Kevin Desmond, King County Metro Transit General Manager
Kevin Desmond, King County Metro Transit General Manager

As the County Council deliberates the 2015-2016 budget, one of the most important discussions is how to maintain Metro’s current level of bus service today without increasing the risk of even greater service cuts in the future when the next, inevitable recession hits our region. Here at Metro, our goal is to avoid past experiences in which overly optimistic revenue forecasts failed to materialize and, as a result, we were unable to deliver the services promised to the public.

The topic is hotly debated, including on this blog. We welcome public discussion and ideas for developing a long-term sustainable funding model for Metro. I read Mr. Whitehead’s recent analysis, and while it includes good observations it overlooks two important aspects: the inherent volatility of sales tax revenue, and the disconnect between the formal economic forecast that predicts uninterrupted growth and the well-established cycle that our region experiences a periodic recession.

This is an important and honest debate. We’ve taken major steps over six years to preserve service through innovation and continuous improvement.  The proposed 2015-2016 budget reflects these realized savings and finds new ways to preserve some additional service previously proposed for cuts. For the first time in preparing Metro’s budget, we analyzed historical impacts of mild to severe recessions. Through this analysis, it was determined that a prudent reserve target should be set at levels that would allow us to ride out something in between:  a moderate recession lasting three to four years. The reserve account is aptly named the Revenue Stabilization Reserve and was created by the County Council in 2011 to serve exactly this function of moderating and absorbing the unpredictable swings of our economy. Until now there was insufficient revenue to put into this fund.

Over the longer term, we also want to have a budget and finances that we believe are sustainable. Let’s remember, twice since 2000 Metro has relied on optimistic and ever-growing forecasts of future revenue only to have recessions (the dot-com recession of 2001-02 and the Great Recession of 2008-10) wipe out expected revenue as people stopped spending – causing Metro to scale back promises of added service. (See sales tax volatility chart – which shows recessions in the 1990s, early 2000s and 2008.)

salestaxgrowthUnder county code, Metro must use the independent Office of Economic and Financial Analysis forecast which in its most recent forecast shows uninterrupted sales tax increases from 2011-2024.  Such sustained growth would be without precedent, but Metro accepted these forecasts in the past: in 2000 after the 0.2 percent sales tax measure that partially replaced MVET, and in 2006 with the 0.1 percent sales tax for Transit Now.  The 2015-2016 budget the Executive submitted and that Whitehead refers to also must use this forecast. Therefore the near and mid-term financial balance sheet shows substantial cash in our Revenue Stabilization Reserve (aka rainy day fund).  Readers must remember this is a forecast; we have not collected this money, it exists only on paper.

So, we had to pose this question: how would our finances behave when the economy slows?  Given past history, and in view of the sales tax volatility, we believe it is prudent and sensible to see what amount of service we could afford and sustain if there is a moderate recession beginning in 2018. The Executive’s proposed budget provides for approximately 3.2 million service hours system-wide.  This assumes a net reduction of 400,000 hours, the first round of which was made in September 2014. Our economic sensitivity analysis shows that this level of overall service should withstand a moderate recession occurring at the end of the decade but only with the assumed rainy day fund levels in this budget proposal.

Metro’s two other major cash reserves (Capital and Revenue Fleet Replacement funds) are intended to ensure there is adequate money set aside in our multi-year financial plan to ensure we can keep our facilities, technology systems and fleet in a state of good repair—deferring maintenance is bad policy that ultimately results in higher costs in the long-run.  We have already diverted about $290 million from our capital and fleet reserves to preserve service over the past several years.  Our capital program now is largely limited to keeping our assets in a state of good repair, and if we are going to preserve existing service, Metro will also need to ensure there will be adequate funds to replace buses that are beyond their useful life of 14 years.

The County Council adopted modifications to the Metro Revenue Fleet Replacement Fund (RFRF) in 2011 to ensure for this outcome.   Reducing this fund now increases the risk that Metro would not have enough money to replace aged buses, especially during an economic downturn.  It’s pretty simple, if we don’t set aside adequate funds now to replace our fleet, we will be faced with either diverting money from our service budget or keeping old buses running even longer.  It’s a trade-off to be sure, but one we think we can avoid through prudent budgeting now.

All of these efforts to ensure for adequate reserves are intended to avoid the very turmoil Metro riders have been subjected to during dips in the economy.  When recessions strike, people stop spending, and the economy drops quickly and recovers slowly. We’ve seen how in good times sales tax can sometimes mean 5 to 10 percent annual growth followed by a quick 15 percent loss totaling hundreds of millions of dollars for vital bus service.  While it’s true that assuming no further recessions could result in an estimated $322 million in the rainy day fund in 2020, it’s equally true that a modest recession, say like the dot-com recession, could wipe out that entire amount illustrating the need to protect against such wide swings.  Similarly, by only cutting the 150,000 hours we did Sept. 27 and not putting sufficient funds into reserves – Metro could be forced into future stop-gap efforts to draw down other capital reserves or making service cuts as the recession affects our sales tax base.

