Transit, Transportation, and the Money Question IV

Funding Transit

The Comprehensive Transportation Fund is critical to any discussion of transit in Michigan. It is the major, if not the only, source for transit funding in the state.  As explained in this guide to Act 51, transit funding is constitutionally limited to 10% of transportation tax revenue.  This memo summarizes the features of the fund.  In addition to the MTF allocation (explained in our previous post), the CTF also receives money from auto-related sales tax.  For FY 2012-2013, estimated revenue from the MTF was $158.155 M and $88 M from the auto-related sales tax.  As the memo (from the excellent House Fiscal Agency) notes, this fund is the source of local bus operating assistance and the total allocated to that purpose has not been increased since FY 2006-2007.  This has created a “zero sum game” for local transit agencies, since they must compete for a limited pot of money.  A complicated funding formula distributes funds in part based on the total operating expenditure for each agency, but there is also a floor created by a 1997 bill.

…the state operating assistance formula rewards local cost participation.  Agencies that pass local transit millages can expand service and effectively use local funding to leverage additional state funding.  Since state funding is capped at the appropriated amount, every additional dollar of state assistance a transit agency can capture comes at the expense of other transit agencies.  Under this formula, agencies in relatively affluent areas…have tended to capture and increasing share of state assistance.

AATA has benefited from this, since our local millage has allowed an expansion of service.   However, DDOT (supported by the Detroit city general fund) received a disproportionate amount of the funding this year (although less in previous years) because of the floor.  (See the report by the Ann Arbor Chronicle and the truly head-spinning explanation of how the formula worked.)  AATA fell short of their expected state assistance by about $800,000; they are hoping that the legislature will make them whole in a placeholder bill that currently contains no provisions but is evidently intended to fill in various budgetary holes around the state.

For the FY2013 budget year (through September), AATA expects to receive $8,301,880 in state assistance out of a total of $32,403,360 in revenue, or about 25.6% of its revenue.

A critical point for the future is that the SE Michigan Regional Transit Authority will now receive the entire CTF allocation for the region, and will distribute that to the different public transit providers under its authority.  This begins on October 1, 2013.  Public transit providers are required to submit applications to the RTA for their allocations.  The RTA will also receive all Federal operating assistance under MAP-21 and distribute that.

In FY2013, AATA expects to receive $5,795,268 from Federal formula funds, about 17.9% of operating revenue.

The Regional Transit Authority

As we just indicated, the emergence of the Regional Transit Authority has brought about a profound alteration in the way AATA will receive operating funds from state and Federal sources.

Here is a guide to the package of bills passed in the last days of the December House session that established the RTA. They have now been assigned Public Act numbers.  (All are “Public Act…of 2012.)  The most authoritative overview of the effect of this package of bills is from the House Fiscal Agency.  Click on the links to individual bills to read their text.

Senate Bill	Public Act	Immediate effect	Summary
909	P.A. 387	Yes 12/19/12	Creates Regional Transit Authority (the RTA act)
911	P.A. 388	No 3/28/13	Vehicle License Fee ($1.20/$1000) with approval of voters in region
912	P.A. 389	No 3/28/13	Makes zoning ordinance subject to the RTA act (subordinate)
967	P.A. 390	No 3/28/13	May operate dedicated public transit lanes on highways
445	P.A. 391	Yes 12/19/12	Directs CTF monies to RTA; RTA would distribute.

Despite the passage of a resolution by the Ann Arbor City Council on December 10, 2012 and what has reportedly been some vigorous lobbying in Lansing by our Mayor, it appears that Washtenaw County is firmly included in the RTA.  (The urgency shown by the Mayor is presumably related to this item in the RTA act):

Section 6 (3) (b) A board shall provide in its bylaws that the following actions require the unanimous approval of all voting members of the board: (i) A determination to acquire, construct, operate or maintain any form of rail passenger service within a public transit region.

The new board (see the temporary SEMCOG site for pictures) had its first meeting on April 10.  Local (Detroit area) transit advocates were wildly ecstatic.  Here is a live blog account. There is money. The RTA bill appropriated $250,000 which does not expire with the end of the fiscal year but can be carried over.

This may have a number of effects that we can only guess at for the moment. In addition to the routing of state and Federal operating funds through the RTA,  all grant requests for capital projects must also go through the RTA.  AATA has been particularly effective at obtaining Federal grants for capital purchases and special programs.

Among the many questions which we might ask: how does Detroit’s desperate situation play into this?  It is now under an emergency manager and its bus system is supported by general funds.  Will the rest of the region be, in essence, taxed to make DDOT a viable system?  Will the RTA board try to rearrange Washtenaw’s transit plan?  Will it continue to allow UM’s ridership to count toward the state formula requirements for AATA?  But above all, what will be the new funds source for this new layer of transit administration?  Much depends on how much more of Governor Snyder’s transportation proposals are accepted by the state Legislature.  And that is not going too well.

