Breaking down TriMet budget and service woes

 

When an economy is suffering, that's when people need mass transit the most: buses and rail to take to work when they might not be able to afford a car anymore. That's why it is all the more disappointing to see transit agency TriMet doing the opposite amidst this Great Recession: cutting service and raising fares.

I'm not the only one who is frustrated, either. A protest of TriMet cuts is happening downtown today, from 4-6PM in front of City Hall.

This month TriMet will initiate a series of cuts approved by its board in May: reducing its bus system's overall vehicle hours by 5 percent while hiking fares 5 cents, or 2 percent for an all-zone ticket. Bus routes 27 and 157 will be eliminated and almost all other lines will come less frequently at some times or see shorter service hours.

TriMet says the cuts and fare hike were needed to help close a $27 million shortfall in its fiscal year 2011. The agency made the cuts based on which routes and times were least used, whether alternative rail service (MAX or WES) was available nearby and whether cuts would fall heavily on low-income and minority communities.

There's no arguing against the agency trying to balance its books. But when a budget shortfall happens, there are two ways to address it: cutting services and raising fees. TriMet is doing both, to an extent. It's cutting services and raising ticket prices.

TriMet receives about 55% of its operating funds from a payroll tax paid by businesses located within the TriMet district boundary. Another 21% comes from fares, which is typical for transit agencies. The rest is made up by federal or state grants and what the agency simply calls "other sources."

Payroll and self-employment taxes, which provide operating revenue for TriMet, are collected and administered by the Oregon Department of Revenue. Effective January 1, 2010, the rate increased to 0.6818 percent ($6.818 per $1,000) of the wages paid by an employer and the net earnings from self-employment for services performed within the TriMet District boundary. For an employee making, say, $30,000, the tax would be $204.54. If you're an employer with a sizable staff, paying $200-$400 per employee (or more) could add up fast.

What I'm wondering is, how could TriMet raise sufficient operating funds without cutting service? Would it be better to initiate a larger ticket price increase, or to increase the business tax? Or better yet, might there be some other kind of funding mechanism that could better fund the agency's operating budget? What about a gas tax in the counties where TriMet operates? Even a penny per gallon spent by each driver in the Metro area would surely add up fast, and this could also have the added plus of inspiring more drivers to get out of their cars. But gas taxes are political hot potatoes, even in progressive Oregon. What would charging $2.15 or $2.25 do for TriMet's ability to offer sufficient service?

 

In case you're wondering, TriMet's operating budget is not to be confused with its capital budget. Capital funds come from a different pool of money, largely in the form of grants from the federal government, and are often allocated many years in advance. The agency also receives a small amount of state and federal money for other capital improvements. So if one argues, "Why don't we just eliminate the new MAX line to Milwaukee?", unfortunately that wouldn't help bring back any service cuts. That said, however, having a line to Milwaukee in the future might mean TriMet's operating budget becomes even more strained. Building MAX lines from the capital budget doesn't have any direct impact on the operating budget at first, but it inevitably does (if you'll pardon the pun) down the line.

The bottom line is that the transit agency is doing what it can given the resources that exist. TriMet has to balance its books, and given that it's much easier to raise ticket prices and cut service than it is to get more money from tax revenue, it's no surprise that's what they are doing.

Yet it just feels wrong to see Portland's transit agency cutting whole bus lines and having existing lines run less often precisely when people need these buses the most. I'd rather see additional steps taken, whatever they are, to make TriMet service at its most robust when economic conditions necessitate customers' and the community's greatest need. No doubt every new or existing expenditure has to be paid for sooner or later, but providing proper transit infrastructure for people to get to work is precisely how the state of the economy will be improved.

Comments

[R A Fontes]

Actually, there is overlap between capital and operations funding. For example, TriMet is paying for a $40 million bond for Milwaukie Light Rail construction directly out of payroll taxes [Source: TriMet Adopted Budget Summary 2010-2011, Page 7, last paragraph]. This is a major concern to many people interested in our transit future.

The payroll tax is a fairly reasonable - but far from perfect - barometer for the combination of inflation and demand for transit services. It goes up automatically with increases in employment or hikes in wages. On top of that, TriMet has statutory authority to annually raise tax rates without any referendum by a nominal .01% which is about 1.5% on the current .6818% rate. The problem is that TriMet continually makes new long term commitments which eat up the tax hikes and the agency ends up barely treading water. Examples of such commitments include the jump in operating costs which come with the opening of new services, subsidies to Portland Streetcar which are then used to undercut TriMet's fare structure, and capital projects such as Milwaukie MAX which hits TriMet's budget years before MAX carries its first paying passenger across the new bridge.

TriMet is having some success with its "It's-the-economy" mantra based PR campaign to explain the agency's financial woes. The reality is that the agency has little chance to get its financial house in order as long as it insists on spending so much money on projects [Milwaukie MAX, Lake Oswego Streetcar, Eastside Streetcar Loop, WES, etc.] which can be successful only in a highly speculative future.

[Joshua Daniel Franklin]

R A Fontes, the paragraph you refer to in the FY2011 TriMet Adopted Budget actually says: "TriMet plans to issue payroll tax backed revenue bonds in 2012 to provide its contribution to the project." While to explanation is given, my guess is that there was no other way to meet the statutory match for the FTA New Starts grant. Also, on the same page the budget mentions that they will increase the payroll tax to .7218%. and that "Passenger revenue is projected to cover 50% of operating costs," a lot higher than the 21% quoted above. That makes sense considering MAX has lower fuel costs and more passengers per operator than a conventional diesel bus.