A strong rainy day fund counters that volatility, which is the only dependable source we currently have available. We owe it to the public to plan wisely and spend tax dollars prudently. The question of reserves is a legitimate policy issue and open to honest debate and one our customers are watching carefully as they make life choices based on what transportation system we can commit to over the long haul.

King County Executive Dow Constantine recently said: Spending on service now at the risk of deeper cuts later is a significant policy choice that we should fully discuss. Given our record and spirit of collaboration, I am confident we can arrive at a solution that responsibly secures Metro’s present and future – so that when the economy changes, as we know it will, our riders won’t be left to wonder what’s going to happen to their bus.

The author is the General Manager of King County Metro.

48 Replies to “What is Financial Sustainability for Metro?”

  1. I posted here soon after the recession started that Metro should be trimming low productivity services or those that were just too expensive to maintain in light of the uncertainty of how deep or how long this great recession would last. Remember the great uncertainty of the times as Bush handed the torch to Obama. Our nation was truly stunned and scared as stocks fell to 50% of their value.
    If ever there was a time the public would support changes that restructure service patterns to save operating dollars, that was it.
    Instead, Metro and King County Council went through years of auditor findings, blue ribbon commission studies, raiding all the capital and rainy day accounts, only to announce the sky truly had fallen. Most other agencies circled the wagons, cut service and are now are emerging with in-tact balance sheets and expanding services. Your graph shows that only 5 years in the last 30 have seen negative sales tax revenue declines, yet here we are – broke – with hands outstretched once again for higher tax rates, when ridership doesn’t even keep up with population gains, let alone capturing higher mode shares from it’s biggest competitor, the SOV.

    1. Given mic’s history of opposition to funding public transit, I take everything he says on this topic with a huge grain of salt.

      Yes, Metro went through several audits, and adopted many of the recommendations in them, perhaps too many (like when the 71-74 got mis-timed to no longer create combined short headway between the U-District and downtown, because the auditor didn’t understand they were one trunk with four branches).

      Metro did go through a lot of reductions and eliminations of low-productivity routes. In the past, mic argued against these cuts, claiming they broke some previous promise. Show me that promise, mic. I don’t think any such promise was ever made. (His arguments came after-the-fact, during campaign season for more funding, not at the time of the cuts.) But I’m glad to see you’ve changed your mind into supporting cutting low-productivity routes. (Or did you support them, then oppose them when the argument became useful during the spring campaign?)

      Of course ridership can only increase so much when service doesn’t increase, and the buses are all full. The solution is not to starve Metro. It is to add service, so more people can ride.

      I’m thankful Metro hasn’t followed PT’s lead, and cut huge service areas off. I’m thankful Metro hasn’t followed CT’s lead, and shut down on Sundays. I’m thankful the County Council, Dow Constantine, and Kevin Desmond are running the transit system I depend on, and that mic is not. We’d all be forced to walk, bike, or drive everywhere.

      1. Metro did go through a lot of reductions and eliminations of low-productivity routes. In the past, mic argued against these cuts, claiming they broke some previous promise.

        I was thinking I remembered something like that. Come on, mic.

        In addition to everything you say, I’m very glad there was no effort to cut service prior to the establishment of the current service revision policy. The faith that reductions/restructures could have been rational, efficient, and apolitical in 2009 is not warranted.

      2. Oh, yikes.

        I can’t claim to know Mic’s inner-workings, nor do I know if he considers himself tax-wary as a general proposition, versus merely waste-wary (which you are too, Brent, as am I), but I do know that any attempt to construe his criticisms of past planning mistakes and non-optimal uses of available funds as “anti-transit” are wholly inaccurate.

        He is, if I remember correctly, a former Metro driver, with an interest in liveable transit bolstered by at least a moderate level of travel and lived-elsewhere experience. He knows inefficient resource allocation and operational policy when he sees it. Never once has he spoken harshly of expansion funds that would help to serve a functional and mobility-enabling transit network in our city and in transit-amenable parts of our region.

        I am of the impression that Kevin Desmond is one of the strongest Rationalists that Metro has, a long-game strategist for an impactful network with budgetary sustainability. On the latter point, his words above speak highly of his thought process. Nothing whatsoever in this comment should be taken as a criticism of Mr. Desmond personally.

        But… the fact remains that Metro, likely over Mr. Desmond’s objections, did piss away the entirety of its reserves over the last seven years on a network as broken as ever, while resisting even the lowest-hanging operational fixes.

        For example, the urban faction on the County Council and the change-averse elements at Metro HQ should be embarrassed that it took conservative-led horse-trading and a total revenue collapse to finally relieve us of Pay-As-You-Shove-To-The-Exit, possibly the dumbest operational policy ever to find its way into what claimed to be a big-city mass-transit system. “Hey, we’re losing money hand-over-fist, no one thinks our system is remotely time-competitive, the un-scalable nature of our routing design is becoming increasingly obvious… let’s fight tooth and nail to keep using only one door on our buses!” It was as if Metro was going out of its way to appear out of touch with reality.

