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Archive for the ‘finances’ Category

Capital Metro CEO Mike Martinez is at the helm of the Transparency Bus.

Capital Metro Board Chairman Mike Martinez is at the helm of the Transparency Bus.

Capital Metro has been awarded—for the third year in a row—the Texas Comptroller’s highest rating for its financial transparency efforts. Yesterday, we unveiled a unique “transparency bus” to remind the community—(you)—they can track every dollar Capital Metro spends on our website.

Senator Kirk Watson noted in a statement, “Capital Metro has done a ton of hard work over the past three years to transform itself into a model of best practices…Capital Metro’s work shows a continued commitment to being accountable on current and future investments in our comprehensive transportation system.”

CEO Linda Watson issued the following open letter to the community yesterday.

December 4, 2012
Greetings.

Capital Metro is seriously transparent. That was the message I conveyed today, along with Austin City Councilman and Capital Metro Chairman Mike Martinez, and Legislative Director for Senator Kirk Watson, Sandy Guzman, at a news conference announcing that Capital Metro has been awarded the highest financial transparency rating—for the third year in a row—from the Texas Comptroller.

We were the first transit system in the state to receive a gold transparency rating.

Capital Metro posts a wealth of financial information (more…)

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Yesterday afternoon, the board of directors approved a long-range financial plan that incorporates the forecasts for revenue and expenditures and financing options for Capital Metro for the next seven years. The plan itself is not posted online yet, but here’s an overview.

This landmark plan outlines a strategy to address several funding challenges over the next few years while increasing our savings to a projected $68 million by 2018.

As outlined in Capital Metro’s new strategic plan, we are taking steps to strengthen the financial health of the agency. The long-range financial plan will help Capital Metro meet its financial goals by:

  • Maintaining current service in the short-term
  • Providing funding for bus fleet replacements
  • Helping meet cash reserve targets of Senate Bill 650
  • Continuing MetroRapid plans as scheduled
  • Planning for federally-required Positive Train Control implementation
  • Supporting the labor structure transition

Of significant concern has been ensuring that Capital Metro’s ageing fleet can be replaced on a regular schedule. The long-range plan includes a seven-year strategy that will replace a total of 292 vehicles.

That strategy includes Capital Metro borrowing $20 million to jumpstart the vehicle replacement program in FY2013-14 and to allow the agency to stay on track to meet the Texas Legislature’s cash savings requirements as specified in SB650. Capital Metro expects to save millions in vehicle maintenance costs over the life of the loan.

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Op-Ed from Sunday’s Austin American-Statesman:

Watson: Capital Metro moving forward fiscally, transparently

Linda S. Watson, Local Contributor

Capital Metro is taking care of business and doing things differently these days. Some difficult but necessary budget decisions will put the organization on a stronger financial path for the future so we can continue to provide the high-quality service this community deserves.

Just like other public and private businesses and your family budget at home, we are facing tough economic times. But this is not the same Capital Metro that it was just a few years ago. We have raised the bar by strengthening our leadership, business practices and transparency. This progress is reflected in our proposed budget for the new fiscal year, which begins Oct. 1, and in the recent recognition of Capital Metro by the Texas comptroller of public accounts as a leader in local government transparency.

Through disciplined budget work, Capital Metro has reduced spending across the board by carefully scrutinizing every line item, delaying construction projects, leaving vacant positions unfilled and adjusting lower-performing bus routes. (more…)

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The gold ball of transparency

Comptroller Gold Circle logo (gold ball with white stars)Guess how much Capital Metro paid last month for upholstery? Well, you don’t have to guess. The information is at your fingertips on the handy Financial and Audit Information Page on our website.

For the second straight year, the Texas Comptroller of Public Accounts is recognizing Capital Metro as a leader in local government transparency. The Comptroller calls it the Leadership Circle “Gold” certification.  The program recognizes local governments that strive to meet a high standard of financial transparency by opening their books to the public and providing information in a clear, consistent and user-friendly format.

