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.

The SE Michigan Regional Transit Authority in Progress

On November 27, 2012, the Michigan Senate passed a bundle of bills aimed at setting up a Southeast Michigan Regional Transit Authority.  We previously reviewed this initiative.  The most recent discussion was Regional Transit in Ann Arbor and Beyond: A Matter of Governance.  The bill package languished through the summer, as was somewhat anticipated. As early as last January,  transportation consultants told the AATA Board that these bills were not likely to be taken up before the lame-duck session.  (See account by the Ann Arbor Chronicle.)

Before we get into any discussion about the political and functional implications of the passage of this package, let’s summarize the bills.  Note that serious study would be aided by consulting this authoritative overview of the major bills (SB 909, 911, 912, 967) and the analysis of SB 445 by the Senate Fiscal Agency.

Senate Bill	House equivalent	Link to text	Summary
909	5309	SB 909	Creates a Regional Transit Authority with 4 counties, described by population.
911	5311	SB 911	Provides for Vehicle License Fee ($1.20/$1000)
912	5310	SB 912	Apparently overrides local zoning for transit purposes.  Little detail.
445	not known	SB 445	Direct Comprehensive Transportation Funds to RTA; RTA would distribute. (Incl Federal funds)
967	not known	SB 967	Operate dedicated public transit lanes on highways

Conspicuously missing from the bill package passed by the Senate was a bill introduced by Senator Rebekah Warren.  Senate Bill 910 and its House counterpart HB 5312 would have allowed counties to levy a vehicle license fee of $1.80 per $1000 of the vehicle’s list price. So, for example, the owner of a vehicle valued at $20,000 would pay an additional $36 a year. Oddly, this money would be paid to the county treasurer, not to a transit authority or any transportation agency.  The fee would be in addition to existing vehicle license fees and in addition to the vehicle license fee assessed on behalf of the RTA.  (That fee would be $1.20 per $1000 valuation, so our hypothetical vehicle owner would pay $24 for the RTA plus the county fee, a total of $60 in new vehicle license fees.)  There would have to be a majority vote on a countywide ballot before the fee could be enacted.

December 5, 2012:  The House Transportation Committee reported the entire package out to the House floor without amendment.

Preliminary reports indicate that the House adjourned without final action on the RTA (December 5).

Here is the story in the Detroit News in which the measure failed to gain enough votes and was withdrawn without a final vote.  Presumably it will be reintroduced.

AnnArbor.com interviews Ann Arbor officials on the status of the RTA package and its likely effects on Ann Arbor.

December 6, 2012: The House of Representatives voted in two of the five-bill RTA package.  These can now go to the Governor for signing.

The two bills, SB 909 and SB 445, passed with bare majorities. There are 110 members, so 56 votes are required. The vote for SB 909 was 57 in favor, 50 opposed, and 3 not voting;  56 – 52 – 2 for SB 445.)  The other three bills appeared to have between 45-50 votes on the board before leadership cleared the board and suspended voting on them.   The two bills were also declared by voice vote to have immediate effect, meaning they will be law after the Governor signs them, rather than in the next legislative session.

Here are comments sent out today (Dec. 6) by Representative Rick Olson, who is retiring from the House at the end of the term.  (Emphasis added.)

If we had amended the Senate bills, they would need to go back to the Senate for concurrence with the amendments, and there are not enough Republican votes in the Senate to do so. So rather than risk losing the RTA opportunity once again, the committee approved the Senate bills as they had passed the Senate. As I am writing this, the main RTA bill (Senate Bill 909) has passed the House.  We are continuing to work on changes to some of the accompanying bills. 

As the bills stand, the bills only enable an RTA to be formed, they don’t form one. The region will need to put a plan together and then pass by a vote of the people of the region the funding mechanism. If the region cannot get its act together, there will not be a regional transit plan. If it can, then the region will be able to join the rest of the major cities in the US in providing convenient transportation to its non-motorized residents.

The Ann Arbor City Council has scheduled a special meeting to discuss the impact of the RTA bills.  Here is the Ann Arbor Chronicle’s description.

December 6, 2012: SB 911 has now been passed with 57 votes.  SB 912 was delayed again. According to MIRS, the House adjourned without action on SB 912 and SB 967. The chair of the Transportation Committee, Rep. Paul Opsommer of DeWitt, seemed to indicate that they will be brought back again.

December 7, 2012: The House is evidently not in session today, as no webcasts are scheduled.  Staff are keeping up with the action on bills.  See for example the page on SB 912, where actions are recorded in the box at the end.

December 10, 2012: The House is not in session until tomorrow.

Murph (aka Richard Murphy) has posted an analysis of why Ann Arborites should not be concerned about the RTA on his blog Common Monkeyflower.  Note that Murph is employed by the Michigan Suburbs Alliance.

The Ann Arbor City Council’s special session today at 4 p.m. has been moved to the City Council chambers from the Jury Room after a question raised about public access and also use of electronic devices (prohibited in the Justice Center).  CTN coverage still TBD.   This session is to consider a resolution asking Governor Snyder to veto the RTA package, or at least SB 909 which causes Washtenaw to be included in the RTA.