Next: so how is the “hopey changey” thing working out for Governor Snyder on transportation?

UPDATE: The House Fiscal Agency has issued updated discussions of the CTF and the overall state transportation funding structure.

Transit, Transportation, and the Money Question III

An overview of state funding for transportation.

The poor condition of Michigan’s roads and bridges is almost legendary.  I remember my puzzlement on arriving here in 1986 and wondering if I had landed in a third-world country.  This Pure Michigan parody on potholes expresses what many of us have felt at one time.  Legislators have raised alarms.  As a result of P.A. 221 of 2007, a Transportation Funding Task Force (nicknamed “TF2″) was formed and issued a report in late 2008  detailing the many problems.  The task force declared, “Michigan is moving from underinvesting in transportation, to disinvesting in transportation.”  It stated that Michigan was falling short even of enough revenue to provide matching funds to obtain available Federal funds.  (We have not attempted to discover whether this happened.) However, despite the report’s call for more revenue to be raised via several possibilities including vehicle registration fee increases, no new initiatives were taken.

Governor Rick Snyder, who was elected in 2010, has made transportation one of his key issues.  He issued a special message on transportation in October 2011.  He then followed up with his budget message for FY 2014 and FY 2015, which states:

The plan addresses the lack of appropriate road funding by creating a new funding model based on a gasoline and diesel tax of 33 cents a gallon; and increasing registration taxes for vehicles and heavy trucks. This will cost a typical Michigan family an estimated $120 per vehicle each year.

Additionally, the governor recommends a local option that would allow Michigan’s 83 counties to raise additional revenue for local transportation needs. Subject to local voters, a local vehicle registration tax of 0.18 percent of a vehicle’s list price would generate $280 million that counties could use to fix local roads or invest in public transportation.

The Governor’s budget (which is his proposal to the Michigan Legislature) thus proposes new revenue. In addition, it proposes a redirection of priorities in transportation.  Here is an excellent summary of the transportation budget recommendations and the changes from prior years.   As it states:

The Transportation budget supports state and local highway programs, public transportation programs, aeronautics programs, and administration of the Michigan Department of Transportation (MDOT). Approximately two-thirds of the revenue in this budget comes from state restricted revenue, with approximately one-third from federal sources. Almost all the state-restricted revenue in this budget is constitutionally restricted – from motor fuel taxes and vehicle registration taxes. (emphasis added)

A Long Tradition of Dividing Between Constituencies

Transportation funding is mostly directed by Public Act 51 of 1951, , which dictates how revenue collected from transportation users (including gasoline taxes and vehicle registration fees) are allocated. These are gathered into the Michigan Transportation Fund and then reallocated according to formula.  The MTF is a “restricted” fund that is limited to the uses dictated by P.A. 51.

After several transfers to some specific programs and departments, the balance of the MTF is divided up.  First,  10%  of the balance (approximately 8.5% of the MTF) is transferred to the Comprehensive Transportation Fund (CTF).  (The CTF funds public transit and other non-auto transportation.) Article IX, Section 9 of the Michigan Constitution specifies that  “Not less than 90 per cent. . . . shall be used exclusively for . . . roads, streets, and bridges . . .”  The remainder is divided up as follows:

State Trunkline Fund (STF):     39.1%

County Road Commissions:     39.1%

Cities and Villages:                       21.8%

The portion going to county road commissions is used for county roads and roads in rural and urbanized townships.   It is generally agreed that there is never enough money to do the job.  The Washtenaw County Road Commission  (WCRC) has been the subject of constant complaint ever since I became acquainted with the County.  It has a separate board of three commissioners, who serve for 6-year terms.  The road commissioners are appointed by the county Board of Commissioners, and that is the sole influence the BOC has over them.  (Another constant has been the complaints about Road Commissioner Fred Veigel, who has been reappointed constantly for nearly two decades. He is powerful politically because of his position as the Huron Valley Labor Council head.) Generally, every locality considers that it is being treated unfairly on attention to its roads.  County commissioners are powerless to address the complaints of their constituents.

Thus, Governor Snyder got their attention last year when he signed a pair of bills that empower county boards of commissioners to absorb the road commission within their own shop. The bills, now P.A. 14 and P.A. 15,  set a deadline of January 1, 2015 for this action to take place within a county.  The Washtenaw County BOC has been having a conversation about absorbing the WCRC, according to this report from AnnArbor.com.  Conan Smith, who has expressed interest in doing away with the road commission in the past, is encouraging discussion of a county transportation reorganization.  Some of the themes mentioned, such as a conflation of roads with other means of transportation and a new local tax, are likely to raise hackles, especially in the townships.  From the AnnArbor.com story:

Yousef Rabhi:  “The funding aspect should take a holistic view to transportation”,  mentioning bike lanes, pedestrian access and alternative modes of transportation.

