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ChineseMeasure R… or massive service cuts?
A report on the Metro web site quietly confirms what many of us have known for some time… the structural deficit keeps ballooning. From a projected structural deficit of $1.8 billion between 2008 and 2018, the projected operating deficit now stands at nearly $2 billion over the next ten years, and over $2.1 billion when capital expenses are included. The deficit alone is projected to be $134.1 million.
Measure R, if it passed, would provide $2.1 billion to backfill this deficit, although a good percentage of this money will be siphoned off to other transit operators through the complicated Formula Allocation Procedure. Still, Metro would receive the lions’ share of the funding, and combined with reallocation of capital funds (now funded by Measure R) to operating expenses, and some small fare increases every few years, the amount of revenue is likely adequate to cover the current system and some additional service.
But should it fail, you would be looking at 1.06 million hours of cuts on the bus side…. the equivalent of lopping off all Sunday service, or shutting down the Orange, Green, and Gold lines. Come July 2010, assuming this scenario holds and only service cuts are made, you would see an additional 800,000 service hours cut back, or the equivalent of shutting down all service after 6 pm. The other option would be to jack up fares across the board by about 50% next year (in addition to the already approved fare increase) and another 40% in 2010, more than doubling fares from today.
To be fair, a lot of the ten-year planning process is hocus-pocus that would make the Soviet Union proud. It does not include a proposed 20% fare increase in 2012 (even though the Metro Board authorized a fare increase then), and assumes that state revenue will be slashed by a third next fiscal year and another third in July 2010. The allocation of state funds between capital and operating expenses seems arbitrary, since most of that money can be used for both capital or operating expenses. Government budgeting is notoriously complicated, and numbers can be massaged to give the appropriate message to opinion leaders. Past memos on the subject have been less than illuminating for the real number crunchers out there. Still, the deficit is real and, perhaps not as apocalyptic as presented in this report, the problem is big.
Part of this has been the Board of Directors’ undoing. Rather than working with Metro CEO Snoble to craft a reasonable fare increase proposal, Snoble chose to scare the public with the absurd specter of $140 EZ passes and $8 day passes. Instead of making the hard decisions to cut service, the Board blinked - possibly to avoid cutting service right before Measure R went on the ballot - and avoided cutting 256,000 hours from the budget using one time revenue. When Pam O’Connor was asked earlier this year about the growing deficit, she replied she was focused on Measure R and not on the deficit that would happen if it didn’t pass.
On the same Board agenda where the structural deficit is being discussed, Gloria Molina has decided to rant again about Measure R, this time with a measure to have Metro shut down the Measure R web site and brochure program, and ask the nonexistent pro-Measure R campaign to reimburse them for their expenses. Almost an hour was wasted at yesterday’s County Board of Supervisors meeting with an intellectual exercise designed solely to shaming County Counsel for giving the go ahead for the informational campaign for Measure R. Ironically, she was one of the leaders to stop Snoble’s Draconian fare increase, and crafted a compromise fare increase… which while helpful doesn’t even meet the problem halfway. Will she have blood on her hands for slashing needed bus service, much of which goes through her district, because Measure R fails? Or will somehow another tax increase be sold to the public just to fund the operations of the existing bus and rail system, without the “carrots” of more rail, repaved streets, and better freeway interchanges?
If Measure R fails, as many folks think it will, be prepared to see planning for service cuts start the next day, and an accelerated public hearing process. Depending on the timing of the process, the normal February public hearings could be moved up a month, with the June “shakeup” moving up a couple of months to buy some time and save some money. Expect labor negotiations, currently set for 2009, to deteriorate completely as Metro staff realizes that the only way to maintain some level of service is to cut salaries and contract out service… which will not be popular in a post-Metrolink crash world, where an employee one of Metro’s three contractors, Veolia, was the at the throttle when the collision happened. A 1974-like strike of two months or more could result as both sides butt heads over how much money there really is. (Incidentally, the strikes of the 70’s probably doomed LA’s best chances for rapid transit to be built, with enough funding to build it. Instead, the 1980 Proposition A, which promised everything for everybody, but couldn’t deliver, passed. And remember, for every day employees go on strike, Metro saves money by not operating service.)
These are the choices we face, and they aren’t pretty. Essentially, vote for Measure R, or watch the dismantling of the MTA as we know it.
Discussion
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Please keep discussions civil: exercise Troll Controll.
The problem is in the commentary. You refer to Snoble’s proposed fare increases as “Draconian.” As long as reasonable and justified user fees are not part of the solution it should come as no surprise that voters will likewise consider Meas R to be unreasonable and unjustified.