Conan Smith’s letter to the Ann Arbor City Council: Hours before the Council meets to consider a resolution calling for the Governor’s veto, Conan Smith, the mover behind Washtenaw County’s inclusion, has sent a letter imploring the Council to step back from the brink.  It had an attached document that explained aspects of the RTA at length.  Conan Smith letter to Ann Arbor City Council

The scope of Smith’s ambition with this measure can be guessed from this sentence:

Ending the balkanization of our transit systems is a fundamental reform if we are to create a system that serves the broadest set of the population and competes successfully against places like Boston, Chicago and San Francisco for federal investments.

Ann Arbor City Council, December 10, 2012 voted to pass the resolution, slightly amended. Discussion was somewhat subdued. According to the Ann Arbor Chronicle, the vote was unanimous. Ann Arbor Chronicle account of the special meeting

The story in AnnArbor.com quotes some officials who have a mixed view of the RTA.

December 11, 2012:

The Ann Arbor City Council’s final resolution regarding the RTA package is now available. DC-1 Protest SB 909 Certified Copy    The resolution removes the issue from the frenetic press of last-minute legislation and pushes it into next term.  It no longer calls on the Governor to veto the existing package.

December 12, 2012: The Ann Arbor Chronicle has now published an article detailing the discussion at the December 10 City Council meeting.  According to the article, as of noon on December 12, Governor Snyder had not signed any of the RTA bills.

December 13, 2012: The final two bills, SB 0967 and SB 0912, have still not passed the House.  (By clicking on the links to the bills, it is possible to see their status.  According to the status update, neither bill has yet been taken up again since December 6.)

Today the Detroit News published an article that quotes Secretary of Transportation Ray LaHood as saying that these two bills must pass in order for Detroit and Michigan to receive the $25 million hoped for the M-1 streetcar project on Woodward Avenue. “The legislation ‘is really one of the last pieces that has to be put in place in order for us to give the green light,’ LaHood said.”

What did we tell you?  (Regional Transit in Ann Arbor and Beyond: A Matter of Governance)  It is really all about that M-1 project.

December 14, 2012: SB 912 and SB 967 passed the House “early Friday morning”. According to MIRS, the vote was 57-48 and 56-49, respectively.

The entire package has thus been passed and is expected to be signed by the Governor, since it was his package of bills at the outset.  This completes the program for a Regional Transit Authority that he laid out in his transportation talk on October 26, 2011.  (See our summary with links here.)

There are many questions to be answered, especially for us in Ann Arbor and Washtenaw County who depend primarily on the AATA for our transit service.  See our early discussion of this.  Future posts will examine the effects on the AATA and its plans for a modestly expanded regional coverage in Washtenaw County.  Meanwhile, we’ll wait to see whether the plea from Ann Arbor’s City Council to remove Washtenaw from the RTA is effective (my best prediction is that it will be fruitless) and who is appointed to the RTA board, and when.

Some of the bills were passed with immediate impact.  However, Megan Owens of Transportation Riders United predicts that the RTA will take shape 90 days after signing, in March 2013. It will have fiscal authority as of October 2013 (the start of the Federal fiscal year).

Conan Smith to appoint Washtenaw County Board Members

Smith has informed the Board of Commissioners that he intends to move ahead with appointments to the Regional Transit Authority Board as soon as the RTA bills are signed.   Here is the text of his message:

Members of the Board(s) . . . next week the governor will sign SB 909 creating the Regional Transit Authority, which includes Washtenaw County.  The legislation authorizes the chair of our commission (sic) to make two appointments to the board.  I’ve discussed options with Curt and the incoming leadership team and with their support will be making these appointment before the end of the year.  The general terms are three years, but one of the initial appointment is for a single year, so that one will expire within the purview of the incoming board who can review and reappoint or replace my selection.

I’ve invited a small group of community leaders to serve as an advisory board in this process:

• Rolland (Sizemore, Jr.) as the immediate past chair and Yousef (Rabhi) as the (presumed) incoming chair;
• Michael Ford, CEO at AATA, to ensure our transit agency’s perspective is represented;
• Bill Milliken, Jr., to represent the business community; Bill served as the chair of the Washtenaw Development Council for many years and continues on the SPARK board; and
• Carolyn Grawi, Director of Advocacy and Education at the Ann Arbor Center for Independent Living, to represent the interests of transit users.

We will post notice today that applications will be accepted through the end of next week.  The advisory committee and I will review those applications and create a short list.  From that list I will select two preferred candidates and one or two alternates.  The advisory committee will interview those individuals on December 27 at a public meeting at LLRC, present their responses to me and I will make the final appointments at that point.

It is rare that statute specifically empowers the chair to make an appointment (typically it is the “commission [sic]“), so I recognize that appointing without board approval steps outside of our standard operating procedures — hence the engagement of the advisory board and a public interview process.   I will happily ensure that you all have as much information as you desire in this process as it moves forward.

