Special series: MARTA put itself in red before recession hit
(Note: This is the third in a special series examining MARTA. Read Part 1 here and Part 2 here. The final part will be posted Wednesday evening.)
When the economy went bust a couple of years ago, tax revenue fell everywhere. But at MARTA, passenger fares and other income meant that the agency’s total revenue actually rose between 2007 and 2009 by 1 percent, or about $5 million.
On the other side of the ledger, however, apparently no one got the memo. Operating expenses jumped by more than $60 million, or 19 percent, over those two years.
Transportation — that is, passenger service: Up 12 percent.
Maintenance — Up 21 percent.
Administrative — that is, overhead: Up 33 percent.
When looking at MARTA’s finances, we tend to examine the budget gap in terms of revenue — the transit agency’s lack of state funding, or its disappointing sales-tax proceeds due to the recession.
As with many public entities, however, expenses tell the real story. Deficit spending was the plan all along.
Look, no one foresaw the housing crash, financial panic and deep recession. Budgets aren’t made with the benefit of hindsight.
But by mid-2008, when the fiscal 2009 budget was approved, MARTA knew things were getting bad. Its sales-tax forecasts had already been revised downward by $24 million (in reality, shoppers would deliver $54 million less than that).
Next missteps
So, what did the agency do? It planned to boost spending even as revenue declined — to make 2009 the third straight year in which spending growth would outpace revenue growth. And it planned to do the same in 2010.
Even before the bottom fell out, then, MARTA planned to run a $44 million deficit in 2009 and expected to lose another $49 million in 2010. That was the optimistic scenario.
MARTA’s explanation goes like this: After cutting service and personnel three times between 2002 and 2005, the agency’s board “made a conscious decision [in 2006] to invest in service improvements,” says Ted Basta, the agency’s chief of business services.
The plan called for adding some 600 positions by mid-2009. (Neither Basta nor the agency’s general manager, Beverly Scott, worked at MARTA when the plan was made.)
Then came the bust. About half of the new positions were never filled. In fact, MARTA reported to the Legislature last year that it actually had six fewer workers in 2009 than in 2007. Nevertheless, the agency said its salary costs were $27 million higher and benefits $18 million greater — making up three-quarters of the $60 million increase I mentioned at the outset.
Making up for losses
All of this was done in the name of expanding service as much as possible. “This is not a profit and loss” operation, Basta says. “If it were, you would not run the services you run.”
He’s right. MARTA is not a profit and loss.
It’s a loss and loss. And loss.
At this point, some reader(s) will respond, “But all types of transportation are subsidized. Roads don’t build themselves, you know.”
That’s true, but it’s a question of magnitude. Randal O’Toole, a senior fellow at the libertarian Cato Institute, estimates that American taxpayers subsidize personal cars each year to the tune of 1 cent per passenger mile.
For transit, including operations and capital, O’Toole says, the taxpayers’ bill comes to 70 cents per passenger mile.
MARTA operates less expensively than many of its peers nationally, but its taxpayer subsidy still amounted to almost 41 cents per passenger mile in 2008.
Whether you want metro Atlanta to relieve congestion through additions or improvements to our road network or through transit, whether you drive or park and ride, surely you can agree that we can do better than this.
Next: A cheaper solution for MARTA
Previously:
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68 comments Add your comment
Brad Steel
May 19th, 2010
1:54 pm
I got my passenger data from the National Transit Database, compiled by the Federal Transit Administration. Hmm. That’s funny. Cause you cite O’Toole not the FTA. That’s convenient 2nd derivative filtered info.
When you’re talking about intracity trips like commutes, it’s an absolutely legitimate metric..
Maybe so, but there’s nothing in your article that says it is limited to intracity trips. Nor is there any evidence that the metric includes amortized capital investment costs or environmental impact costs.
With the source cited and lack of support, why would anyone but an easily swayed rube buy in to your weird attack on public transportation.
Kyle Wingfield
May 19th, 2010
2:32 pm
Brad, if you’ve bothered to read the series you will have noticed that I’ve referred to passenger miles several other times.
Don
May 19th, 2010
3:31 pm
I think the comparison of transit to highways and roads is out of scope here. The only time that is relevant is when there is some analysis to justify adding capacity. Then you’d do a cost/benefit analysis between alternatives. The real question here, and I think Kyle is getting at it, is “do we have the best MARTA we can have”? So far, it appears the answer is no. The next question is, “What needs to be done to make it so?”
I think it’s refreshing to find a conservative who doesn’t start out with the answer “MARTA is worthless” and work backward.
joan1
May 19th, 2010
3:36 pm
I echo the sentiments about the surly, dumb and fat MARTA employees. They are typical government employees in my opinion. No responsibility for their own dumb actions.
Kyle Wingfield
May 19th, 2010
3:54 pm
Appreciate it, Don.
VWD
May 19th, 2010
4:08 pm
I think that one poster hit the nail on the head. It seems that in big cities and in particular big cities controlled by Democrats that they view stuff like Marta as a jobs program. More of the entitlement mentality and more of the get taxpayer funded jobs for my friends and constitutuents mentality. But as Margaret Thatcher one said about socialism and socialistic programs sooner or later you run out of other people’s money. And sooner or later Marta runs out of other taxpayer’s money.
The conservative view is that a public service should benefit the citizenry and hopefully pay for itself or at least give the taxpayers a benefit that’s reasonably in accordance with its cost.
Peadog
May 19th, 2010
6:09 pm
Kyles 3 part in depth report reads like something my high school er came up with, pathetic journalism to say the least.
Was this supposed to be some cutting edge investigative reporting?