Rob Dawg is right. We need user fees. No more free rides for private automobiles. They suck up a 25% to 40% chunk of the MTA’s budget, and they hardly cover that with their share of taxes. It is time for a “reasonable and justified” user fee for private cars on MTA funded roads and road repairs.
I’d also like to add that the “Taj Mahal” MTA HQ downtown might make an excellent condo conversion project, if the MTA is looking to lower their operating costs and make some cash. The money they save (or make) could go to “backfill” their deficit.
There are a number of ways to gain funding for Metro, none of which will be implemented owing to the financially fortified vested interests that will use the funds they could lose to keep from losing future funds:
1) Make Hollywood production companies pay a unique tax when they film in downtown L.A. At present the only real beneficiaries are those whose real estate is used for location shots. After all the hue and cry (during the writer’s strike) regarding how dependent is the local economy on the movie studio system, surely the studios can be brought to pay for the privilege of closing countless streets and frustrating nearly everyone here just to make car commercials and must-see movies such as “Phone Booth” and “The Fast and The Furious Pt. Whatever: Skid Row Street Drags.” Surely that would be a considerable bit of revenue for a new subway or six that would allow street closures and all the other crap granted downtown denizens via Hollywood to not be so painful.
2) Eliminate the free ride that metro literally grants to private motorists via free Freeway towing. That would release some $27 million ANNUALLY.
3) Congestion taxes in the Freeway-defined downtown: from the 101 to the 110 to the 10 to the 5. Hop on the DASH, walk yer fat ass off or pay for the privilege of jamming up the streets and slowing down the busses.
4) Yes, sell of that italian marble building and force Roger & Co. to take up digs elsewhere—say in Skid Row, where those poor schmucks are being ousted. Or perhaps put them up in SB Lofts, where they will have to pay for parking (where there is any provided) so as to be closer to at least two Red Line Stops as well as the nexus of the downtown: 7th and Broadway.
5) Much as I hate it, raise the fares. This would put more power in the general populace’s collective hand, which would compel Metro to make itself work well owing to the threat of a rider strike.
6) Fire Roger, Pam, Tom Horne, et al and hire competent executives.
Exactly for those reasons and more. 2007 fares accounted for 23% of operating revenue. 17% of total budget. $293,878,777 per year and the amount requested in “R” is 30 years $40b or approximately 4 times as much. Call the current farebox 25%, use that as a baseline and raise 25% from fare and 75% from taxes. Problem? Well I have a problem. Maintaining that ratio would mean a doubling of fares. Besides doubling fares is likely to only increase revenue 60-70%. Things should have never been allowed to get this disconnected service/cost. Now that we are here there is a very real threat of a voter revolt that will cut of their noses to spite themselves. To keep the taxpayer paying it is necessary to raise fares as much as possible until ridership and elasticity are stretched and then go to the taxpayer.
If you look at MTA’s presentations on the structural deficit, they admit that a 38% farebox recovery would have solved the problem. The problem is achieving that 38%… which would have required higher fares AND a cheaper cost per hour of service, achieved through lower salaries for bus drivers and mechanics and/or contracting out. The problem with contractors is accountability, especially in the ham-handed way that MTA does it.
I’m looking at the NTD 2007 data for MTS in San Diego, they have a 36% farebox recovery. And I believe that is with a one way fare of $2.25? Their light rail does even better, with 49% farebox recovery.
Maybe that’s the way Metro needs to go, to bump up the base fare, unless there is something I’m missing. I just read an article this morning about the BRU opposed to Measure R, saying it will cost an average $80 per household. Guess they expect everything to not cost any money.
Careful Stephen. MTS lies. Really. They learned to lie from the experts in Portland. What happens is that admin and overhead costs are not proportionately or functionally applied to different modalities. Do you really think their light rail operating costs are $7.05/mi compared to LAMTA $16.63? Even the liars at TriMet manage to only get it down to $11.22/mi.
Source? Reference? Cite? Rumor? Anything?
[crickets chirp]
I am not speaking for ubrayj, but there remains a considerable chunk ($27 million ANNUALLY) of Metro’s budget set aside for private motorists who are unable to maintain their vehicles: http://www.metro.net/news_info/facts.htm#P181_2906
The funding for FSP comes mostly from Proposition C - Streets and Freeways (25%). So, if the FSP wasn’t funded, it’s not like this money could go for buses. Rather, they would use it to build carpool lanes instead.