I’ll be sending a press release out this afternoon and would greatly appreciate your support in distributing it and alerting community members to this opportunity to represent the county.

NB: The body that Smith chairs is the Board of Commissioners. It is often informally called the County Commission, but no such body exists in Michigan law. The RTA legislation correctly identifies the Chair of the BOC as the responsible party in this instance.

Governor Snyder signs RTA package of bills

Governor Snyder signed the RTA package and several other bills on December 19, 2012.  Here is a picture.

Note: Subjects in this category are listed on the Transportation Page.

A Pause for Breath

The secret is out – the publisher of Local in Ann Arbor is running for office again.  I’m running for the open council seat in Ann Arbor’s Fifth Ward.

I want to keep Local in Ann Arbor as what it was intended to be: a blog about the life of our city, with special attention to the issues of the day.  I don’t want it to morph into a campaign vehicle.

There will be more posts, but not very soon.

Issues discussion from a campaign perspective is going on at Ann Arbor – It’s Where We Live (my campaign blog).

We’ll be back.

UPDATE:   Okay, so that sentence should have read “There will be more posts.”  It seems there is a lot to write about that is not directly connected with a political campaign.

Those State Transportation Bills and the Regional Transit Authority

The pending state action on a Regional Transit Authority will hold up resolution of a Washtenaw County transit system. Or it should.

As we have been documenting in a seemingly endless stream of posts, the Ann Arbor Transportation Authority (its board and staff) have been engaged in a prodigious effort over the last three years to put a new regional transit system into operation. (A catalog of these posts and links to other resources can be found on our Transportation Page.)  The idea was that a new “countywide” authority would be instituted that would then implement a Transit Master Plan (TMP) developed by the AATA with their London-based consultants. (See their website, Moving You Forward to see the full TMP.)   But just as their efforts seemed near fruition, the new governor introduced what is sometimes referred to as a “game changer”.    On October 26, 2011, Governor Snyder presented a broad, ambitious plan to remake the face of transportation – especially as its infrastructure is supported by state law and funding – in Michigan.  (Our post and a report by the Ann Arbor Chronicle are contemporary summaries of this proposal.)

The effect of Snyder’s plan was to throw off the schedule for the Financial Task Force, a blue-ribbon committee of local notables who were tasked with the job of coming up with a financial “white paper” to back up the regional (countywide) transit plan. (We’ll call this the  TMP, to distinguish it from Snyder’s proposed Regional Transit Authority or RTA).  The chair of the task force, McKinley Properties’ Albert Berriz, summarily changed the course of the FTF’s work so that a final report was delayed to January 27, 2012, then to February 29.  (The actual text of the legislation was not released until January 2012; see the report by the Chronicle.)  Here is a sheet showing a list of all bills in the transportation package and with links to the Michigan Legislature page that shows their progress through committee to passage.  Note that very useful legislative analyses and summaries are found on some of the linked pages.

Partly as a result of these delays, the calendar for completion of the TMP process has been considerably altered.  See our post, AATA: Moving Us Along for a discussion of steps in the process (the timeline has slid considerably since then).  While there were efforts earlier to have the 4-party agreement and the Articles of Incorporation all adopted by January (we complained about that in an earlier post), the RTA confusion (along with delays in approval both by Ann Arbor and Ypsilanti of the 4-party agreement) has introduced considerable uncertainty into the FTF’s conclusions.  (Note: a complete listing of the FTF’s reports is on the Transportation Page.)

Dennis Schornack at the Finance Task Force meeting, February 29, 2012

There was discussion of the state legislation for the RTA at the February 29 meeting, with both Dennis Schornack (the Governor’s assistant and point man on this issue) and Conan Smith (one of whose hats is apparently to be bargaining on behalf of Washtenaw County on this matter) weighing in.  Berriz interjected a number of worried statements and questions about the effect of the RTA legislation on Federal funds that have been coming to AATA.  (One aspect of the proposed RTA is that it would become the recipient and manager of Federal operating funds for transit in the region.)

The reasons for the anxiety are better illustrated with a diagrammatic summary of changes in relationships among transit agencies that was released March 13 via AnnArbor.com.  As the article says, the diagram was prepared by Richard Murphy (known around here as “Murph”), who now works for Conan Smith at the Michigan Suburbs Alliance.

Note that AATA currently receives funds directly from the Federal Transit Administration (the only agency in the region to do so).  AATA has been very effective at applying for Federal operating and capital funds.   Berriz fretted that that “foundation” of significant funding could be endangered.

Under the new legislation, AATA would become merely one of several regional transit agencies.  Federal funding would go directly to the RTA, to be forwarded to each regional transit agency.  This is the feature of the new legislation package that especially had the FTF worried.  Another feature that has left some of the process up in the air is the prospect of a new funding stream via a vehicle registration tax.