Conan Smith:  “Our transportation system needs to change to meet the needs of a different kind of user.  We’ve focused on transportation too long as roads as primary and public transit as secondary.”

Smith and Rabhi have both been big supporters of the Southeast Michigan Regional Transit Authority, which is meeting for the first time on April 10.   Smith has really pushed the envelope with his maneuvers on the RTA, including using his position as the Executive Director of the Michigan Suburbs Alliance and his marriage to Senator Rebekah Warren to shepherd it through the Legislature with Washtenaw County appended to this metropolitan Detroit transit authority.  He also managed to appoint the two RTA board members from Washtenaw just before ending his term as Chair of the BOC.  It is not clear how his notion of having the BOC take on more authority over transportation in the county would integrate with that thrust.

Meanwhile, the talk of more state revenue has caused some excitement at the WCRC itself.  Its managing director, Roy Townsend, is quoted in another AnnArbor.com report as having plenty of ideas on how to spend additional road funds raised by the Governor.  A quick look at the map included in the article seems to indicate that most of the projects are on rural roads.

Clearly, there are very different visions of how additional transportation funds should be spent  – fixing roads? Or more transit?  One complication not always mentioned is that the 10% constitutional limit for transit applies across the board for governmental expenditures on transportation, not just to the MTF.

Next: special aspects of funding for transit.

UPDATE: The House Fiscal Agency has just released an excellent overview of transportation funding, which includes a discussion of  many of the concerns and issues with the gap between funding and needs.

Transit, Transportation, and the Money Question II

One of the peculiarities of transportation funding is that the true cost of transportation is almost never borne by the actual users.  There is a superstructure of taxes and fees that make up most of the costs, while the actual users do not pay proportionately, even those using roads and bridges.  In the case of public transit, fares may seem significant to the riders but generally do not pay for more than a fraction of the service.  Further, fares have to be kept relatively low or ridership declines.  (The most recent statement of cost per passenger for AATA buses is $3.16, while the full fare is $1.50.  How many people would ride the bus at a cost of $6 per round trip?)

Local taxes and fees that are paid for transportation often are perceived by those paying to be really burdensome, and the related service is considered inadequate. (Key the complaints about the Road Commission and Ann Arbor potholes.) Yet, those are usually only a small fraction of the cost.  The main cost is borne by the Federal Government, and the State of Michigan.

Federal Funding

The Federal transportation bills which provide for transportation are always contentious and provide Congress with some good old-fashioned wrangling, as legislators try to get the best for their own regions.  In spite of this, Congress managed to pass a new surface transportation bill, known as MAP-21, in the summer of 2012.  It expires at the end of FY 2014 (September 30, 2014).  Here is SEMCOG’s page on MAP-21.  MAP-21, or the surface transportation act, is basically what we think of as the “gas tax”.  The formal name is the Highway Trust Fund, and the money available has been shrinking as (believe it or not) total gas consumption has been declining.  There are efforts to recast the funding mechanism but this will be contentious. Much of MAP-21 relates to roads and bridges, but it is crucial to transit systems because this is where Federal formula funds for day-to-day operation, and also capital funds for transit purposes, are allocated.  See a helpful memo by AATA’s Chris White about the effects of MAP-21 on AATA’s finances.

General note: it is helpful to remember that all transportation agencies have fiscal years consistent with the Federal fiscal year, which begins October 1 each year.  Many municipalities in Michigan use either a calendar year FY (January) or a mid-year FY (July).  This can cause some coordination issues.

There are many other Federal transportation funds. This has become very significant because of the Federal funds sequester, which has affected most funds EXCEPT MAP-21.  For a pdf of this chart showing the effects of sequestration on Federal transportation funding,  see here. (Click on the picture to see a larger version.)

Note that most MAP-21 funds were not reduced by the sequester, but others were. Also, a couple of funds that AATA has benefited from in the past did not survive the last Congress at all.  They are the Sustainable Communities grants (which funded ReImagine Washtenaw; see our post) and the High Speed Rail, also known as HSIPR, program.  These were both “zeroed out”.  The grant for design of the Fuller Road Station was from HSIPR.  TIGER grants, which have been used for many capital projects involving transit, have been cut, as was New Starts.  (New Starts is the program that would usually pay for a new rail line or other new transit line.)

In a recent audit of infrastructure by the American Society of Civil Engineers, the country’s roads and transit systems each got a grade of D.  Bridges and rail were upgraded to C+, two of the brightest spots in the overall audit, which is not saying much.  For most observers, the state of the nation’s roads and bridges is a higher concern than transit systems, and most of MAP-21 is directed to roads.