        Now we’ve weathered the crisis, but only thanks to four fare hikes and a series of questionable interventions. Those emergency infusions, as well as in-perpetuity TransitNow tax collections, did disappear into the general fund with zero quantifiable mobility gains to show for them. That is simply fact! And we still hear no peeps about, say, differential cash fares — an industry best practice — nor do we ever hear of a institutional-culture reorientation (also plenty of precedent for that) to ensure that, from the administration down to the individual-driver level, the transit system will henceforth be implemented in a way that honors and respects taxpayer and farepayer magnanimity in repeatedly rescueing Metro from its self-inflicted dire straits.

        I can’t speak for Mic, but I am not tax-averse at all. In fact, I’m solidly pro-Prop 1, now that I’ve seen the litany of route allocations and of span+frequency investments it is likely to enable (with or without proper rainy-day diversions).

        But when you pretend that King County Metro has a long and glorious track-record of using funds wisely and providing the best results it can at any given level of investment — or when you lambaste Mic for harshly questioning claims of sudden enlightenment in these regards — you do a disservice to those who have been actively harmed by Metro’s objectively — and thus far unrepentantly — poor budgetary stewardship of the recent past.

    2. mic, let’s look deeper at a couple of your sentences:

      Instead, Metro and King County Council went through years of auditor findings, blue ribbon commission studies, raiding all the capital and rainy day accounts, only to announce the sky truly had fallen. Most other agencies circled the wagons, cut service and are now are emerging with in-tact balance sheets and expanding services.

      Another way to put this: “Instead, Metro and the Council struggled to maintain service that is a bedrock of the Seattle economy, rather than making the pre-emptive cuts made by agencies in other areas where transit is far less critical to economic health. They dug under all of the couch cushions, accepting almost entirely the results of an outside audit which recommended changes in Metro operations from subtle to radical, and finding a way to leverage additional federal dollars for a major fleet replacement to free up precious local dollars for operations during the worst part of the downturn. This resulted in the agency being able to maintain service nearly in its entirety when recession-affected local residents needed it the most, and having to cut only about 4%-9% of its service, much less than peer agencies, after the economy began to get back on track. While other local agencies are beginning to backfill small parts of 20%-25% cuts that have been in effect for several years, Metro weathered the recession with a far less meaningful loss in service.”

      Spin? Absolutely. But no more than the sentences you wrote.

      1. How, exactly, did the audit manage to miss cash surcharges, eliminating paper transfers, and trading the punitive generalized peak surcharge for a fare structure that assigned value-added express runs with a value-adjusted fare (all of the above being common practice among the hemisphere’s best big-city agencies)?

        That doesn’t even revisit the restructure question. I can’t imagine the audit had nothing to say there, if it was performed by anyone worth their salt.

      2. Note that my comment, written deliberately to be as spinny as possible, didn’t mention the quality of the audit. The lack of creativity in its fare proposals was just one of many issues with the audit. Personally, I think its worst consequence, worse than anything having to do with fares, was the recommendation (which Metro followed) essentially to treat recovery time as a pure cost center rather than essential to the operability of the network. Fortunately, Metro has been slowly moving back the other direction. RapidRide C/D, for all its problems, has good recovery time, and it looks like some of the Prop 1 money will boost today’s most inadequate recovery times on other Seattle routes. (The most recent runcut I saw suggests that the 7 and 71/2/3/4 need particular help in this respect.)

      3. d.p., I think the better question to ask is who is opposed to cash surcharges and eliminating paper transfers. Someone at Metro or the Council genuinely believes that there is opposition. Who composes that opposition and why? Perhaps they have more clout than the rest of us, or they’re just louder.

        Similar questions can be asked about routes (why did the 62 persist for so long?) or other policies (why do drivers not reliably open the back door on a stop request?), though the fare collection ones are the most pressing.

      4. mic:
        Most other agencies circled the wagons, cut service and are now are emerging with in-tact balance sheets/

        David Lawson:
        Metro and the Council struggled to maintain service that is a bedrock of the Seattle economy, rather than making the pre-emptive cuts made by agencies in other areas where transit is far less critical to economic health.

        Some of these “other agencies” have rather different sources of funding, which aren’t acknowledged very well in either of these statements. Sure, you can say TriMet “circled the wagons” or “made pre-emptive cuts” but the fact is, King County Metro depends on sales taxes. TriMet depends on payroll taxes. This recession impacted consumer spending far more than it did employment numbers.

        So, TriMet cutbacks weren’t quite as bad as King County Metro.