So how did we get here?  Some of the history is known, some has evidently come through private conversations among people with an interest in metro Detroit and in the future of transit in the region.  (Among other things, inadequate transit is seen as an impediment to economic activity.)  But clearly Conan Smith and his wife (State Senator) Rebekah Warren have been intensively involved.  Last year (June 2011) Warren introduced bills that would establish an RTA in the Detroit metro region.  (The story in AnnArbor.com makes it sound as though the intent is to support passenger rail funding;  it includes enthusiastic quotes to that effect from Ann Arbor’s Mayor John Hieftje.)  Smith, in his guise as the executive director of the Michigan Suburbs Alliance,  has a clear interest in enhancing economic vitality of the Detroit metro region.  Warren’s bills would have created a transit authority that included only Wayne, Oakland and Macomb counties.  They were never taken up for action, or at least did not make it out of committee.

In September 2011, the Washtenaw County Board of Commissioners (of which Smith is the chair) passed a resolution as follows (according to the Ann Arbor Chronicle):

Be It Therefore Resolved that the Washtenaw County Board of Commissioners supports the creation of a new Regional Transportation Authority to enhance interconnectivity among the communities of the southeast Michigan region and urges the participants in the 2011 Southeast Michigan Regional Summit to aggressively pursue work that meets the above outlined goals.

Conan Smith at the Financial Task Force meeting, February 29, 2012

Smith then subsequently became one of a group that also included the Mayor of Detroit and 3 elected county executives who pledged to promote a regional transit authority (MLive described the group).  In a little over one month later, Governor Snyder released his transportation plan.  And now, Washtenaw County is included in the Regional Transit Authority that was originally confined to metro Detroit.

Smith is now heavily involved in negotiation about the makeup of the bills.  Appearing before the state Senate’s transportation committee, he even indicated that one of Washtenaw County’s representatives to the RTA could be surrendered, if that would help (account from the Chronicle). His role at the Financial Task Force was to explain and predict the course of the bills.  (Jesse Bernstein, chair of the AATA board, said that he would be meeting with Smith separately to insert material into the legislation that would specifically protect AATA by making it the designated agency for the subregion (Washtenaw County) (to which Schornack responded that it already was in the legislation).

The recommendation from the FTF was, finally, very tentative.  It was clear from their statement that the pending RTA legislation left the TMP very much up in the air.

The analysis conducted by the sub-group was built on several assumptions about the level, type and timing of funding available from the State of Michigan. The recently-proposed legislation affecting transit funding and organization in SE Michigan, introduced since the last meeting of the sub-group, suggests that those assumptions may not be complete and should therefore be revisited.

The letter from Berriz to his committee makes it even more explicit that the committee is simply unable to make a final (funding) recommendation with the state legislation pending.

…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 until we have a clearer picture of what the efforts now underway at the state level will look like in their final form. Moving forward with a millage at this time is not prudent 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…I respectfully request that we table our work at this time, and I would ask that reconvene at some later point once we have a clearer picture of what the statewide efforts look like in their final form.

What the FTF’s recommendation actually consists of is a number of changes to services to be included, changes in fares, and a figure stating the likely amount of additional funding that must be found – whether by a millage or other type of funding.  But as Berriz’ letter states clearly, all of that is tentative.

Under questioning, Smith and Schornack expressed a belief that legislation might be through both houses by May, though they complained that a number of representatives had small local issues that they were concerned with.  At the same time, Schornack expressed a wish for even stronger legislation than is currently being proposed.  (He also confirmed that Washtenaw County has no opportunity to opt out of this plan.) Throughout the meeting, both Schornack and Smith clearly demonstrated that the real issue is the lack of coordination between the two metro Detroit bus systems (SMART and DDOT).  Alarmingly, many of the subsidiary measures appear to be aimed at enforcing some discipline upon those two agencies.  For example, there is punitive withholding of  funds for lack of coordination.

But what is not clear is how some of those measures might rebound on AATA and its ability to act in an autonomous manner to plan and provide services within Washtenaw County.  An issues analysis prepared by AATA staff in February states this conundrum clearly:

The uncertainty of the effect of the RTA Act on Washtenaw County is likely to undermine this effort, particularly any referendum for local funding. AATA will no longer be able to guarantee that it will implement the plan if the local funding is approved…The RTA is required to coordinate the operating and capital plans of the transit agencies…It could be as little as collecting and organizing the plans of the transit agencies and working eliminate overlap or duplication. It could also be as much as determining the local service to be operated throughout the region, including Washtenaw County. For example, will AATA have to get RTA approval for local service changes?

