January fare increase likely averted

As you may know, Capital Metro had proposed a fare increase as part of our initial plan to balance the budget for next year.  In fact, a series of public meetings had been scheduled mid-September to talk about the fare proposal with the community.

Capital Metro staff will present an alternative budget proposal to the Board of Directors on Monday that balances the budget without an additional fare increase in January. Continue reading “January fare increase likely averted”

Facts on Finances

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.

Our Share of "the Stim"

We recently heard from the feds that Capital Metro may receive about $26.1 million from the economic stimulus plan (or if you prefer the long name, the American Recovery and Reinvestment Act of 2009).

Our initial proposed project list includes many possibilities, all of which would be key components of a regional transportation system that this area needs to remain economically competitive and to retain and attract businesses.

Here’s a quick summary of some those potential projects:

Bus and paratransit fleet replacement and expansion: More than half of Capital Metro’s fleet will require replacement over the next several years.

MetroRail Red Line Expansion: A likely first step would be to add some additional track siding which would allow increased service.

Construction of new park & ride facilities: Possible locations for new P&Rs include South IH-35 and the city of Manor.

Expansion of Intelligent Transportation System (ITS) Technologies: Expanding the ITS system would allow us to provide real-time information for onboard audio and visual announcements to notify customers of upcoming stops. This would also result in more predictable service and improved operating efficiency.

Upgrade of bus stop signage: Improved bus stop signage would provide information more effectively.

Rail with trails: Over the years the community encouraged Capital Metro to plan for bike and pedestrian trails along our rail line.

Capital Metro is working diligently to determine the best use of this stimulus funding to provide maximum benefit for the community. We should have more detail in the coming weeks.

More Money for Mass Transit

Increased ridership and crowded buses due to high gas prices are popular topics on this and other blogs. At Capital Metro, we’re facing the same challenges as transit providers across the country. Yesterday’s Wall Street Journal took a closer look at this issue and the possibility of additional federal funding:

Congress Weighs Boosting Funds for Mass Transit
Wall Street Journal

Momentum is building in Congress to increase funding for public transportation as transit agencies struggle to accommodate increased demand from Americans seeking to escape high gas prices.

The Senate banking committee will hold a hearing Tuesday to examine how the government can strengthen mass-transit options as a way to reduce dependence on imported oil. Meanwhile, House and Senate leaders debating a new energy bill are considering a range of incentives and new funding for transit agencies.

On Monday, a spokesman for Senate Majority Leader Harry Reid (D., Nev.) said a measure that would provide as much as $2 billion in grants and other funding for public transportation appears likely to be included in energy legislation that could be voted on next week. The House has already approved a bill that would provide an additional $1.7 billion to transit agencies over two years. If Congress fails to pass a new energy package this month before adjourning for its election-season recess, a transit-funding boost could still be included in an end-of-session budget resolution.

The legislative push comes as high gas prices are spurring Americans to drive less and use public transportation more. Data being released Tuesday by the American Public Transportation Association show the number of riders on mass-transit systems is growing at an accelerating clip. After rising 2.5% in 2007 from 2006, public-transportation use increased 3.4% in the first quarter of 2008 from the same period a year earlier, and 5.2% in the April-to-June period.

The increased demand is straining many transit agencies, which are already coping with higher prices for fuel, steel and other commodities.

“We are stretched to our limits,” said Fred Hansen, general manager of TriMet, a regional mass-transit system in the greater Portland, Ore., area that operates bus and light-rail service. “We need help.”

Ridership has risen modestly over the years, Mr. Hansen said, but recently there has been a significant spike. These days, the number of passengers on his trains and buses is around 12% higher than it was a year ago, he said.

Mr. Hansen has taken a number of steps to accommodate some of the new riders, even though he lacks the extra buses and rail cars he needs to greatly expand service. Among them: Keeping older buses in circulation longer, and asking area employers to alter starting times to reduce crowding during peak periods.

TriMet raised fares earlier this month. An “all zone, one-way” fare has risen 25 cents to $2.30. TriMet isn’t alone. According to a survey of 115 transit agencies being released Tuesday by APTA, more than 60% of mass-transit systems are considering fare increases and 35% are considering service cuts. Both findings reflect the cost pressures from energy prices that are making it hard for transit officials to maintain service levels at a time when demand is surging.

Mr. Hansen said his agency can stay afloat with its current funding structure, which primarily depends on locally generated revenue. But a greater federal role is needed to enable major service expansions, he said.

Andy Darrell, vice president at New York-based Environmental Defense Fund, plans to deliver a similar message to the Senate banking committee Tuesday.

“What we’re seeing around the country is that transit is underfunded and is having a really hard time meeting that demand,” Mr. Darrell said. “Our government should be ready to meet that demand, to embrace it.”