        Also, I would imagine that since Seattle is the headquarters of Amazon, that hd the State of Washington decided to be less generous with its sales tax policy (ie, charge sales taxes on mail or online or other out of state orders like New York and a few other states do) we would probably not be having a discussion about King County Metro cutbacks. Cross state border transactions are currently exempt from Washington state sales taxes
        http://dor.wa.gov/Content/FindTaxesAndRates/RetailSalesTax/DestinationBased/ImplementationFAQ.aspx
        (see question approximately halfway down the page “What about shipping out of state?”)
        However, if you purchase something from a company operating in New York, you must either prove that you are exempt from New York taxes (ie, the buyer is located in a state with no sales taxes), or pay New York taxes just as if you purchased the item at a storefront there.

        Online and similar mail order business isn’t going away any time soon, and those states that rely so heavily on sales taxes are going to have to figure out how to work better with that economy.

      5. Glenn, I think by ‘other agencies’ people are referring more to other transit agencies in Washington State (most notably Community Transit and Pierce Transit) and not agencies in other states. Due to the vast differences in funding structures comparing across states isn’t apples to apples.

        Then again comparing Metro Transit to Pierce and Community transit really isn’t fair as Metro is one of the 10 largest bus operators in the country and the other transit agencies in the state are much smaller.

        As for Amazon, if Washington had a policy similar to New York it is unlikely Amazon would have located here in the first place (perhaps Jeff would have picked Portland instead?). Besides the vast majority of Amazon’s warehouses and data-centers have been located in other states for some time. Who gets to charge the sales tax when a customer in California orders something shipped from a Nevada warehouse when the company is based in NY.

        FWIW I’ve ordered from NY based online companies before and have never been charged sales taxes.

        Under Washington State law I am responsible for paying Washington State use taxes on anything I purchased out of state and did not already pay sales or use tax on. However this is nearly impossible to enforce on individuals except with vehicles. Even businesses are rarely audited for compliance with use taxes.

        The problem of collecting sales taxes on online sales is an issue for every state with a sales or use tax. There are efforts underway to solve this but they haven’t gotten very far due to Supreme Court rulings that say a state can’t make an out-of-state entity collect taxes on its behalf.

      6. The basic problem with the audits is that they are all performed by auditors, not transportation experts. That’s why you won’t find any peer-review-type suggestions, such as cash surcharges, eliminating paper transfers, stop consolidations, more transit ROW priority, signal priority, etc. Nor are the auditors necessarily familiar with all relevant points of law, but I hope the audits at least go through some amount of legal review.

        Some auditor, somewhere, ought to be able to put a dollar figure on the cost to taxpayers of parking a car in a bus lane, but I just don’t think that is most auditors’ expertise.

      7. Job opportunity for auditors with transit expertise. Or a transit consultancy getting into the auditing field.

      8. Then again comparing Metro Transit to Pierce and Community transit really isn’t fair as Metro is one of the 10 largest bus operators in the country and the other transit agencies in the state are much smaller.

        It looked to me as though mic was talking about “peer agencies” which has been used in the past in similar commentaries.

        FWIW I’ve ordered from NY based online companies before and have never been charged sales taxes.

        Maybe it’s just a commercial thing, or falls under the minimum value limit? I do know that any time the company I work for obtains material from certain states back east (New York and several others) we sometimes have to go through a paper tangle to show that we are exempt from paying their state sales tax, since our state doesn’t charge one.

        I attempted to find something about what they are doing online, but what I found led me into a sheer tangle. Apparently New York has managed to make their sales tax code almost as complicated as the federal income tax form.

        As for Amazon, if Washington had a policy similar to New York it is unlikely Amazon would have located here in the first place (perhaps Jeff would have picked Portland instead?)

        All states have taxes of some sort. If he had picked Portland, he would be paying property taxes on his inventory, as well as TriMet payroll taxes and state income tax. If he had chosen one of the low taxed enterprise zones near Bend or somewhere, he’d be facing trying to attract a workforce to live there.

        Bottom line though is that there are some significant issues with trying to rely on something as fickle as a tax that depends so much on local goods movements.

      9. “Job opportunity for auditors with transit expertise. Or a transit consultancy getting into the auditing field.”

        The American Public Transportation Association encourages its members to make use of its quasi-consulting services, for things like peer reviews. Their latest one for Metro was a mix of good and bad ideas, but the bad ones were mostly because they are partially in the business of helping the management side in union negotiations.

        That’s the first “audit” of Metro I’ve seen broach the topic of efficiencies in how fares are collected.

      10. Glenn,
        Even ‘peer agencies’ needs to be taken in context. When discussing funding structure or governance some parts are necessarily state-by-state as the laws and source of revenue are different. For other things agency size is more important and you need to compare similar sized agencies.

        So when looking at cutbacks/restructuring due to the Great Recession PT and CT are more valid than looking at say TriMet. Agencies in other states didn’t face the same drop in revenue due to different funding structures. Furthermore agencies in other states may have received assistance from their state legislature (which didn’t happen in Washington, we’re dead last in state support for public transit)

        All states have taxes of some sort. If he had picked Portland, he would be paying property taxes on his inventory, as well as TriMet payroll taxes and state income tax. If he had chosen one of the low taxed enterprise zones near Bend or somewhere, he’d be facing trying to attract a workforce to live there.