The analysis notes that most funding for AATA comes from Ann Arbor, and then makes this point about another section of the RTA legislation:

The interpretation that RTA will have control over local service is increased by Section 8(4) on Coordination Directives. The section explicitly gives the RTA the power to issue directives to AATA affecting “routes, schedules, and fares,” but not limited to these areas. This would clearly permit the RTA to order AATA to add, revise, or delete service or change fares. There is no limitation on these coordination directives and the bill’s language specifies that the coordination directives pre-empt city, village, or township provisions or procedures. There is no mention of the relationship with funding. Theoretically, this provision would enable the RTA Board to order AATA to shift service from Ann Arbor, even if the local funding comes from Ann Arbor.  (emphasis added)

In the midst of all this flux, no one has thought to question what the effect of forming an entirely new regional agency (the Act 196 New Transit Authority that is the subject of the 4-party agreement and the draft Articles of Incorporation) might be as the metro Detroit RTA is being organized.  There would be two transit authorities/agencies in Washtenaw County, AATA and the NTA.  But the NTA is not (by the terms of the 4-party agreement) to become a “successor agency” with regard to Ann Arbor’s assets until there is a popular vote, presumably for a millage but possibly for a local vehicle registration fee.  That is unlikely to happen before 2014.  (There is not time this year to coordinate a millage vote, and no clear direction to have one.)  So what would be the status of the two parallel authorities?  To which would the RTA turn in its effort to coordinate regional transit over the entire area?  And which would receive Federal and state funding via the RTA?

Surely, the Washtenaw County Board of Commissioners should examine the Articles of Incorporation closely with these questions in mind.  I would think that the BOC might even prudently table the matter until the RTA legislation and all its facets are fully known.  I would like to think that the leadership of the  BOC would take all actions possible to protect our local bus service from being controlled through a multi-county agency that is really focused on metro Detroit.  But then, that would be Conan Smith (who is the chair of the Washtenaw County Board of Commissioners).

ADDENDUM: A coalition of local lawmakers was formed to promote the regional transit concept. R-PATH is represented in Washtenaw County by county commissioners Yousef Rabhi and Barbara Bergman.  Most of the posts on R-PATH’s website so far seem to emphasize the Bus Rapid Transit routes across metro Detroit rather than the transit agency revisions.

UPDATE: According to Michael Ford’s report to the AATA board in the April packet, the RTA bills have passed the Senate committee.  There is no information about amendments on the state website.

SECOND UPDATE: An editorial in the Detroit Free Press implies that the Senate is near action on the key RTA bills.

THIRD UPDATE:  At a so-called Ann Arbor District Advisory Committee meeting on May 14, AATA staff and chair Jesse Bernstein stated that they are working directly with the Governor’s office to set Washtenaw County aside from the RTA so that it is its own RTA.  The rewritten legislation has not yet been introduced into committee.  The comment was made that the draft legislation may pass the Senate first and then have to be reworked in the House.

Timing of the changes to legislation and of the legislation itself was discussed.  It was stated that if action does not take place before the end of the current session (said to be May, which is now half gone), it is likely to be enacted in the lame-duck session after the November elections.

At the meeting, a Partners for Transit worker identified herself as affiliated with the Michigan Suburbs Alliance.  The Partners for Transit group has been producing newsletters (here is the May 2012 issue which contains some nice maps) and is supposedly a volunteer citizen group.   It has been more or less housed in the WATS office but evidently is now being supported by Conan Smith’s shop (he is the executive director of the MSA).

 

Fairness and Transit III

Is the proposed “countywide” transit funding scheme fair to Ann Arbor?

First, let’s review what the new plan will cost Ann Arbor taxpayers. The Financial Task Force appointed by the AATA to come up with a funding plan were able to reduce the likely millage needed to 0.5 mills (based on full countywide participation). Here are their budget spreadsheets for the first 5 years of the plan: the operating budget, the capital budget,and the summary.  (Their full report and service review subgroup report have some explanations of changes and assumptions.)  After excluding some capital-intensive projects and making some other adjustments, they were able to project that the plan could be done with a 5-year budget gap of $32,877,825; that is, nearly $33 million in new funding must be found to pay for the reduced plan.

An important assumption in the FTF’s budget is that the Transit Master Plan’s services will be extended to the entire county, and the new funding (we still assume that this is a property tax millage, though they took care to deny that this is their recommendation) could be paid by a 0.5 mill tax on the entire county tax base. This appears to be substantially correct. Using their assumptions (no change from 2011, no subtractions for DDAs and other TIF, no change in law to exclude personal property), the 5-year yield from a whole-county 0.5 mill tax would be $32,788,601.  (Here is a spreadsheet summarizing all the TV and millage yields.) (Note: the FTF calculations and all those here are based on the Washtenaw County taxable values table for 2011.  The taxable values for 2012 will not be available until assessments are fully reviewed and apportioned.  This should be any day now.  See our post on city income tax for a discussion of the assessment and tax schedule.)

Washtenaw County participating municipalities shown in green; five townships have declined. Click for larger image.

But as we already know, the full county will not be participating.  According to the response I obtained through a FOIA, 5 of 20 townships have already declined to participate.  If these low-population rural townships’ taxable value is subtracted, there is still a calculated 5-year tax yield of $30,968,566.

Terri Blackmore, the executive director of Washtenaw Area Transportation Study (WATS) has been somewhat the godmother of the countywide transit plan, including its governance structure.  At the FTF meeting, she rose to point out that as municipalities drop out, so will the service to those areas, reducing expenses.  However, on examination, it is clear that these townships would not receive much additional service in any event.  They may have been able to expect more demand services, and to make use of express services by traveling to a city or township nearby.  Eliminating those services to these few residents will not be likely to bring about $2 million in savings.