That said, it would be nice to see a wider variety of funding sources used to fund service, such as property taxes or partnerships with large employers who could fund lines as an alterative to parking lots, for example. Of course all of these are likely to drop in a bad economy as well; it would also be great to see some sort of special counter-cycle transit funding from the state or federal government linked to the state of the economy.

[Stephen]

Everyone needs to make cuts and while mass transit is very important, they need to do their part.
Unfortunately, this leaves some folks without their favorite bus.
Maybe it is time for more people to ride a bicycle.
As far as the different pools of money goes, that really makes me mad. It is all one ocean of money and we should be able to access the larger fund if times demand it.
With that said, if the overall effect of the larger Trimet projects have is positive, then good.
Hey Brian, do you have any interesting architectural projects that you can talk about? these past few posts have been bumming me out.

[R A Fontes]

My bad in using present tense.

The point remains valid: TriMet does mix operating and capital funding. It's the reality, not the morality, of capital funding from the general fund which is the point.

TriMet has the authority to incrementally increase the payroll tax rate to .8000%, significantly more than the .7218% increase from the current .6818%.

The lower per-passenger operating costs for MAX than buses only applies if the train is carrying more than two busloads (about 110 to 120 riders). Otherwise buses are cheaper to operate. According to TriMet's Spring 2010 route ridership report, MAX per rider ops costs range from $1.70 for the blue line weekdays to $3.60 for the yellow line on Sundays. Many bus routes beat the latter, with the cheapest being the weekday service of the #4 at $2.02.

[billb]

Yes tax gas , tax it alot! We can not get to a sustainable world by wishing our over - weight couch potato neighbors will get on a bus or bike. Cars use most of the 'right of way' and create most of the pollution , and should pay for making it less pleasant to walk and bike.

[Greg Moore]

Tri-Met is first and foremost run more like a business than a government agency. The fact that they are engaging the community at all probably isn't required anywhere in any statute - it's being done as a courtesy. Let's not forget that public transportation isn't a right. We're very fortunate to have Tri-Met. I think they do a very good job at interfacing with the community and informing everyone of their business decisions. I ride Tri Met daily (sometimes 4 or more trips). BillB: There will always be lots of cars on the road. Traveling by bike and foot isn't possible or desirable for everyone. We all get the anti-car sentiment. Maybe in the future we can have 20-minute communities, light-rail everywhere and work from home more. Let's work towards it instead of wasting our energy ranting about those awful cars on the road. You'll make no allies for your cause.

[Rob]

How much was an all zones fare ten years ago? How much is it today?

How much was a gallon of gas ten years ago? How much is it today?

I hate seeing Trimet fares go up as I'm sure we all do, but I'm surprised they haven't risen higher and faster.

[[name removed - spam]]

First image is really impressive and useful to learn the basic concept of it.

[Jeffrey Alan Smith]

I am a frequent user of TriMet as I live downtown and don't own a car. I have also been TriMet's worst customer service nightmare. I have written several times about bitchy, nasty, mean drivers, citing times and numbers so they can follow up with the offensive driver.

The problem is these people are drivers who couldn't care less about customer service. Apparently, courtesy is optional. These 'bad' drivers are doing their best to destroy the TriMet brand (I define brand as what your constituencies think of you). They don't get that WE RIDERS are their CUSTOMERS. Like it or not, we pay their salaries. We are a largely captive audience, but the bad attitude of the drivers is a public relations negative.

When one of their drivers mow down and kill pedestrians then claim it was about poor visibility on the bus (And you have been working with this poor visibility for how long?), TriMet really can't expect sympathy. When they announce rate changes or disclose how much it really costs to provide bus service, and could use some support in the public dialog, a little good will could go a long way. When I recall that TriMet was named the Best Transit System in America a few years ago, I had to wonder whether anyone actually rode a bus. In my experience 8 out of 10 drivers are hostile, indifferent or mean. I always compliment the ones who are nice.

Most of the drivers only know their routes, but nothing on either side. They often give terrible directions to riders who are navigating their way around Portland. I think TriMet drivers should be informed tour guides and think of themselves as ambassadors of Portland.

Finally, we're probably stuck with this nightmare because they are unionized. There is nobody more rude than a union member who doesn't care because it's not in the job description.

[HBertman]

@Stephen, architecture as written by Brian is certainly uplifting but it's no cakewalk these days either. /aside (and my apologies to Brian for a minor hijack)

RE: The line decreases and fare increases
I recall my introduction to Sound Transit and surprise at how cheap it was compared to our regional system (at the time $1 versus close to $2 here - a long while back). I don't know nearly enough to comment more substantially, but perhaps there is someone out there who can offer insight between these two systems and their operating models.

As far as "more people should ride bikes" mantra that I hear all the time, we would all do to remember that mass transit is for everyone - including the disabled and those who live too far away from school or work to cycle practically - and it is intended to provide an affordable and relatively quick means of travelling between places. The system routes are still inadequate compared to actual need and saturation into surrounding communities, and cutting back on routes and telling people to get on their bikes is not the way to engender a more vibrant populace. There is a vast (and growing) geographic area served by the system.

I too have experienced more than my share of surly drivers, but truly I have witnessed at least 5 horrifying passengers for every one of those. We have no protection for drivers in the form of barriers in our busses, which is inconceivable in this day and age.