Last year, Capital Metro was the first transit system in Texas and the first government agency in Austin area to receive the Gold designation.

Awards are nice, and we get to put the cool gold ball logo on our website again this year. But really what this is all about is doing what’s right. If we hold ourselves to a higher standard of openness, then you’ll have a much clearer picture of how Capital Metro does its business. And if you’re interested, you can pretty much see how every dollar is spent.

Here’s some of what you’ll be able to find online: (more…)

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Capital Metro’s budget process for 2012 is already underway, although it seems like 2011 has just begun. There’s a reason for that. Metro works on a fiscal year basis, and our “New Year” officially begins in October. There’s a lot of work to be done between now and then, and there’s a big part for you to play in the process.

Writing Capital Metro’s budget begins with each operating department making their requests to my department, Finance. That covers a lot of departments, ranging from Human Resources to the folks who operate our buses and trains. The Finance staff meets with each department to talk about their request and match it with our financial forecast for the year.

Right now, we are predicting a continued improvement in the sales tax, which accounts for 75% of our revenue. The rest of our funding comes mainly from federal grants and fares. We expect to have more revenue to work with in the coming year, but like a family, Capital Metro always has more needs than there are dollars.

In the coming months, we’ll be sorting out those needs. Metro staff led by President Linda Watson will be meeting internally for awhile working out the details, but this summer we’ll be asking the community for input. Look for a video as early as next week of Linda talking about Capital Metro’s budget. We are planning a budget “open house” that I promise will be more interesting than it sounds. We’ll also be holding an online community forum. We have other ideas for encouraging input that you’ll be hearing more about, too.

I can’t stress enough how important community input is to writing a sound budget. It’s going to be a challenge to meet our budget goals in coming years, which includes not only investment in our vehicles and facilities, but also in making sure Capital Metro remains on a sound financial footing. That means tough choices, and it’s important to us to understand what’s important to you. We can do all the planning in the world, but without public input, it could be off target.

In any case, once we have gone through our internal and public processes, Capital Metro’s board of directors will begin examining the budget in detail in August. This review process will go on for several weeks, and I can tell you based on last year, a lot of hard questions will be asked and changes made.

And then there’ll be another chance for the public to have a say. We plan a public hearing on the budget, based on the board’s input, for mid-September. Then the board will approve the budget based on public input and internal recommendations. The whole process will be done, we plan, by September 26, just ahead of our New Year’s day, October 1.

Then it is just a matter of keeping track of how the departments are doing against their budgets and starting to think about 2013—all before it’s even 2012 on the calendar.

Billy Hamilton is the interim chief financial officer for Capital Metro and a tax and fiscal policy consultant. In his 30+ years of professional experience, he’s worked on tax and fiscal policy issues from every angle. In 2006, Hamilton retired from Texas state government as chief deputy comptroller of public accounts of Texas. He writes a regular column on state tax issues for the national publication State Tax Notes, and he’ll be contributing a series of articles for Capital MetroBlog over the next several months about the development of Capital Metro’s FY12 budget.

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With plenty of confusion out there about Capital Metro finances, staff gave the Board an update at yesterday’s meeting. The Board also received a favorable annual financial audit from an independent auditor, as one of the required elements of the agency’s FY2008 Certified Annual Financial Report. Learn a bit more about both the audit and the budget presentation here.

In Fact Daily posted the following story about our finances this morning:

McCracken, Cowman defend Cap Metro decisions
By Kimberly Reeves
In Fact Daily

Board members Council Member Brewster McCracken and Leander Mayor John Cowman went out of their way to defend the financial decisions of the regional transit agency yesterday, saying Capital Metro was being prudent and responsive to unanticipated problems of dropping revenue and rising expenditures.