The “optimistic” scenario (click for larger)

In our earlier post, How Much “County” in Washtenaw County-wide Transit?, we presented a number of different scenarios for participation across the county, each with justification.  Let’s assume for the moment that the “optimistic” scenario is the correct one.  Note that this scenario retains all the cities (except Milan), the more urbanized townships, and several more distant townships that have reason to be more amenable to a regional plan.  They represent the greatest fraction (with the city of Ann Arbor) of the taxable value of the county.  Still, the 5-year total is still only $26,912,443 – a $5-6 million shortfall of the amount needed.  The townships who have dropped out are still not heavily served by the TMP, so again the savings are not likely to be high.

But Ann Arbor (and the city of Ypsilanti) are still contributing the full amount of their charter millages, so as other communities in the county drop out, the total tax contribution of those two cities rises in proportion to the rest of the county.  This effect is exacerbated by the drop in the new millage from 1 mill to 0.5 mills.  And since (under what is actually a set of very generous assumptions) there is already a “budget gap” again, the burden is likely to fall on the remaining communities disproportionately, since they will have to carry the truly regional aspects of the TMP with less support.  This will inevitably lead to more fare increases, loss of service, or perhaps additional tax demands.

Percent tax paid in a single year by Washtenaw County communities (the “optimistic” scenario), based on 2011 TV and 0.5 mill new millage. Ann Arbor and Ypsilanti millage rates based on FTF assumptions.

So taxpayers of the city of Ann Arbor (who make up almost exactly 1/3 of the population of the county: 113,934 vs 334,791; thanks to Steve Bean for challenging me to make this comparison) are expected to pay more than twice that relative percentage in property taxes in order to support a “county-wide” transit system.  If you own a house that has a TV of $100,000 (which means that it has a supposed market value of $200,000, depending on what year you bought it), you will be paying $250 each year to support the new transit system.

Is that fair?

In the next post we’ll explore what fairness, and its cousin, equity, mean in this context.

UPDATE:  For a full apples-to-apples comparison, here are the amounts and percentages of tax paid in one year by all currently participating communities.

Tax paid by all participating communities (including 15 townships and all cities and villages), assuming a 0.5 mill tax plus existing charter millages. (2011 valuations)

Assuming that all communities currently participating in the u196 process also remain in a new authority,  94.5% of the taxable value of the county will be included in the new tax.  However,  the City of Ann Arbor represents 35.7% of that TV, and because Ann Arbor will be paying tax at a rate Five Times that of all communities other than the City of Ypsilanti, its tax contribution to the new transit authority is still nearly three-quarters of the total.

UPDATE: Northfield Township has now withdrawn from the Act 7/u196 organization. This means that the “optimistic scenario” above was in indeed optimistic.  Six of the twenty townships in the county are now out of the picture – and the formal decision hasn’t even come to them yet.

Fairness and Transit II

Is the countywide transit plan fair? (The sequel)

In our previous post, we introduced the idea that a major underlying factor in discussion of the countywide plan (an umbrella term that includes the TMP and the proposal to incorporate a new transit authority: see this post for a discussion of the differences) is the concept of fairness.  So much of the back-and-forth has been about the question of who will pay vs. who benefits, and how fair that is.

Let’s review the proposition briefly.

• The idea is that the current Act 55 Ann Arbor city transit authority (AATA) will eventually be disbanded and its assets (both hard capital assets like buses and shelters, and financial reserves) will be turned over to a new Act 196 authority (currently being called the New Transit Authority) that has a broader potential geographic reach.  See our post, AATA: Moving Us Along for some description of the process.
•  But to give the new authority a solid revenue base, Ann Arbor’s perpetual millage (voted into the city charter by the citizens and thus sometimes called the “charter millage”) is proposed to be transferred to the new entity.
• The City of Ypsilanti, which also has a charter millage, would do the same.
• This transfer of charter millages to the NTA is the only purpose of the 4-party agreement, approved as amended (pdf of draft, as amended, that was approved) by the Ann Arbor City Council, March 5, 2012.  (See brief report from the Ann Arbor Chronicle here.)
•  The NTA would also levy a millage across the entire county (or the parts that didn’t opt out of it) to support additional services.
• Depending on the level of that millage (both 1 mill and 1/2 mill have been discussed), it has been acknowledged that taxpayers of Ann Arbor will pay the greatest share, perhaps about 2/3, of the entire local tax collected to support the Transit Master Plan, which is also referred to as the “county-wide plan”.

Some basic questions

1. Is it fair if taxpayers in rural communities (the “countywide” in the table below) who will receive some, but not much, increased service, pay for an enhanced system with some strong urban biases?
2. Is the proposed arrangement fair for the communities other than Ann Arbor who are part of the urban network?
3. Is it fair if Ann Arbor taxpayers pay most of the cost of a county-wide system?

 The “countywide” rural communities

As we discussed in a couple of former posts about politics of a millage vote and the likelihood that various local units might drop out of a “countywide” organization (5 townships out of 20 have already declined to participate), the history and politics of the other communities in Washtenaw County is that they are very resistant to voting for increased taxation, since even half a mill is a substantial fraction of their current taxes.

