Archive for May, 2010

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 …

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Special series: Ending 50-50 split is no salvation for MARTA

(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 …

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Special series: It’s time to end MARTA’s boom-and-bust budgeting

(NOTE: This is the first in a special series examining MARTA. Part 2 will be posted Monday evening.)

On May 14, this newspaper ran a story that began:

“MARTA’s managers appear determined to hold the line on bus and train fares for another year, but unresolved labor problems and a desire to find new sources of revenue will be continuing worries . . . .”

Yep, that story ran on May 14 — in 1984.

What has the transit agency learned since then? Evidently not much. MARTA still awaits salvation, a train that never seems to arrive. If you read the digital board in a station, it may say, “North Springs, 13 minutes,” or “Airport, 2 minutes.” Perhaps MARTA should add, “Financial Rescue, forget it.”

As you may have heard, MARTA now faces a $120 million budget hole. Believe it or not, the agency projected as early as in 2006 that it would be short $60 million by now, even though revenues were forecast to rise for a decade. Problem was, expenses piled up even faster.

One might summarize …

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The social rot of Greece and the politics of dependence

There is a word which European socialists, and their American admirers, invoke in their calls to come together for the greater government — er, good. That word is “solidarity.”

Here’s what solidarity looks like in Greece, where three bank workers died Wednesday after rioters threw Molotov cocktails into their branch:

“Witnesses said that protesters marching past the building ignored the bank employees’ cries for help and that a handful even shouted anti-capitalist slogans,” the English-language Kathimerini newspaper reported.

A columnist for the paper wrote that the man who started the fire “flipped [the bank employees] the finger when he saw them choking on the smoke of his firebomb.” Other media outlets reported that the mob blocked firefighters from reaching the burning building.


The proximate cause of these protests was the Greek government’s $38 billion plan to cut public spending and raise taxes. This “austerity package” was a precondition of the $140 billion

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‘Fra-gee-lay,’ now made in America

As Ma Parker would know, the word is “fragile.” We’re talking about the economy, and two bits of news from the past 24 hours.

First, the “flash crash” on Wall Street yesterday afternoon. That’s when the Dow Jones Industrial Average, already down about 400 points for the day, shed another 600 points in just seven minutes, before regaining that ground in about 20 minutes (the Dow and other major stock indices still closed down sharply).

We now know that a significant chunk of the losses are probably attributable to trading glitches and the automated shutdowns used by some trading firms; we’ll learn more in the days to come.

At the time, however, pundits’ fingers were pointed straight to Greece, where fears of a public debt default have forced the government to slash spending and raise taxes, in turn provoking street protests that have led to three deaths so far. Investors are worried that Greece’s problems could spread elsewhere in Europe and, ultimately, to the U.S. and …

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It’s time for the tea party to go local

This is going to be an anti-incumbent election year. Right?

That’s the conventional wisdom. Nationally, the tea party movement puts on display what a host of opinion polls say: The public is weary of Washington’s hard-left policies, independent voters are fast fleeing the Democrats, and enthusiasm is high among Republican and conservative voters.

Typically, that kind of mix leads to big gains for the opposition. Political handicapper Charlie Cook’s latest list describes a whopping (all gerrymandering considered) 99 U.S. House seats as potentially in play; 62 of them, including 57 seats now held by Democrats, are tabbed as truly competitive. (The GOP needs a net gain of 40 seats to reclaim a majority.)

Georgia of late has bucked the national leftward drift, putting and keeping Republicans in power since 2002. But now they, too, have to face the anti-incumbent sentiment. What will that mean in 2010?

The number of new entrants and departing incumbents offers a signal about the …

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Let these Members lead financial rules reform

There are 13 members of Congress who at least seem to understand more than the average senator or representative about how equity markets work. From The Wall Street Journal:

Senators have criticized Goldman Sachs Group Inc. for profiting from the housing collapse. And Congress is considering legislation to curb Wall Street risk-taking, including the use of financial instruments known as derivatives and of leverage, or methods that amplify returns.

According to The Journal’s analysis of congressional disclosures, investment accounts of 13 members of Congress or their spouses show bearish bets made in 2008 via exchange-traded funds—portfolios that trade like stocks and mirror an index. These funds were leveraged; they used derivatives and other techniques to magnify the daily moves of the index they track.

Short selling is a critical part of our equity markets: It’s a way for market participants to send a negative signal about the direction of a particular investment or the …

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About an oil spill, so to speak

No, not that oil spill.

The divorce between Florida Gov. Charlie Crist, the Republican office holder-turned-independent Senate candidate, is getting messy. How messy? The state GOP has turned to eBay to sell an oil painting of the governor — er, “Untrustworthy, Self-Serving Politician,” according to the listing — in an effort to “Help…Get Our Money Back!” More from the listing:

  • Canvas is naturally sensitive to changes of temperature and humidity, just as the Charlie Crist’s political convictions are subject to fluctuations in poll numbers.
  • Depending upon variety of conditions, the stretch canvas may periodically lose and regain tautness, much like Charlie Crist periodically loosens or regains positions on a variety of issues.
  • Ornate gold frame made of manufactured wood, similar to the fabricated conservative values of the politician depicted within.
  • Estimated Value – PRICELESS!

    Wow, just wow. With just under seven days left in the auction, the highest bid the last time …

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    Reason, NYT agree: GM repaid your money with your money

    There has been some confusion in the comments threads on other posts about whether or not GM has repaid the federal government. With that in mind, I offer the following.

    Strictly speaking, GM wasn’t lying when its chief executive, Ed Whitacre, announced last month that the company had “repaid [its] government loan, in full, with interest, five years ahead of the original schedule.” The key word was “loan,” as editor Nick Gillespie explains in this video:

    The video played a bit slowly on my computer, so I’ll summarize here:

    The federal government devoted some $50 billion in TARP money — originally intended for financial companies — to bail out GM last year. Of that, $6.7 billion was classified a “loan,” while $13.4 billion was put into an escrow account at the Treasury for GM to tap. (The remainder was a U.S. government investment in the company’s stock — an investment that hasn’t been paid back, and which will produce a loss unless GM surpasses its previous high in …

    Continue reading Reason, NYT agree: GM repaid your money with your money »