        Washington has an inventory tax as well. Site selection is a matter of trade-offs. Local tax and regulatory structure is only one set of factors.:

        In any case I don’t see a change like New York’s as likely to happen here. In any case even with such a change it is unlikely much tax would be able to be collected from Amazon as most of their warehouses aren’t in Washington (it would be similar to trying to charge Nordstrom Washington sales tax for a sale in one of their New York stores).

        Bottom line though is that there are some significant issues with trying to rely on something as fickle as a tax that depends so much on local goods movements.

        In general I support reform of the WA State tax system. I agree sales taxes are fickle and give us the most regressive tax system of any state.

        However I don’t hold out much hope for it changing soon. The idea of income taxes in Washington is as much of a third rail politically as the idea of sales taxes in Oregon.

      11. if Washington had a policy similar to New York it is unlikely Amazon would have located here in the first place (perhaps Jeff would have picked Portland instead?)

        I’m not sure why. We *do* charge sales tax on amazon purchases, as they are in-state. We don’t charge out of state vendors for online sales in this state. As far as access to the Washington market, the current status quo looks more like incentive for Amazon to be elsewhere, not here–our current policy puts in-state online vendors at a disadvantage.

      12. Djw,
        But we don’t charge Amazon for sales made to California or Oregon.

        Washington can’t charge out of state vendors with no nexus in Washington for sales made to Washington residents. The state can go after residents for failing to pay taxes in out of state purchases, but that is difficult and expensive to enforce.

        I don’t remember all of the reasons Bezos has said he picked Seattle for his startup rather than somewhere else. I know the availability of a suitable workforce was one factor.

        In any case having to charge sales taxes on purchases made in Washington only affected one state when Amazon started. They could sell to the other 49 states without charging sales taxes. Things have changed with Amazon having offices and warehouses scattered all over the country. They have to charge sales taxes in many states now.

    3. Is d.p. the only one who gets it?
      Metro had lots of route efficiency moves in the heads of most transit planners when the recession hit.
      Then was the time to restructure, when the public was scared shitless the sky was falling.
      Not only would the system be better today, but the accumulated savings over the last 6 years, plus doing all the other belt tightening changes Metro has done (and they are to be applauded for doing that), would lessen the impact of the ‘massive cuts or more money’ scenario playing out today.
      I am pro transit, which is why watching Metro continue to lose the mode shift fight makes me angry.
      So build your grand 2nd and 3rd tunnels under Seattle, and your tubes to Kirkland and W.Seattle, bring on your Pill Hill Ebola Streetcars – DOA, while simple solutions to streamlining Metro still sit on the shelf. (e.g. LQA diversions, arterial street parking on clogged corridors, responding to service overloads quickly without Exec/Council approvals, simpler uniform fare structures region wide, trolley expansion)
      At some point, all the overhanging debt being piled up by transit in this region, coupled with taxpayers weariness with higher rates for the same service, and the next big financial crisis will combine to start this boom bust cycle all over again – something Seattle seems to do well.

      1. The question here is how best to address the issues you outline.

        Your method is “no more money until I see real reform”.

        Myself and others believe the best way is to support efforts to get Metro the funding it says it needs while supporting rationalists like Mr. Desmond who are trying to run the agency according to best practices as much as possible.

        Then of course there are the Pollyanna’s who don’t believe Metro needs any reforms or are at least opposed to specific reforms (see the ‘save route X crowd’).

        I’ll point out some of the reforms you advocate are out of Metro’s hands. Issues like on-street parking, bus lanes, queue jumps, and signal priority have to be co-ordinated with the relevant agency.

        Personally I think putting Metro directly under the control of the County Council and Executive was a mistake. Metro would be much freer to enact reforms if it’s governance structure was more along the lines of Pierce Transit or Community Transit with an appointed board. However the chances such a reform will happen are slim to none.

      2. mic, opposing more revenue sources doesn’t help reduce overhanging debt. You seem to be the only one who doesn’t get that.

        Your repeated claims that Metro hasn’t made cuts are just flat-our wrong. They made substantial restructures in 2009, 2010, 2012, 2013, and this year, too. As djw poined out, the restructures in 2012 followed new hard-fought-for guidelines that cut the least productive service and invested in the routes where more capacity was clearly needed.

        You argued repeatedly this past spring that Metro shouldn’t have made those cuts, as they violated past promises to voters for new service (which promises you never documented). Now you argue they should have made some cuts when they had the chance (which they actually did).

        It is hard to believe any of your claims, when so many of them go against the historical record, and therefore hard to buy any of your arguments, especially when they repeatedly contradict each other.

      3. Chris,

        I generally agree that having the county council run the transit system has been plagued with pork-barrel politics. On the other hand, an appointed board will have a more part-time handle on public financing in general, and less access to other fungible funds when an emergency (e.g. the 2009 recession) hits. The county council’s role in scouring for other resources not specifically dedicated to transit may have saved transit’s bacon during the recession.