• The actual service improvements being offered to many of the more rural townships are minimal. In most cases, only a commuter express bus is being proposed for the outlying areas. Express buses do not serve the needs of individuals who are not mostly commuting to a job in Ann Arbor. Hours are restricted and “demand” service (for the disabled and elderly) does not automatically go along with express bus service. (With a fixed bus route, Federal rules require demand service at no more than twice the fare for a fixed route, but that requirement can be evaded with express buses.)

The Transit Master Plan overview, as prepared by consultants Steer Davies Gleave. Click for larger view.

• Note in the table below that only about 10% of operating costs are proposed for bus service and demand service outside the urban area. (The “urban network” is roughly described by the green blob with yellow lines in it above.)

• Also, a significant percentage of the long-term expense is for high-capital projects like commuter rail, which doesn’t directly benefit those more distant communities.  (Note that commuter rail, the airport service, and the long-distance express bus services could be said to enhance the economics of the entire area, so might be argued to have a diffuse but real benefit to rural communities.)

Summary of combined operating costs for different types of service, from Financial Task Force November 2011 distributions

The non-Ann Arbor communities that are part of the urban network

Some communities are currently paying for AATA (fixed route bus) services, under what is called POSA (Purchase of Service Agreement).  Those POSA would be revoked under the Act 196 NTA, since those communities would be part of the new transit regional authority.

The City of Ypsilanti has a dedicated millage for transit of approximately 1 mill.  Actually, that millage does not go directly to AATA as tax receipts.  Instead, it is used to pay the POSA for the service that Ypsilanti has had in the past. (See the route map.) Originally, there was no money to pay for this service in Ypsilanti’s increasingly stressed city budget.  For a while the cost was borne by Federal stimulus funds.  Then, the citizens of Ypsilanti voted in the charter millage (a really brave and forward-looking act on their parts).  Recently, because of changes in the AATA chargeback schedule, the millage amount fell short of the required amount to pay the POSA, causing consternation in Ypsilanti’s City Council.  But the service has not been curtailed, and even better, recently service on Route 4 has been increased at no additional cost to Ypsilanti (the amount not covered by Federal formula funds is paid by Ann Arbor taxpayers).  Still, the on-and-off-again bus funding has led Ypsilanti’s mayor Paul Schreiber to support the 4-party plan at a public hearing in Ann Arbor “to stabilize Ypsilanti’s bus service”.

Now that the City of Ann Arbor has (provisionally) approved the 4-party agreement, the baton passes to the City of Ypsilanti.  My information is that it (the agreement) is on the March 20 council agenda.

The City of Ypsilanti’s budget problems are simply staggering.  For an overview, see Mark Maynard’s discussion of the consequences of the nonapproval of a city income tax.  On May 8, Ypsilanti’s beleaguered taxpayers will be asked to approve both a 1% income tax (0.5% for workers in Ypsilanti who live elsewhere) and an additional millage to pay off debts.  Ypsilanti’s property tax millage is already the highest in the county (for 2011, it was 33.6731, over twice the City of Ann Arbor’s at 16.4660 and miles above any township).  In spite of this, the city has gone through round after round of service cuts.  One problem was an ill-advised attempt by the city to dabble in development.  The Water Street Development, a failed exercise in urban redevelopment, left the city with bond debt and unaffordable payments.  So on May 8, in addition to the income tax vote, residents are being asked to vote themselves an additional 4.7085 mills merely to retire these bonds.  (The Ypsilanti City Council is now expecting that they will not need to levy the full amount.)

To POSA or not to POSA?

Ypsilanti City and three other Washtenaw County municipalities currently pay POSA (purchase of service agreement) contractual amounts to AATA for specified services.  They are all within that urban network seen in the map above.  POSA charges are calculated yearly using a formula to pay actual “loaded” costs of the specified services.  In general, POSA amounts are part of a municipality’s general fund budget and are paid right off the top of their discretionary revenue.

Here are the amounts these communities currently pay in POSA charges, and the total tax that would be raised if the countywide millage were applied instead.  Note that the POSA charges would disappear.

*Amounts for Ypsilanti City are calculated differently. Its tax rate would include the current 1 mill plus the additional countywide millage.

As is quickly evident, the total tax dollars paid by each municipality would be considerably higher with the new transit plan.  The difference for all but Ypsilanti City is that the municipal budgets would save money and the costs would be transferred to their taxpayers.  Because Ypsilanti City would be a signatory to the 4-party plan, while the accounting method would change (a direct transfer of their millage to the NTA rather than a check), their taxpayers would continue to pay the current millage amount plus the additional millage.

This might not seem too bad a deal for Ypsilanti City, considering that they are already receiving enhanced service without paying for it and there are many of the other enhancements to the urban network will serve them directly.  But whether their anguished taxpayers will agree with this as they face two more impending tax measures is a different question.