Oh well
May 19th, 2010
7:07 pm
Transportation is neither conservative or liberal. It should be based on the capacity needed to move people and goods which benefits the economy be you liberal or conservative.
The comparison between MARTA and Highways as Georgia, constitutionally is required to invest in only roads and bridges. We are fortunate to have the MARTA system we have and mainly thanks to some very strong political leadership at the US Capital and for 1 Presidential Term. Yes there are things that could be improved.
Atlanta would not be an Olympic City, hosted the Super Bowl, host annual SEC Championship games and attract conventions without MARTA. MARTA’s record 11M people in 10 days.
Kyle and while roads will always be necessary so will Transit if Atlanta and Georgia are to continue to enjoy robust economic growth. We, as Georgians, are very vulnerable to spikes in the price of Gasoline. We have no alternative.
MARTA’s sister systems – WMATA and BART continued to expand and both San Francisco and Washington DC are cities where you can step off a plane and get to anywhere by transit. In the same time period Georgia built 4 lane highways criss crossing south Georgia not based on capacity needs but based on a required balanced distribution of highway funds by congressional district.
If we hit a period of high cost gasoline Atlanta’s and the rest of Georgia’s economy suffers in comparison to other cities and states that have made multi-modal investments in transportation.
Kyle, your conservative think tank that you referenced may prefer to see Atlanta build tunnels and double deck 285 and criss cross downtown with additional interstate highways. But then the city with that model Los Angeles is now extending their subway system.
Op-ed may give you all sorts of excuses not to overly investigate this topci and that is a shame because the transportation challenges this City and State face our daunting and treating them lightheartedly is unbecoming of a major metropolitan newspaper.
midtownguy
May 19th, 2010
7:13 pm
I read somewhere that MARTA’s 1000+ unionized bus drivers make more than an Atlanta public school teacher with a Master’s Degree. If that is true, their financial situation will never improve.
Scott
May 19th, 2010
7:46 pm
Examples calling out Randal O’Toole:
…http://www.streetsblog.org/2009/06/02/randal-otoole-taking-liberties-with-the-facts/
…http://why.michaelpatrick.org/2005/05/otoole-redbaits-smart-growthers.html
…http://www.cnu.org/node/1533
…and there is a whole lot more too
Scott
May 19th, 2010
7:52 pm
Kyle…yes facts are facts but when you take a bunch of unrelated or cherry picked facts and make an assumption based on incomplete information, it ceases to be fact any longer.
From a post on the following site:
http://trains4america.wordpress.com/2008/11/07/cato-institute-strikes-again/
I just reviewed this document as well as some of the data that O’Toole cites. I believe he has misstated the total subsidies for highway transportation, possibly by as much as $70 billion. Correct me if I am wrong, but he also does not count property and sales taxes that divert their revenues to road funds as subsidies, even though that is exactly what they are.
Moreover, he compares ALL road finances to Amtrak finances, when those comparisons are improper. Amtrak does not pretend to be a suitable substitute for rural transportation. As per the U.S. DOT rural driving constitutes 33% of all passenger-miles. In contrast, I suspect urban and inter-urban/state road spending probably constitutes the lion’s share of all road financing. So as a starting point, O’Toole should have compared urban and inter-state road spending to Amtrak spending, although personally I think a more apt comparison would have been just urban and interstate highway spending to Amtrak finances (all in per-passenger mile terms, of course).
There are other problems, and new ones keep coming to mind: O’Toole ignores costs due to fatalities, congestion, policing, noise pollution, returns to scale–all of which probably favor rail transportation over (urban and interstate) roads on the whole.
The work should not be taken seriously.
Jeff Fryer
May 19th, 2010
8:47 pm
Why can’t they simply raise prices for passengers? It’s not like there’s any competition. How much more would the average ticket have to cost to break even?
Kyle Wingfield
May 19th, 2010
9:29 pm
Really, Scott? You’ve copied the comment of an anonymous reader on a blog called “Trains for America” — a source devoid of bias, I’m sure — to attack Mr. O’Toole’s credibility? One that says he doesn’t count one type of tax when he expressly does count it? http://ti.org/antiplanner/?p=500
More broadly, all the ire toward Mr. O’Toole and Cato has been one heckuva distraction from the other 90 percent of my post. That, or a very telling silence.
PDiddy
May 19th, 2010
10:29 pm
Not that you had much credibility to start with, but you lost all remaining credibility when you quoted Randall O’Toole. He is a known anti-transit advocate.
Mike
May 20th, 2010
8:59 am
Your comparison about the costs per passenger mile are misleading. You include the capital costs in mass transit, but I doubt if they are included in the comparison cost for automobiles. We should not be so naive to think that an additional penny per mile would make the highways self funding.
Comparing the capital costs is difficult because, for major highway projects, the vast majority of funds comes from the Federal government. The cost of borrowing that money is not figured into the highway costs. I think to be fair we should include that cost, since we know that the Federal government is borrowing the money, we are just paying for it via other taxes.
By GDOT estimates the cost per lane mile of urban interstates is $20 million. A 40 year mortgage on that would be about $96000 month. 3200 per day. On average, each lane mile of traffic carries 16000 cars. So the capital costs are $0.20 per mile.
20 cents per mile is MUCH LESS than the costs of mass transit. But, it is also much less than would be covered by the gasoline taxes we pay.
Marta User
May 21st, 2010
3:45 pm
If every one in Fulton and Dekalb Counties, who pays for Marta, will park their cars and started using Marta, then we can keep the other counties interlopers out. Let them sit on the freeways for three or fours hours a day while life pass them by.
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