$27m of the entire including pass through funding of the $3.4b budget is 8/10ths of one percent. There’s still a ways to go to get to 25%. As a hint LAMTA transit alone is $1.8b.
But Rob if you are implying raising fares to half of the operating costs, wouldn’t that end up driving a ton of people away from transit? Unless, of course, we adjusted user fees for drivers as well to their societal costs. Right now, I can’t and haven’t seen any LA politician willing to risk his career to raise user fees for drivers, with the overwhelming amount of the constituency still in their cars.
I think it will be interesting to see the outcome of the Harbor Transitway and El Monte HOT lanes in a couple years. I guess it’s a step towards congestion pricing/user fees.
Actually past moderate fare increases in Los Angeles have exhibited relatively small negative elasticity. Thus my extreme example where a doubling of fares would result in 60-70% revenue increases.
You really have to get beyond this theoretical “societal costs” issue. It just doesn’t go anywhere. The sierra club is still reeling from the disaster of their attempt to claim gas should cost $16/gal to cover those costs. There’s a very good reason they are called externalities.
http://www.sierraclub.org/sprawl/articles/subsidies.asp
——
Then there’s http://www.reason.org/ [specific link broken]
…
“But according to the Reason Foundation study, auto-users are already
overpaying. For example, California’s auto-users pay approximately $16
billion through auto-related federal, state, and local levies, while only $7
billion to $8 billion is actually expended on roadways and other related
auto use infrastructure
… Reason Foundation study also examines alleged social
externalities. Such social costs include compensating pedestrians for
blocking their way and military activities aimed at protecting oil supplies
in the Middle East”.
…
“Related studies on the cost of automobiles and transportation reform
include Where the Rubber Meets the Road: Reforming California’s Roadway
System, and Looking Beyond ECO: Alternatives to Employer-Based Trip
Reduction.
——
Touche. Looks like the Reason link got broken.
I was just doing a quick search and ran across the State of Texas DOT’s website explicitly stating that roads do not pay for themselves…
“Applying this methodology, revealed that no road pays for itself in gas taxes and fees. For example, in Houston, the 15 miles of SH 99 from I-10 to US 290 will cost $1 billion to build and maintain over its lifetime, while only generating $162 million in gas taxes. That gives a tax gap ratio of .16, which means that the real gas tax rate people would need to pay on this segment of road to completely pay for it would be $2.22 per gallon. This is just one example, but there is not one road in Texas that pays for itself based on the tax system of today. Some roads pay for about half their true cost, but most roads we have analyzed pay for considerably less. To conclude, in the SH 99 example, since the traffic volume for that road doesn’t generate enough fuel tax revenue to pay for it, revenues from other parts of the state must be used to build and maintain this corridor segment. The same is true across the state, meaning that, as revealed by the tax gap analysis, overall revenues are not sufficient to meet the state’s transportation needs.”
http://www.keeptexasmoving.com/index.php/news/Do_Roads_Pay_for_Themselves%3F
Wow, Stephen. I don’t think I’ve seen the TxDOT AVI claim for at least a decade. You want specific roads projects that don’t recoer their costs? I can give you thousands. You wnt transit projects that exceed operating costs? I can give several. The SH 99 project was uniquely expensive and by no means typical. Let’s stay local:
I want my piece of the IHS. 143,000 AADT Del Norte to Central on the
101 is my segment of choice. 1.42 miles long, 3×3 with about 180ft of
row. Income $3,600 per day from the gas tax. Over $200,000 per lane
mile per year for expenses. Let’s see a CHP and car 4 officers taking
running shifts with vehicle expenses would be $500,000/year. Of
course if I shared “my” officers with neighboring segments… nah we
are trying to pad the expenses but to be realistic I’d share with 10
segments. So, with an additional $100,000/year in routine
maintainence I can still squirrel away $900,000/year so every 10 years
I can run an $12 million dollar improvement project. Heck, at that
rate it turns out I can afford to own the overpass at Central without
busting the budget. Imagine what we could do with 60s era gas taxes,
about 2 1/4 times in real dollars what we have today.
—-
The truth lies somewhere in between.
So what’s the best strategy?
We need to raise the gas tax fee. Probably 11¢ per gallon equivalent. I’d split that 6¢ State and 5¢ Federal with an incentive. For every penny above 6¢ that States raise the Fed is decreased by 1/2¢.