In addition to these funds, transportation projects got a big boost from President Obama’s stimulus program, the American Reinvestment and Recovery Act of 2009, commonly called ARRA.  This was quite a bonanza for local governments.  AATA received $6,474,089 (some of this was spent on Park and Ride improvements, some on the UM transit center, and new buses were purchased; ARRA also helped with some operating funds).  (For an overview of AATA grant proceeds through FY 2011, see AATA Grant History 2007 to 2011.)  It is important to remember that ARRA expired at the end of 2010 and Congress seems unlikely ever to renew it.  Some funds may still be disbursed within separate grant awards, though Congress did withdraw some unexpended funds as part of the budget cuts of 2011.

With MAP-21 scheduled to expire in 2014, and with Federal budget talks continuing, it seems most prudent to assume that current funding may not continue forever.  Here is a provocative article that discusses Federal vs. state and local funding.

Rail Funding

Rail transportation (including passenger rail) is not included in MAP-21.  That has two immediate consequences: one is that rail is more vulnerable to Congressional cuts, and the other is that it is not treated as part of a comprehensive transportation system. (A recent analysis calls it a “blow to multimodalism”.) The Passenger Rail Investment and Improvement Act of 2008 (PRIIA) governs funding for passenger rail systems, especially Amtrak.  (PRIIA expires at the end of this fiscal year – that is September 2013.)  The biggest shot in the arm for capital projects relating to rail was ARRA (the HSIPR was part of the stimulus.)

Note the distinction between “appropriated” and “authorized”.  Congress appropriates funds within budget bills, but the agency must authorize their use through grants.  As can be seen from this graph from a report of DOT’s Inspector General, the big injection of capital grants ($8 billion) was during the 2009 stimulus, but little has been made available since then.

As shown in the table, Amtrak funding has been cut. PRIIA has changed the rules on funding shorter lines, which include the Wolverine (the line that goes through Ann Arbor between Detroit and Chicago).  Beginning this year, Michigan is obligated to make up the difference between revenue and operation of the Wolverine (the operating deficit).  According to this summary, that is $17 million. (Ridership on the Wolverine has increased 15% since 1997, but that does not erase the operating deficit.)  This is significant to us locally, because though the Governor’s budget calls for rail funding, the revenue to pay for it has not yet been identified.  More on that when we discuss State of Michigan funding.

For a history of passenger rail and much useful data, see the recent Brookings Institution study.

Making Local Borrowing Easy

With the availability of grant funds limited, the Obama administration has been shifting emphasis to loan programs.  These make it easy for local governments to obtain low-interest loans for big projects.  Of course, it also means that these governments can commit to projects that will put them into long-term debt without assurance of success in the final operational mode.  (Even after all the construction is done, there is still a cost of operation – as with Amtrak.)  The best-known program is TIFIA, which “provides improved access to capital markets, flexible repayment terms, and potentially more favorable interest rates than can be found in private capital markets for similar instruments”. As noted, “TIFIA can help advance qualified, large-scale projects that otherwise might be delayed or deferred because of size, complexity, or uncertainty over the timing of revenues.”

President Obama has recently proposed a more expansive approach to offering credit for transportation projects.  “Among other things, new “America Fast Forward Bonds” would help state and local governments borrow money for projects, while foreign pension and retirement funds would have a tax penalty eliminated so they could invest in infrastructure in the United States on a similar basis as American funds.”

AATA has traditionally not used credit (floating bonds, etc.) for projects, but has relied on Federal grants for capital projects.  Those traditional grants required a 20% “local match” but were otherwise found money.  If they began to take on debt (which was proposed in the implementation plan for the TMP), they could encumber fares and tax revenues to pay off that debt.  That could potentially change the landscape quite a bit.

Still to come: State of Michigan transportation funding, still unknown territory.

UPDATE: TIGER Grants

The Transportation Investment Generating Economic Recovery (TIGER) grants have been an important source of capital investment for transportation projects, and were originally part of ARRA.  However, they have survived, though with reduced amounts, into the present day.

TIGER I	FY 2010	$1,500 M
TIGER II	FY 2010	$600 M
TIGER discretionary	FY 2011	$527 M
TIGER discretionary	FY 2012	$500 M
TIGER discretionary	FY 2013	$475 M

As indicated in the comment, Ann Arbor received $13.9 million in FY 2010 for the Stadium Bridges.  That was very nice, since these grants are highly competitive.  In the FY 2012 round, DOT received 703 applications requesting a total of $10.2 billion.  They awarded 47 applicants grants of a total of $500 million.  In other words, about 1 in 15 applicants received grants.

According to Transportation Issues Daily, 16% of the funding went to transit projects, and 13% to passenger rail projects.  Roads and bridges got 35%, with the rest divided between ports, multimodal (includiing bicycle and pedestrian) projects, freight rail, and special set-asides for rural areas and tribal governments.

The FY 2013 TIGER projects will evidently be advertised in May.  Look for an avalanche of applications.