        That doesn’t mean I agree with the council’s approach of continuing to deplete reserves and continuing to delay fleet replacement. But I think we have to clear out the smoke from some of the campaign rhetoric to have a clear-headed discussion of best governance models.

        I also don’t think very highly of the results at CT and PT, as you may have noticed.

      4. It wasn’t Metro that refused to consider consolidations before 2009. It was the county council who vetoed Metro’s previous attempts at reform if even a few status-quo advocates complained to the council. So the 74 split succeded but many others did not. Metro was essentially beaten into submission not to propose anything like reorganizing the 2 or 4, and that made it shy in a way it’s just now starting to recover from. The blame belongs on the elected councilmembers of the time. But to the council’s credit, it reformed the performance metrics and repealed 40/40/20. The missing piece now is for the council to actively encourage Metro to restructure. The council is saying, “We expect Metro to stick to its performance metrics”. That’s mediocre support for restructures, which (altough better than before) is not the same as active encouragement for restructures.

        For instance, why do you think Metro withdrew its own proposal to restructure the 2 and 4 in 2012? Because activists opposed it of course, but why did Metro listen to the activists? Because it didn’t have confidence the council would sustain the restructure if it reached that level. Again, shyness. Then Metro tried again during the cuts, but now that the cuts are suspended, it’s unclear if the reorg can happen without cuts. And now, because parts of the 2 have underservice, it may be boosted without consolidation. That’s better than a sometimes 30-minute route, but it’s not as good as an ultra-frequent route on Queen Anne Ave and Madison Street.

        So the real problem is the lingering effects of anti-reform councils, and the current council giving basic support but not active encouragement for reorganizations now. True, if Metro had a general manager who was an outspoken activist (say Mike McGinn), he might keep proposing reform after reform in spite of vetos and keep putting the maps in the council’s face until the council said yes. And that would be great but it’s arguably too much to expect, especially since the council appoints Metro’s leaders and they’re supposed to follow the council’s direction.

      5. which is why watching Metro continue to lose the mode shift fight makes me angry.

        You tried to make this claim a few weeks ago, by misreading the evidence you provided and insanely claiming that Seattle’s metropolitan area had faster population growth than any city in China or Africa. Now you’re back to this claim again. Metro transit boardings are up 25% since 2002, despite losing a decent chunk of riders to link; VMT is down slightly in King County over the same period.

        Your method is “no more money until I see real reform”.

        Yes, mic is “pro transit” like Pete Steinbrueck is “pro density”–aways in theory, never anything on the table. His proposal here–massive, politically difficult restructure in the midst of terrifying economic freefall–is a good example. There’s no way the county government, to whom Metro is beholden, would have gone along–for better or for worse, politicians are pretty much always going to be less willing to take the risks associated with big changes in times of chaos and uncertainty. So “I’d support more investment in transit only if they’d done this obviously politically impossible thing” isn’t materially different than saying “I don’t support investing in transit.

      6. Brent,
        The current governance structure does have its pluses and minuses.

        My two main points of comparison (more than PT and CT) are the old federated Metro board, and the Sound Transit board. While the old Metro had much less political interference they operated for 20+ years with little restructuring of routes and service patterns that had been in place since the days of the streetcars. It took takeover by the county to put some much needed restructuring in place. On the other hand 40/40/20 also came about relatively soon after the county takeover.

        By contrast the Sound Transit board seems to mostly follow staff recommendations and doesn’t interfere with day to day business. To some extent this is very likely due to the trustable professional culture the current director has built.

        I believe the CT and PT boards are made up mostly of county and city elected representatives from the respective service areas. So would not be unfamiliar with public financing. The lack of access to other fungible funds in times of shortfall would be a problem.

        In any case I don’t see any change in governance unless the state forces a merger between agencies.

  2. So perhaps the leader of the “Office of Economic and Financial analysis” could guest blog next and explain why there won’t be a recession ever again?

  3. I support public agencies planning their budgets at a sustainable level. Given the reliance on sales tax and B&O taxes for much public funding it is only prudent to restrain spending to a level that can be sustained during an economic downturn. Leave room in the budget to build up reserves in the good times and so the reserve fund can maintain services during the bad.

    Unfortunately many elected officials and members of the general public do not understand how this works. They will call for tax cuts, increased spending, and reductions in reserves during good times. They then turn around and resist tax increases, spending cuts, and criticize agencies for poor planning during bad times.

    In short I support making cuts in the near term to allow Metro’s capital and reserve funds to be rebuilt.

    1. The story in the Bible about 10 years of good harvests followed by 10 years of famines comes to mind.

      It’s always good to save during good times so that you can spend during bad times.

      Apparently fools have been doing the opposite since before Genesis was written thousands of years ago.

  4. According to history, damage from earthquakes, Depressions, and lost elections is not only survivable, but precursors to much improved futures.

    Memories about whoever “calls” next few years’ politics and business cycles- especially in these pages- same as another President said following a really bad reversal.