Now transit fees. Like it of not the only way to fund services is with user fees. Everything else has little prospect of passing. $182 is/was not in any way shape of form unfair, unreasonable or onerous. MTA costs 63.2¢ per passenger mile to operate. They collect 14.4¢. It isn’t just the revenue but the expenditures. Such a massively subsidized service creates distortions. Higher fare would remodel service and save even more money while improving service to people willing to pay more.
Do you think gas taxes will remain to be the main user fee for cars, even as we’re seeing fuel economy go up in light of more hybrids and more fuel efficient cars come to the market?
What would be a good base fare increase or would it be better for distance based fares, at least for rail? I think that $1.25 for a one seat ride from Long Beach to 7th/Metro is extremely underpriced. Calwatch said a 38% FBRR would do well for Metro, what increases do we need to see to get there? I’d have to say that 38% seems like a pretty high number for a bus & rail agency in LA, given that Metrolink achieves 42% with much higher fares and much less service.
And maybe they should lift the express surcharge on the Harbor Transitway service to help lure people off the transfer at Imperial/Wilmington. I don’t know. Maybe that’s what will happen when the new HOT lanes are implemented.
Stephen,
It won’t be much longer before technology allows more accurate fees. Highe mileage is but one aspect. It is interesting but SUVs have less impact than HOV hybrids. It is complex. Do we want to charge SUVs less because they cost less relatively to service?
Distance fares are one aspect. Strangely I think subsidizing long corridor runs is better than allowing short ride service for cheap. This is a long explanation not suitable here.
The article makes sense.
If those (or similar) service cuts do happen,
I will move the heck out of LA!
I am sick & tired of dealing with inadequate mass transit in LA, and with choking in LA’s gridlock.
Actually, I just came back from visiting Portland, followed by Seattle, and I’m just astonished to see how far behind LA is, comparing to other cities. Both Portland and Seattle have awesome mass transit, and as a result - those cities are much more vibrant, safe, user-friendly, and overall - EFFICIENT.
Shame on LA!
Tax cars more to cover the costs of car-only infrastructure. That new revenue will go towards car projects, and the general sales tax money that used to go to car projects can keep transit prices down.
I know it seems politically tough, but it definitely makes a lot of sense.
Tax cars more to cover the costs of car-only infrastructure.
Huh? Cars already cover that. Are you talking about taxing cars less and eliminating their transit subsidies? It isn’t that easy. Some of those subsidies reduce congestion.
LOL @ offering to convert the Taj Mahal to condos to handle the structural deficit.
I’ll be voting for the dismantling and the fare hike.
Prop R is the result of tax-happy politicians meeting to establish a new tax and have a victory dance, not to colloborate on a long-term transit plan - not that it should be done by one county in isolation anyway.
The outcome of this gleeful rush to raise taxes, is the “Subway to the Sea” doesn’t go there, and the outlying areas of the county will not support the measure.
This MTA can’t even get bus lanes striped on Wilshire in less than 5 years, and hides behind “Rapid” marketing campaigns. I am not prepared to trust them with another red cent.
Sounds like standard operating procedure for the budgeting process. I hope all that doesn’t happen before I take a trip down to check out the transit. We’ll have to definitely meet up and hang out for a while when I head down.
If the leaseback fiasco gets any traction Measure R doesn’t stand a chance.
Ugh.
Gosh I hope that R passes, but a bad feeling in my stomach tells me it won’t. Knowing that it needs a 66% majority to pass, and knowing that I’ve come across a good number of people who I would normally think would be pro-everything transit, but who are against R because they either a.) don’t think it’s the right time for a sales tax, b.) don’t like that a certain county region isn’t getting more of the funding, or c.) simply don’t trust the MTA, period. . . I fear for the chances of this measure.
I’m doing all I can to educate my friends on it, but I fear it won’t be enough.
Sigh. I long to see Los Angeles to get a world class public transit system that will make people look forward to coming to L.A. and getting around without a car, the way you can in Chicago, D.C., New York, London, or Paris. I just hope that happens before my kids have kids of their own, and I don’t even have kids yet.
So if this Measure fails I guess I can officially make the hiatus permanent and shutter MRLA? Maybe make a site about getting around LA on rollerskates?
back on the east coast we use toll roads. we don’t let roads that are developed with special funds be used by private citizens unless they pay their fair share. Perhaps there should be user fees.
“So if this Measure fails I guess I can officially make the hiatus permanent and shutter MRLA? Maybe make a site about getting around LA on rollerskates?”
If Prop 1A and Measure R both fail I’m pretty much taking all these gay transit blogs and forums off my favorites, lol. Nothing personal, but my heart just can’t take it.