SECOND UPDATE: Here is an article from the Atlantic with a brief discussion of President Obama’s transportation budget.  Keep in mind that his budget probably bears very little congruence to anything finally approved by Congress.

Transit, Transportation, and the Money Question

If Ann Arbor had a Time Magazine cover for Topic of the Year, the winner would surely be Transportation.  Or, more specifically Transit.  This last year has seen a tumult of transit proposals.  In our post of almost exactly six months ago, we referred to the Ball of Confusion that is local transit proposals.  It hasn’t gotten better. We still have proposals for regional transit (read, mostly bus) organizations, connectors, corridor studies, train stations, and most especially commuter trains tumbling around and bumping into each other, leaving most everyone scratching their heads and trying to figure out where things fit.  Transportation in the sense of infrastructure (roads and bridges) is an issue too, and it affects transit discussions because the two compete with each other for an increasing scarce commodity: MONEY, or as we wonks refer to it, funding.

Any process so intensive as our current tangle of transit proposals must have an energy source behind it, and a mechanism.  In the case of Ann Arbor, it is not that difficult to see that our Mayor, John Hieftje, is the man behind the curtain.  He first laid out his plan, the Mayor’s Model for Mobility, in 2006.  Since then, he has consistently and methodically used every tool at hand (and that is a lot, being the Mayor) to move toward implementing it (we discussed this earlier).  He has seated the entire AATA Board, hired a transportation specialist whose job description is essentially to execute the model, and has pulled every possible political string, including that connected to our sitting Congressman, John Dingell.  The result has been plenty of energy directed at transit.  But most specifically, it appears to be directed at Hieftje’s dream of establishing two commuter railroads.

We have previously discussed the compelling image of trains in our posts, Train of Dreams and Train of Dreams II.

Trains occupy a singular place in our culture’s mind’s eye.  There is a romance, a jumbled set of personal and relayed memories that combine to make just the idea of a train the cause of an emotional rush.

Partly because of this, many of the general public have responded to Hiefje’s vision without much critical attention to practicalities, or to the question of how two new rail systems can be paid for.  And this vision is still driving much planning in the city (only recently, stories have come out about a downtown station for WALLY in which we may demolish a building at 415 W. Washington for a possible station, and the continued existence in the budget of additional funds to plan for the Fuller Road Station).

But how realistic is this apparent obsession? We will attempt to examine factors affecting our current transit proposals, including the trains, in future posts. First, the next post will examine the current state of transportation funding.

UPDATE:  For a review of AATA’s explanation of transit funding, see pages 33-35  of this draft package for a panel discussion on “Urban Core Transit”, held March 28, 2013. Some pages of the draft package were replaced by final text in the package actually handed out at the meeting.

Topsy-Turvy Transit: Where Do We Go From Here? III

Continuing a retrospective of AATA’s countywide transit authority efforts, with a look ahead.

In the first post of this series, we described AATA’s decision to “catapult” the authority into its hoped-for transition to a countywide service by advance implementation of several services.   This meant that AATA passed a deficit budget for FY 2012 (which began in October 2011).  At the time, it was clearly expected that this bold leap would be for one year only.  As we reported at the time, it was evident that the intention was to ask voters to approve a property tax millage in the November 2012 election.  Assuming that was approved, there would have been a funding gap between September 2012 (the last month of that fiscal year) and July 2013 (when taxes for the next year would be collected).  We commented,

But the AATA, which uses the Federal tax year (October-October), would have to pass a new budget in September 2012 in advance of the millage vote.  So not only will the AATA have to pass a new year’s budget without a certainty that a countywide millage will pass, but three-quarters of a year will pass before revenue will be realized from a successful millage vote.

And indeed, September 2012 rolled around and a new budget was passed.   As the Ann Arbor Chronicle reported,  the AATA finished the year with a deficit of over $1 million.  (Note: the deficit is the difference between revenues and expenses; this does not reflect a negative fund balance overall.)

And so the AATA began another fiscal year with a deficit budget (this time the projected deficit is about $300,000).  That was partly because of a reduction in state formula support, as detailed in an expanded report by the Ann Arbor Chronicle.  But they had a bigger problem: the possibility of new revenue had been pushed much farther out toward the horizon than anticipated.  Instead of a November millage vote, they were instead only now preparing to incorporate the Washtenaw Ride (that request to Washtenaw County would take place October 2) and after an opt-out window, would ask countywide voters to pass a property tax millage, perhaps in a May 2013 election.

From the Chronicle’s first brief account:

At the board’s Sept. 27 meeting, board treasurer David Nacht was keen to stress that various initiatives in which the AATA has invested in the past year and in this next year’s budget could not be sustained without the kind of additional funding that could come from a countywide authority.

Of course, just the next month, as we have described, most communities in the county opted out, and the “countywide authority” vanished into a puff of smoke.