Much of the talk was a response to a recent article by transportation reporter Ben Wear in the Austin American Statesman, which accused the agency of going on a capital spending spree on rail lines and park-and-ride lots that depleted the transit agency’s reserves. At yesterday’s meeting, agency officials vigorously refuted implications the agency had been less than prudent with its expenditures, saying it had met all its obligations and payments.

While Wear wrote the agency owed various local jurisdictions up to $110 million, officials insisted the transit agency is current with its fiscal obligations. Capital spending was, as Wear wrote, upwards of $300 million over five years, but sales tax revenue for that same time period was $783 million, the agency’s financial staff noted in a pre-board meeting briefing.

Agency officials were so firmly committed to their numbers – and that recent dips in reserves were do to unexpected bumps in the economy that the agency had and would continue to deal with – that officials said the agency was open to a state audit and had requested a review by the State Auditor’s Office.

During yesterday afternoon’s board meeting, McCracken offered his own soliloquy about the solvency of the transit agency, saying capital project expenditures now were funded separately from the recent growth in operating costs the agency had faced. The agency was not caught flat-footed, McCracken said. Instead, agency staff had constantly hammered at the need for operating budget restraint.

In 13 months, Capital Metro saw unprecedented fuel costs growth, from $11 million to $27 million, McCracken said. Among transit agencies, Cap Metro had seen some of the lowest fare box recovery and the lowest fare prices in the state. The decision to stop Build Greater Austin – given the growing operating expenses — was a tough but wise decision. And the board had finally taken a hard, but critical, vote on fare increases in an effort to address the rising operational costs.

Yesterday, Capital Metro announced a voluntary buyout program for agency employees as a potential cost-savings measure. Talking to a television crew outside the meeting, Cowman said he continued to be a proud member of the board of Capital Metro, a board that continued to be fiscally prudent.

“We have to make some tough decisions,” Cowman said. “We’re all facing shortfalls, all over the United States. We look for solutions. We accomplish those solutions. We’re a solution-based company.”

As sales tax and ridership goes down, the transit agency would make adjustments, McCracken said. That’s the only way to respond to tough economic times. And although the local union presented the board with a petition at its last meeting to remove CEO Fred Gilliam, after yesterday’s board meeting Cowman expressed continued confidence in Cap Metro’s top leader, saying that Gilliam had done – and continued to do – an excellent job for the agency.

In his comments, McCracken implied recent changes in the agency’s financial team were necessary for the agency to move forward. The improvement of the financial team, under the current leadership, had improved dramatically. The agency also had worked to create a separate capital budget so that operating expenses and the agency’s capital budget could be kept in perspective.

“That’s what happens when operating expenses increase faster than revenues,” McCracken said. “We started to lose our capital reserves. We had to cancel bus purchase orders. With the creation of a capital budget, we’re able to prevent the total erosion of our capital expenses before operating expenses eats it all up.”

Capital Metro also had been through a thorough peer review process from CAMPO with favorable results, McCracken said. That was like having a tough physical, twice over, to try to diagnose any problems with the agency. McCracken said he was confident the agency would implement many of the changes recommended by CAMPO in the coming months. Still, people are critical about Cap Metro right now.

“We get criticized – and people get mad at us – for spending money on a rail system after they told us to build it. Can you imagine what it would be like if they had told us to build it and we hadn’t spent the money?” McCracken asked his colleagues. “It’s hard to do something like a new rail system… Are we going to have to make some significant and important financial reforms into the future? Definitely.”

Cowman, who says rail service has strong support in the north, also bristled a bit at newspaper accounts over the weekend that said the start of MetroRail service was postponed indefinitely. Indefinitely implies no particular start date, Cowman said. There will be a start date for MetroRail, and it will be soon, Cowman said.

Work on the rail lines would be complete next week, Cowman said. While MetroRail faced a delay due to operator problems – the reason for the recent postponement – that problem would be resolved. It’s a positive thing that Capital Metro has caught a problem in advance and addressed it, not a negative thing, Cowman said.

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