(Note: This is the second in a special series examining MARTA. Read Part 1 here. Part 3 will be posted Tuesday evening.)
Why can’t MARTA have full control over its sales-tax revenue?
Generally speaking — very generally, as we’ll see — the state limits MARTA to using just half of its sales-tax revenue to pay for operations. The rest is reserved for maintenance and capital improvements.
That restriction might have made sense back when MARTA was a growing young transit agency, but today this policy is slowly suffocating it, according to MARTA supporters who’ve been pressuring the Legislature to do away with it.
If only it were that simple. Ending the 50-50 split might make for a good lobbying slogan, but it would do very little to ease MARTA’s problems.
For starters, MARTA’s supporters seem to believe the agency is still growing and in need of capital infusions.
I made the argument Sunday, in the first installment of this series, that MARTA should put expansion plans on the shelf and focus on the system it has now. But the agency’s plans call for adding light rail along I-20 east to Lithonia, extending a “Clifton Corridor” line from Lindbergh station to Emory, creating the Peachtree Streetcar and boosting bus frequencies across the city.
More important, the current projects and the maintenance required to keep the MARTA system in a state of good repair are also costly.
In the current fiscal year, MARTA is cutting its capital budget by $180 million to about $200 million, focusing spending on safety and regulatory issues. But get this: The agency is still moving $20 million out of its precious operating reserves to shore up capital spending, says Ted Basta, MARTA’s business-services chief.
As for moving money from capital to operations, “In good times, 50-50 [flexibility] is worth a lot,” says Rich Krisak, head of rail operations. “In bad times, it’s not.”
Yet, the 50-50 clamor is of course loudest in the bad times, when MARTA goes looking for ways to plug revenue shortfalls.
In any case, the restriction itself is somewhat overblown. State law allows MARTA to borrow from its capital funding to subsidize operations anytime, as long as it repays the money within three years.
And over the past decade the Legislature has voted at least three times to ease the restriction in part or altogether. The transportation bill passed last month includes a three-year suspension of the cap, subject to certain conditions.
When the new three-year grace period ends in mid-2013, MARTA will have been totally subject to the 50-50 cap in just 18 of the preceding 138 months.
Proponents of ending the 50-50 requirement lament that MARTA is the only major transit agency in the country that doesn’t get funding from its state government. Just as problematic for MARTA’s budget, however, is that the agency historically generates only about 25 to 30 percent of its operating income from fares and related services like parking, compared to 40 to 50 percent for the industry nationwide.
Making matters worse, income from fares and other services industrywide has been growing two to three times as fast as it has at MARTA.
It’s only fair to note that MARTA had the fifth-lowest operating cost per passenger mile (45 cents) among the nation’s 20 largest transit systems in 2008. A low cost of living in Atlanta, compared with places like New York or Chicago, no doubt helps. MARTA officials also say they have held union wages flatter than their counterparts nationally have done.
But all of that strikes me as a reason to keep the 50-50 restriction and the discipline it imposes on the agency.
And one can’t compare operating expenses nationally without noting that MARTA’s cost per passenger mile has been growing much faster than that of other systems over the past decade. Among the top 20 systems, MARTA’s cost growth rate is sixth-highest. That’s a very bad thing when you’re spending money you don’t have.
Next: What’s really wrong with MARTA’s model
Previously: It’s time to end MARTA’s boom-and-bust budgeting