What could go wrong?

Reprinted with permission by S. Harris. Copyright by ScienceCartoonsPlus.com

From the beginning, the AATA’s quest for a countywide (Act 196) authority has been powered by magical thinking.  A number of assumptions were made, one of which is that no obstacle was insurmountable. But really, if only one of these assumptions was in error, they were in trouble.  The other items of faith:

Local governments will opt in (didn’t happen).

Voters will support a new millage (irrelevant at this point).

Required documents (4-party, Articles of Incorporation) passed by City of Ann Arbor and Washtenaw County, along with the City of Ypsilanti quickly, for a November 2012 millage vote (final sign-off by the BOC in September, much too late).

Changes in Federal transit funding would not affect them negatively (see the memo by Chris White; loss of discretionary funds; still some uncertainly with the Federal budget sequestration).

But if not the greatest miscalculation, certainly a major one was the mis-estimation of the effect of Washtenaw County’s inclusion in the Regional Transit Authority for SE Michigan.  As explained here, a package of bills passed in the lame-duck session of the Michigan Legislature and has been signed into law by Governor Snyder.  This is a succinct summary of the main package.    (The detailed discussion of the effects of Washtenaw County’s inclusion will be in a later post.)   We speculated a year ago that then-Board Chair Jesse Bernstein expected that a vehicle license fee associated with this package might serve instead of a millage to fund the AATA’s expanded authority.  He had made some cryptic remarks, like this one at the October 2011 u196 meeting:

“Everyone talks about a millage, but I’m hoping that the Governor will light a candle over the weekend.”

Earlier, there was this exchange at the September 2011 Planning and Development Committee meeting (discussing the deficit budget later voted in by the Board):

Rich Robben: We won’t be able to follow this mechanism (dipping into reserves) next year.  We’d better pull some rabbits out of a hat.

Michael Ford: I’m looking at finding some rabbits.

How SB 910 would have allowed a county vehicle fee (from illustration by Richard Murphy)

All this became clear once the package of bills was revealed in January 2012.   SB 910 provided for any county to assess a vehicle license fee, upon passage of a measure by the county BOC and approval by the voters.  The bill provides for up to $1.80 per $1,000 vehicle list price to be assessed in addition to all other vehicle license fees, and paid to the county treasurer for transportation purposes.  However, if the county were in the RTA, the amount of the fee would be reduced by the fees paid to the RTA.

Right up to the issuance of the final 5-year plan, AATA staff apparently had hoped that this source of revenue might replace the need for a millage.  But the plan acknowledges that the millage appears to be the only option.

From the September 2012 final 5 year plan

Proposed BRT routes into Detroit. Graphic by Dave Askins of the Ann Arbor Chronicle, used with permission. Pointer is Detroit Metro Airport.

The RTA package was delayed past the initiation of Washtenaw Ride, so the vehicle license fee did not materialize in time–or ever.  When the RTA package was finally passed in the last days of the 2012 lame-duck session, SB 910 was not included.  The only vehicle license fee included in the final package is that which will support the RTA itself, most likely to initiate Governor Snyder’s dream of Bus Rapid Transit connector routes.

So – after 18 months of intense effort, the AATA finds itself highly leveraged, over-extended, and with no immediate source of new revenue.  And in addition, it has an extra layer of complication introduced with the inclusion of Washtenaw County in SB 909, establishing the SE Michigan Regional Authority.

Next: What now?

 

Topsy-Turvy Transit: Where Do We Go From Here? II

In our previous post, we listed five assumptions that AATA was operating under in its quest for a countywide transit authority.

1. The elected officials of all the units of government in Washtenaw County would assent to being included in a new scheme that included a likely new tax and a governance model that left Ann Arbor mostly in charge.
2. Ann Arbor, the city of Ypsilanti, and Washtenaw County would all sign off on a couple of fairly substantial legal documents.
3. The Regional Transit Authority for SE Michigan either would not materialize or would not affect them significantly.
4. The voters across the county would vote in a new property tax, including in both tax-adverse rural townships and the voters of Ann Arbor and Ypsilanti, who were expected to add this millage to one already existing.
5. Changes in Federal transportation funding would not affect them negatively.

From AATA’s perspective, assumption #1 seemed pretty reasonable to begin with.  From the beginning, staff spent many hours meeting with local officials and holding local public meetings.  They were  assisted by the Executive Director of the Washtenaw Area Transit Study (WATS), Terri Blackmore.  (Blackmore is more or less the godmother of the countywide transit plan and knew many of these officials through her professional activity.)  They received generally a good reception.  A number of local officials allowed the use of their faces in promotional materials and ultimately signed on to serve on the “u196 board”.  The u196 board, who were recruited via the district governance scheme, were all either local officials or very solid citizens who were accustomed to accepting civic responsibility.  Meetings began in November 2011 and the u196 appointees sat solemnly through a number of excellent staff overviews of various topics concerning transit.