If they fail I think I’m going to buy a Lamborghini Countach, change my name to Freddy Countach, and start a Countach enthusiast blog called CountachNation, and you’re all invited.
If both fail I’m gonna get an oil change and make an appointment for 100,000 mile maintenance.
If both pass I’m going to chuck my car into the LA River.
“…back on the east coast we use toll roads.”
I missed the vote that certified the “we.” Got a link? Toll roads are imposed.
Fred,
No, R was a combination of bad idea, unfocused and bad timing. Add to that a crushing sales tax rate. Don’t mistake the obvious massive rejection of Measure R for anything else.
If only we could appoint Rob Dawg overlord and ruler of all transportation in California. He’d fix everything.
If only we could appoint Rob Dawg overlord and ruler of all transportation in California. He’d fix everything.
No, I’d fix some things, break some things and use my position as Transportation Czar as a springboard to ruler of all California and only then issue in a new golden age based on low taxes and and optimism.
Seriously, “R” is at the very least a victim of the times. There’s no need to go into all the other reasons (A & C, et al) why it would be a bad idea in the best of times.
my biggest shock when i moved back east was the gas prices were the same price. for years of living in CA i’d been told our Gas was higher because of the extra processing that was done to it. I get back east and find out the price is basically the same. And of course toll roads.
In california the term freeway has meaning if you originate in the east coast. However I didn’t start on the east coast so i took it for granted.
Now I agree, we don’t get a choice on our toll roads or the fees, but we can choose not to drive on them. As for myself, I ride the metro every day to work (metrorail in DC) and I see tremendous waste left & right (or perhaps one could say lots of room for improvement).
our metro is constantly raising fees and the like…
Now that measure R has passed, we can proudly begin an era of high taxes and pessimism
Seriously though, I’m pretty happy that this thing passed. Though i really shouldn’t be surprised, the only people opposing the measure were transit advocates, and we all know how hard those are to come by in LA.
Oh and Fred, I guess you’ll have to wait on that Countach.
Woo Hoo!!! Measure R passed!!! I am so happy.
Wow. There you go. The people of Los Angeles county have spoken and, regardless of how you feel about the specifics of this measure, they’ve made it clear that improving transportation is a priority. That’s inspiring to me. Look for a new and improved MetroRiderLA coming soon. It’s time to give the people an excellent resource to rely on to promote, inform, and encourage the lifestyle they voted their tax money towards and to attempt to keep Metro informed and aware and accountable for that precious money and trust.
Yeah, I’ll take an expo line extension, a gold line extension, a Crenshaw transit corridor. . . and, you know, go ahead and throw that Westside Subway extension in there too, would you? That’d be greeaaat. Thanks.
(Yoink.)
Hey, now I don’t have to move to Chicago. Yay!
oh man this measure R is some bullshit.
talk about rascist! how is it possible we elect our first black president (OBAMA!) and pass this insidious attack on POOR minorities.
i’m outraged.
hehe, I get it.
I can’t wait to see auto sales tax revenues the month after Measure R goes into effect.
guys dont forget to get out and VOTE tomorrow!!!
Yes, life in Los Angeles county is now 0.5% worse for the next 30 years.
Johnny, I see you bought in to the rhetoric put forward by the BRU that this sales tax is somehow going to have a devastating impact on the cost of life’s necessities.
Here’s the requisite reality check:
Rent - not subject to sales tax
Utilities - not subject to sales tax
Groceries - not subject to sales tax
Non-food necessities (i.e., paper towels, toilet tissue, toothpaste, deodorant, soap) are taxable. Clothing is taxable, unless you do a lot of wardrobe shopping at Goodwill.
Buy a car and that is taxable. So is the gasoline you put in it. A transit pass, though, is not.
Let’s presume an example of a low-income person who uses public transit and spends $200 a year on non-food necessities and clothing. The additional tax at 0.5% on that $200 is one dollar. For the whole year.
On the other hand, someone who spends $40,000 on a BMW or Mercedes will pay $200 in additional sales tax on that purchase alone.
So, unless you are one of those people who can afford a Beemer or Benz, life is not as “worse” as you thought.
KR,
For the record, I was being facetious. I would think that the idea of referring to life itself becoming better or worse by percentage points would be so ridiculous that the irony would be obvious. Apparently not. If you scroll up to comment 37 you will see that I (sincerely) declared that I was “pretty happy that [measure R] passed”. I join you in cheering the likely passage of the measure, and hope that better transportation options will make life immeasurably better in LA county.