxes (which, are not as progressive as income taxes but are still a whole lot better than sales taxes).

      1. The taxes on gas are currently higher than the sales tax rate. Thus, as a first step, I would support restructing the gas tax so that gas is no longer exempt from sales tax, but the gas tax is reduced by an equivalent amount, so the pump price doesn’t change.

        What’s the point of that, if revenue doesn’t increase? Well, it means that about half of the gas tax money is no longer earmarked for highways.

      2. People aren’t pro sales tax per se. They’re just afraid of the California situation where the sales tax remains just as high and there’s an income tax.

      3. as a first step, I would support restructing the gas tax so that gas is no longer exempt from sales tax, but the gas tax is reduced by an equivalent amount, so the pump price doesn’t change.

        I’ve supported this exact thing on the blog in the past. The “earmarked” for special purposes is an accounting slight of hand anyway. It really just provides political cover. Tolls I think are different just like bus fare should be considered a part of Metro’s budget tolls should go toward supporting the highway project that they are charged on.

  2. How about contracting out some of the services? Denver has contracted out about 50% of their operations from what I understand and they have seen a 25% savings in the costs of operations. In Europe a number of cities, such as Stockholm, Helsinki and Copenhagen, have contracted out services. Some have seen costs decline and quality improve.

    1. Ask the passengers on Metrolink train 111 on September 12th, 2008 how that “contracting out to the lowest bidder” thing worked out.

      http://en.wikipedia.org/wiki/2008_Chatsworth_train_collision

      Or then there was the fun that Denver RTD had after one of their contractors (a division of Trailways, IIRC) bid low to win the contract, then couldn’t maintain the service they promised.

      I can’t find documentation for that, but here’s a nice document:

      http://gulliver.trb.org/publications/sr/sr258.pdf

      See especially “Box 3-2” that starts on page 54 of the document, page 66 of the PDF.

  3. How about we finally stop playing games and do what has to be done — increase Property and Asset Taxes?

    Washington deadbeats only pay 25 percent of what “real states” like New York pay in property tax.

    Property tax is the traditional way for funding necessary local services — like transit.

    All the fees, tabs, income taxes, sales taxes, are just ways to skirt the underlying problem that Washingtonians want Premium Government services, but want other people to pay for them…mostly those who work hard for living.

    1. While we’re reforming the tax code, we should institute a graduated income tax, knock down the sales tax by four or five points, and repeal Amendment 18.

      I’ll file an initiative. I’m sure it will pass muster.

    2. We also need to refute the argument that businesses will run to other states. First, there are only a few other states without an income tax, and Idaho and Montana are not the most desirable locations for most businesses. Likewise, some millionaires move overseas but most remain where they want to live regardless of taxes. And the ones who would move their money to tax havens: don’t they have it in tax havens already?

      1. There is no state income tax in Florida and it’s a huge reason retirees from NY buy homes there and live 183 days a year there. It’s also the fourth most populous State in the union behind NY, CA, and TX. TX btw has no corporate income tax. You may think Idaho is nothing but potatoes and supremacist cults but in fact Boise (third largest city in the Northwest United States) is a high tech center drawing companies and jobs.

  4. The issue at hand is at what point can Metro ask for more money?

    I would like responses on that topic rather than people arguing about how efficient/inefficient Metro is, since that discussion is so complex and trying to have it online is essentially impossible.

    1. Well stated. I think the answer lies in my last sentence. “Metro needs to have good answers for all this before sticking their hand out for more money every couple of years.”
      I don’t think they have made a good case for more money,… yet. The task force has established several key metrics that can be compared to peer transit systems.
      How Metro stacks up against the competition will tell the tale.

    2. I think we should hold off for a couple of reasons (in no particular order):

      1) 40/40/20 needs to go before I want to give Metro any more money.
      2) Confidence in Metro needs to be restored before people are going to want to give them any more money. The whole Driver’s Pay/Part Time/Full Time/Over Time BS needs to get straightened out. As well as other issues highlighted by the RTTF.
      3) We need to really find out how far the rabbit hole goes in this recession. What if the recovery stalls/worsens? We don’t want to have to go to the taxpayer twice.

      1. 1 & 2) What if these remain for fifty years? Do we suffer deteriorating service until we die?

        3) We won’t know how far the rabbit hole goes until the recovery, and every indication is it’s several years away, and won’t come until there’s a radical change in policy (building renewable energy plants on a mass scale, retrofitting buildings for efficiency, reviving local manufacturing, writing down zombie mortgages, etc). We can’t predict when/how the economy will worsen, and we can’t just do nothing in the meantime.

        Yes, people are mad that their levies and fare increases promise to increase service and end up just maintaining service, but that’s because the funding base is so unstable, it’s not the transit agencies’ fault.

        I can see some benefit to starving Metro and forcing it to make efficiency changes, because it’s doing that right now. But I don’t want to be left with hourly service because some people are refusing to support Metro until 40/40/20 is repealed.

      2. Yes, if Metro refuses to get their act together, we let it wither until they do. Harsh, but why throw good money after bad? They have to demonstrate that they will be proper stewards of our dollars before we agree to give them anymore.

        Yes a large part of this shortfall is the economy, but Metro was failing to meet it’s promises from the last time it went to voters long before the recession began.

      3. If Metro can’t cut waste in the face of death then does it deserve to live in it’s current state?

        But enough hyperbole, Metro isn’t going to die without increased funding.

  5. If anyone from Metro is listening–you can bring revenues up by charging two-zone fares during off-peak hours! That may be a little change (a 25-cent increase) but in the long run it will help!

    1. You can also bring revenue up by charging absurdly high fares for people who demand 1-seat rides when there’s a perfectly good transfer option available.

      In Boston, the base fare is $1.25, and express buses cost $2.80 or $4.00 depending on where they go. That’s the price for getting a 1-seat ride to downtown, instead of having to transfer to the Red Line at Harvard Square (the tragedy).

      I have to go now, so I’ll let someone else run the numbers to see how much extra revenue that could get us…

      1. LA has an extra $.70 zone charge for any route that goes on the freeway… Metro could do something similar.

  6. The best funding source is a carbon tax. Failing that, a gas tax would be almost as good. Unfortunately, there isn’t any way that a gas tax increase will be politically feasible anytime soon.

    Until Metro gets its costs under control, I don’t think there will be a lot of political support for new taxes. I personally don’t like a higher MVET because it hits car owners regardless of how much they use their cars, and the sales tax is really, really high already.

    Ironically, a prolonged strike might be the best solution for Metro’s budget woes…

    1. Are drivers forbidden by contract from striking? I believe if an agreement can’t be found between King County and the Union it automatically goes to arbitration.

  7. What happened to the study of charging for parking at park&rides? That’s a revenue source that doesn’t require any further approval from the lege. It also disproportionately brings in funds from the suburbs, where more revenue is most desperately needed.

    1. I remember reading that it requires approval of the State Legislature, as most of the park and rides are co-funded by the state DOT.

      Lots that the county or Sound Transit own outright could have fees implemented. Of course, that would cause some confusion.

      A way around is something like what Denver RTD does. They charge a fee for anyone that parks at one of their park and rides who does not have their car registered within the RTD district. They determine this by using the registration plates.

  8. P&R fees, yes, payable by ORCA e-purse but not by passes or transfers. The combined parking+transit fare would have to be low enough to compete with downtown parking garages.

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