(Note that the list circulated at the second meeting does not include any representatives from Ann Arbor.  According to the governance scheme, the u196 board was to have 15 members, 7 of whom would be the current AATA board, representing Ann Arbor.  However, it was decided by leadership that the entire AATA board could not sit on the u196 board, since that would make meetings essentially a meeting of the AATA board and thus come under all the legal requirements of the Open Meetings Act.  Therefore, three AATA board members (the actual individuals who served changed) sat on the u196 board.)

But the acquiescence of u196 board members to discussion was not a promise that the political environment at home in the township would be favorable to an agreement on new taxes.  As we detailed in this post about county politics, many townships have a long tradition of very low property tax millages, and a 1-mill tax would have been doubling tax rates for some townships, a very hard sell.  And AATA leadership ignored the results of their own survey data (results from March 2012).

Results by region: Would you vote for a 1 mill transit tax?

Note that while 68% of respondents in the City of Ann Arbor said they would be likely to vote for a transit tax of 1 mill, and 56% of the urban core communities in Ypsilanti and Pittsfield were positive (combining “definitely” and “probably”), only 48% of those in the City of Saline and eastern townships, and 42% in Chelsea and western townships were positive.  Of those, the greatest proportion were only “probably”.  The overall percentages of respondents in 2011 who said they would be “definitely” vote for a tax was 18%, and 36% said “probably”, for a total of 54% positive responses.  But that overall positive number did not take willingness to participate on a regional basis into account. Further, was this really a very strong positive result, even overall?  Survey respondents are known to tailor responses to what they think the questioner wants to hear.  Who knows what that 36% of  “probable” voters would have done in the privacy of the ballot box?

Somewhat disastrously, AATA appeared to take the position that any negative implications were to be ignored or explained, and positive ones the only to be considered.  When six rural townships withdrew very early even from the planning exercises, AATA leaders like Jesse Bernstein began talking of population numbers and taxable value, in effect arguing that those townships didn’t matter.  But these withdrawals undercut the premise of a countywide authority and set a precedent for non-participation.

One move that AATA did make in the face of these negative indications was to reduce the target millage in an attempt to make a vote for a new tax more palatable.  As mentioned in the last post, the Financial Task Force was able to reduce the proposed millage amount to 0.5 mills by excluding a number of projects from the cost of the plan (though AATA kept them in the plan and continued to spend money on them).  But there was again a political miscalculation here.  It was not a matter of the amount of the millage.  It was the question of any new tax at all for the benefit being offered.

Remaining (green) and opted-out (red screen) communities in Washtenaw County as of October 30, 2012. Dexter Village had not voted.

Ultimately, AATA simply failed to make the sale.  As we attempted to explain in an earlier post, for most sections of the county, the plan didn’t pencil out.  Once AATA sent out letters to municipalities offering a 30-day window from October 3 for opting out (the date was later extended to December 10), there was a rush to the exits.  By October 30, all but four governmental units had formally opted out.

Faced with the likelihood that the new authority was likely to consist of Ann Arbor subsidizing transit for a couple of other nearby communities, the Ann Arbor City Council voted on November 8 to opt out of the Washtenaw Ride and also to cancel the city’s participation in the 4-party agreement.

With Ann Arbor out, remaining communities followed suit.  Dexter Village finally opted out, and Ypsilanti Township and the City of Saline reversed their earlier “opt-ins”.  (See our post,  Washtenaw County Transit – More Outs than Ins for a blow-by-blow account.)

Opt-outs as of December 5. Only Ypsilanti City remains.

By the deadline of December 10, only the City of Ypsilanti remained in the Washtenaw Ride.  As reported by the Ann Arbor Chronicle, the November 18 AATA Board meeting sought to put the best face on what was, in fact, a devastating rejection of their efforts to put together a countywide transit organization.

Next: It’s all about the money.

Topsy-Turvy Transit: Where Do We Go From Here?

This has been a tough year for AATA.  What was supposed to be a walk in the park has turned into something more like a ride on Space Mountain.  And The Ride hasn’t finished with the possible surprises and upsets.

As we documented early on, the AATA board settled on a plan to launch a countywide transit authority at a retreat in June 2011, and released its first version of the Transit Master Plan in August 2011.  The process laid out was complex. It required participation of all units of government in Washtenaw County to appoint a 15-member board that would serve as an “unincorporated 196 board” (u196), execution of a very complicated legal document that would result in the city of Ann Arbor dedicating its charter transit millage to the new authority, and approval by the voters countywide of a new transit millage.

Roadmap presented to Ann Arbor City Council, December 2011

In September the AATA board approved a deficit budget for the next year (FY2012 started in October 2011).  As the Ann Arbor Chronicle reported, Planning and Development committee chair Rich Robben

“led off deliberations by saying it’s not a sustainable budget. But he said it would catapult the AATA towards a transition to countywide service.”