    But in same vein, future needs “do” more than “say”. Between now and election day, our gorgeous geology can worsen transit’s budget in 20 seconds.

    So vital subject is how we use transit’s present resources to get system in best condition and spirit possible to both survive setbacks take fast advantage of opposite.

    A strong plan and strategy make a very young system in a rich and intelligent region a very good survival bet.

    But as with many intense and focused ideas, a powerful plan for the future is likely the best defense against the worst of presents.

    Mark Dublin

  5. I’m not familiar with how much gets put into reserves and what is plausible. But in an ideal world I would think Metro could build up a few years of reserves. Meanwhile a ranking list of services should be maintained so when a year’s worth of reserves gets depleted then an equivalent amount of the lowest ranked service is eliminated. If a year’s worth of reserves reappears then bring back the eliminated service. Always have a couple years of reserve on hand if possible. Don’t wait until reserves are completely bust before cutting service to where we require a ballot measure. Ballots are too risky.

  6. Thanks to Mr. Desmond for his thoughtful reply.
    Few of us dismiss the possibility of a recession, nor the need to plan accordingly. The room for disagreement is in the details. Metro’s proposed budget is based on a scenario of a moderate recession, and perhaps the most useful response would be to provide the details of that scenario: the assumed dip in revenue, and the specific impact on the rest of the financial plan.

    In response to previous readers’ comments I posted a moderate-recession scenario here:
    https://seattletransitblog.com/2014/10/08/are-the-metro-cuts-needed-again-a-quick-look-at-a-moderate-recession/
    But much more useful would be to have Metro’s scenario.

  7. Last time a fellow contributor asked me get the pigeon off the head of my statue with list of some specifics behind the grandiosity. Should’ve been called out by now. So:

    “Health and Welfare of the Division” -both of them: KCM and ATU Local 587 agree to put hostilities on hold long enough to formulate the joint effort needed to bring the transit system through the next few years.

    Best first step would be to unite Kevin and his office with first-line operating personnel as co-working equals on long-term and day-to-day transit planning. Not just “listen to input”, but “work alongside”.

    I think efficiency-related budgetary results will at least let us have all-door card readers to match San Francisco MUNI, and also chance to turn Breda fleet into a grade-B zombie movie via buying new buses.

    But most important,in addition to long-term benefit, combined knowledge and expertise should should start delivering benefits immediately. For both ongoing operations and a working political coalition for budget-related politics.

    Immediate sources for the above? Start by redirecting enormous consulting costs on the order of the last two Tunnel tests to projects listed above. KCM’s already got several thousand trained consultants in company colors instead of suits.

    Also, put first-line consulting personnel into 587 as drivers, and let them regain present positions by seniority. They and their employers will thank you for the career advantages which irreplaceable experience will give them.

    And for the rest of this posting’s discussion, let’s remember that the most pessimistic of balance sheets still has a credit column.

    MD

  8. I feel you need to have a consistent service and only increase service when you have a rainy day fund that would keep your service going for at least 8 years of a down turn. We have only had 1 downturn in the last 100 years that have lasted longer than 8 years. When you increase service you increase your rainy day fund and then you will never have a budget problem

  9. The whole funding model for Metro is lunacy. Why should a subagency be allocated a certain percentage of the tax revenue in the first place? Metro should be allocated a fixed budget by the executive, to provide the level of service the executive wants. The economic forecasting and budgeting should be done once, for the whole of the county, by the executive. When there is a recession, we should take out loans (ie. go into budget deficit), which we can repay in the good years. If what I have described is impossible due to State restrictions, then it is those restrictions on the proper operation of government that should be the real issue.

    1. Stuart,
      Part of King County’s revenue stream includes funds with restrictions on their use. One of those funding sources is the 0.9% sales tax which can only be used for transit.
      You want a bit of a firewall between different functions because otherwise what is to stop the county from say cutting transit or raising sewer rates to fund human services or law enforcement?

      Public agencies in the state of Washington are not allowed to run deficits under the state constitution. Borrowing is allowed, but only for certain purposes and only up to a certain limit.

      While there are downsides it does keep the State and local governments from overextending themselves as has happened elsewhere.

      1. So, the true problem here is an insane budgeting system forced upon the county by an equally insane state constitution.

        Where I come from, the state government runs everything, and so they have an interest in sanely funding things, since whether the trains run on time determines whether they get re-elected. In Washington, the state government seems to enjoy delegating powers to counties and cities, but then making exercise of those powers as difficult as possible. The only thing run even half-sensibly in this state is WSDOT. Maybe we can convince them to take over Metro?

      2. Where would the fixed amount come from if sales-tax revenue is coming in under par? The council wouldn’t let other agencies get zero, so it would reduce Metro’s amount, and the result would be the same. Also, Metro wouldn’t automatically get the benefit of revenues coming in higher than par. Instead that money would go into the general fund, and probably be spent on something non-transit.