The “catapult” consisted of advance implementation of a number of new services that were presented as part of the countywide plan.  The choice of term was perhaps unfortunate, since it did indeed “catapult” AATA into its first acceleration to the top of the mountain.

The first jolt was felt in October 2011, with Governor Snyder’s announcement of his new transportation initiative, which included a Regional Transit Authority for SE Michigan.  It would include Washtenaw County.  We reported on this in detail in a post that described the reaction of Albert Berriz, the chair of the Financial Task Force.   The FTF had been appointed by the AATA to come up with a financial plan for financing the TMP.  It had its first meeting on October 28.  Snyder had given his talk on October 26.  Berriz was clearly stunned by the implications of the RTA (especially its control of state and Federal funds) and rather summarily canceled most business of the FTF, postponing the next meeting for a couple of months.

But AATA staff and board seemed sanguine and pressed ahead with their plan despite this large dose of uncertainty delivered by the Governor. They came up with a reassuring interpretation of the effects of the RTA on Washtenaw County’s transit plans as being minimal. Apparently these were based on conversations (the text of the legislation was not yet public). Many details are now clearly understood to be mistaken.  And they pressed on with their original plan.

From a presentation to the Ann Arbor City Council, December 2011

The FTF appointed a subcommittee of very knowledgeable people who did a very high-level job of analyzing finances needed for the TMP.  By considerable fudging (they simply omitted many facets of the plan from the financial estimates) and raising fares, they were able to recommend a county-wide millage of only 0.5 mills (this was later recalculated to 0.584). But just as they were poised to present this to the full FTF, Governor Snyder’s package of bills were made public and the roll-out was again postponed.   Finally, the FTF met on February 29 and released their recommendations.  A complete set of these reports and recommendations is available on our Transportation Page.   The chair, Albert Berriz, wrote a letter to the committee that was telling.

…we don’t know what the Governor’s plan will look like in its final form, and without that information it’s difficult to say that pursuing the track of a countywide millage is the right thing to do at this time.  Therefore, in my opinion, it’s premature to pursue any millage option at this time…as there are too many parts of the current economic model that we have been asked to review that may and likely will change once the final legislation comes into play.

Meanwhile, in the background, serious discussion was going on in Washington D.C. about the fate of Federal transportation funding.  The then-current transportation bill was on life support after many short-term renewals.  Finally, on July 6, 2012, MAP-21, the new transportation bill, was signed into law.  Regulations and funding schedules have been generated on an ongoing basis.  (For excellent coverage, see Transportation Issues Daily’s MAP-21 Learning Center.)  During much of 2012, AATA did not know how Federal funding (a very important component of their overall financial plan) was going to settle out.

So, let’s summarize.  The AATA was proceeding on a number of assumptions.

1. The elected officials of all the units of government in Washtenaw County would assent to being included in a new scheme that included a likely new tax and a governance model that left Ann Arbor mostly in charge.
2. Ann Arbor, the city of Ypsilanti, and Washtenaw County would all sign off on a couple of fairly substantial legal documents.
3. The RTA either would not materialize or would not affect them significantly.
4. The voters across the county would vote in a new property tax, including in both tax-adverse rural townships and the voters of Ann Arbor and Ypsilanti, who were expected to add this millage to one already existing.
5. Changes in Federal transportation funding would not affect them negatively.

To all of these challenges, the response was to press ahead.  After all, what could go wrong?

In order to pursue the county-wide vision, the AATA invested big.  Over a three-year period, they spent $463,499.66 of Ann Arbor millage money.  The rest of the $1,418,890.15 cost for consultants, survey research, promotional materials and “outreach” was borne by Federal and state funds. See spreadsheet from AATA here.

The effort to get the cities of Ann Arbor and Ypsilanti and Washtenaw County Board of Commissioners to sign off on both the four-party agreement and the Articles of Incorporation was longer and much more tedious than hoped.  But finally, on September 5, the BOC approved the AOI (account by the Ann Arbor Chronicle).  The AATA immediately (September 7) approved their 5-year plan and launched the countywide plan.  This would presumably lead to starting a 30-day clock for local units to opt out, after which the 196 board could be seated.

File directory of toolkit presented to AATA board on a flash drive

A very thorough campaign was conducted through the u196 members and their associated District Advisory Committees (staffed by u196 members and AATA staff) to convince communities to support the countywide effort.  It included postcards to be sent to elected officials and drafts of emails, letters to the editor, Facebook posts, and letters to officials.

The objective was to build a public pressure to get local governments to sign onto the countywide plan.

Postcards provided in a promotional packet handed to AATA board members and u196 members

Next: So how did that work out?

Note: Posts on this subject and much reference material is on our Transportation Page.