      3. Stuart: where are you from? Here in NY, the state government enjoys requiring cities and counties to provide highly specific services (“mandates”), and then not providing any money for it at all, forcing the local counties and cities to take the political heat from raising taxes. It’s obscenely dishonest.

      4. The only thing run even half-sensibly in this state is WSDOT. Maybe we can convince them to take over Metro?

        You must not have been around here long if you think WSDOT does anything “half-sensibly”. They certainly have no business running a public transit agency.

        Where I come from, the state government runs everything

        Ugh, given all the problems the urban counties already have with the state legislature I can only imagine what things would be like if a rancher from Yakima had a say in what kind of bus service Capitol Hill gets,

      5. “Where I come from, the state government runs everything, and so they have an interest in sanely funding things, since whether the trains run on time determines whether they get re-elected.”

        Here, if the state runs everything, there might not be any transit except an hourly coverage service that doesn’t run evenings or weekends.

      6. Nathaniel: NSW, Australia. There, local government is very limited – just waste collection, parks, local maintenance, etc. Everything important (Police, Fire Brigade, Health, Education, Public Utilities, Transport, Courts, etc.) is strictly a matter for the state government.

        Chris: WSDOT is run pretty well, IMHO. The cost overruns they suffer are a result of the fact they are tasked to build massive road projects, and those are just inherently hard to plan everywhere. As for the problem of country folk ruining everything, the population of the Seattle metro is just over 50% of the state population, and if you add in other metros in western WA, that would climb to an easy majority. Admittedly, the ratio is more in favour of the city in NSW (4.75m of 7.5m = 63%), but we still have country people too.

        Mike: Metro’s revenue should not depend on tax receipts. It should depend on the amount of service the community needs. The county should juggle its books to provide that, and should be able to go into deficit in the short term during recessions. Also, your comment about the state government shows how dysfunctional politics is here – the current system of dividing things up between governments encourages this behaviour, because the state government doesn’t own transit and so doesn’t feel responsible for it. If it owned the service, it might actually care, since it would reflect badly on it if transit were shitty.

      7. Bertha would have been a fuck-up no matter who tried to build it. But WSDOT has done a pretty good job, considering how much of a boondoggle that project is.

      8. Stuart,
        For one thing I remember how corrupt WSDOT used to be, it really isn’t that far in the past.

        For another they are still terribly road and auto centric. Proposing outsized pavement solutions to every problem. The situation with the viaduct replacement is yet one more symptom. A surface/transit solution would have gotten to the same place without the risk and expense of Bertha.

        If you want an example of how WSDOT might run a transit system look no further than the Washington State Ferries. Corruption and lots of issues with new vessels. Old vessels left in service to the point they are a maintenance nightmare and some so unsafe they are forced out of service by the Coast Guard. 25 years to finally implement a new fare collection system going through multiple vendors and millions of dollars I n the process.

        Sure WSF looks good compared to BC Ferries, but that is a low bar.

        WSDOT is better run than some other state DOTs but again that is a really low bar.

        As for having the state run things, remember the outer suburbs hate Seattle just as much if not more than the rural parts of the state. There are just enough votes to screw over urban concerns when the time comes.

        The US isn’t Australia, and the political dynamic here means letting the state take over any functions of local government would be a bad idea.

        The state doesn’t really care if it does a shitty job in many areas of state responsibility. See education funding but for one example.

      9. “WSDOT is run pretty well, IMHO. The cost overruns they suffer are a result of the fact they are tasked to build massive road projects, and those are just inherently hard to plan everywhere.”

        On the other hand, WSDOMA still plans those road projects and shoves them down the throats of areas that don’t want them and that all evidence suggests don’t need them, and certainly could get better bang for the buck by building transit projects they begrudgingly go along with while their bosses in state government put up as many roadblocks as they can in front of them and shackle them to even more unnecessary road projects.

        You don’t seem to grasp just how much impact rural interests have on state government in Washington and federal government in the United States in general, and how limited the impact of urban interests are. I seem to recall reading that Australia has a proportional representation system where people vote for entire party tickets for each governmental body, not the district-based system the US has where a lot of legislators have absolutely zero stake in how the urban areas do and even more legislators have absolutely zero stake in how Seattle does (before we even get into gerrymandering).

  10. Hey, look as a former Metro driver. Let me tell you this that are facts. Service should remain as is however, you have too much of the tax payers money going to the top. Example at South Base you have approximately 525 drivers with 4 to 5 Base Chiefs that make over $100,000 and a Base Supervisor over $129,000.. I currently work drive in Las Vegas for a private bus company with 489 drivers. GM with only 3 Senior supervisors under $51,000. Very cost controlled efforts all the way down. KCM is buying new buses which really don’t fit the which it’s serving. Stop throwing numbers around a waste of time. Cap the overtime by not allowing operators to work only 6 days and 10 hour driving rule. That’s a big operational flop! Too much fat at the top, stop the overtime, stop buying buses ever other year. That’s the bottom line.

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