For the other municipalities, it does not appear that they will immediately see markedly different service levels.  The current routes that are being supplied with fixed-route buses may see some hour and frequency enhancements, and more Park and Ride lots and transit hubs might be built.  But new fixed route lines look to be unlikely in the near future, based on the maps that have been provided.  Thus, whether taxpayers from Superior, Ypsilanti and Pittsfield townships view the change as “fair” probably depends in part on whether they view the general increase in connectivity over the county to be beneficial to the overall economic climate and thus to themselves.

Complications to the who pays, who benefits question

All the discussion so far as been based on the assumption that the voters of the county will vote in a new millage to support a new transit authority.  The talk for the last several years was that it would be 1 mill.  However, this has now been scaled back to 0.5 mill.The recommendations of the Financial Task Force, issued on February 29, are just that, recommendations.  The FTF has no actual authority and is not the final planning body for the new authority, which does not yet exist.  Thus, its projections are merely hypothetical.  Nevertheless, they were able to arrive at the 0.5 mill amount (which they style as a mere placeholder, not an actual recommendation for a millage) by stating that the capital-intensive commuter rail and connector programs should not be folded in to the 5-year plan (thus allowing a smaller budget gap to be addressed by a millage).

This recommendation is apparently being sidestepped by AATA.  As its CEO Michael Ford says in his executive summary for March 15,

Capital intensive portions of the original program were removed with the caveat that alternate sources of funding should be secured to support the service.However, the planning and development of the capital projects will continue, but will not be slated to utilize the new local funding source.

Now this is a puzzling statement.  Money is fungible and if an activity costs something, it comes out of the total budget.  So if the FTF considered the total budget and recommended the exclusion of activities that are being carried out anyway, the money has to come from somewhere.  AATA has, of course, had budgets for many years in which certain funds (like Federal formula funds) had to be allocated to specific services.  But it is dizzying to consider an accounting system that somehow segregates general tax funds in such a ways that one dollar goes to allowable uses and another is held back.  The sleight of hand is less impressive when the quarter falls out of the cuff.

The inescapable conclusion is that the additional millage paid by former POSA communities will, in part, be used for commuter rail and connector projects.  (Though these might depend heavily on Federal and private funding, they will require some local funds.)

Another factor in the calculation of benefit vs. additional payment is that the FTF also recommended (in order to make this package fit into its tighter garment) that fares be raised an average 50 cents.  So while the former POSA communities are paying more in property taxes, their transit riders will also be paying more to ride.

Is that fair?

Next: the conclusion.  Is this plan fair to Ann Arbor?

UPDATE:  The final version of the 4-party agreement as passed by Council on March 5 is here.

SECOND UPDATE: Note the comment regarding the meaning of the 4-party agreement below.  There is additional justification for my statement that the 4-party agreement is necessary only because of the transfer of the two city millages.

THIRD UPDATE: A commenter also raised the issue of availability of demand (“paratransit”) services. Though the Financial Task Force recommendations themselves make no reference to lowered expectations for these services (apart from a fare increase), the report from the subcommittee signaled that they may be regarded as optional, depending on funding.  The quote is from their presentation on February 29, 2012.

“Adjustments to estimated Countywide Door-to-Door service costs – reduced estimated usage volume based on A-Ride’s experience with the proportion of eligible population that are active users.”

Fairness and Transit: Where AATA Is Moving Us

Is the countywide transit plan fair?

Underlying many of the debates about the “transit transition” – whether we should move to a new type of  “countywide” transit authority – is a question of fairness. For most government programs some people will always pay more than they receive in benefits and others will receive them while paying almost nothing. We have generally accepted that in order for society to work, we must pool our resources and distribute them on the basis of need.   But we hate it when that isn’t done fairly.

Because of the tax revolt that started in the 1970s and most recently with the rise of the Tea Party, this question of fairness in taxation vs. benefits is a constant source of friction among us.  Many people now think that they should receive a direct benefit from paying taxes, in a payment for services rendered model.  This has a lot of problems, including that it is sometimes hard to recognize the benefit.  A thought-provoking recent article in the New York Times revealed that some of the people (and the states) that have become most vehemently opposed to taxation and to government benefits are the ones who most benefit from those programs.  As the article says, “Many people say they are angry because the government is wasting money and giving money to people who do not deserve it.”, yet those who consider themselves middle class are increasingly dependent on government programs.  Paul Krugman reflected on this in an excellent column and pointed out another study that “points out that many beneficiaries of government programs seem confused about their own place in the system… that 44 percent of Social Security recipients, 43 percent of those receiving unemployment benefits, and 40 percent of those on Medicare say that they ‘have not used a government program.’”  He concludes, “Presumably, then, voters imagine that pledges to slash government spending mean cutting programs for the idle poor, not things they themselves count on.”

The need for fairness is apparently built into our very nature.  A great deal of research with both animals and humans indicates that we are “hard-wired” to a sense of fairness.  So while children can readily be socialized (and may not require much) to share their cookies, they will protest loudly if they are required to give them all away.   This is an example of distributive justice and we feel it on behalf of others as well as ourselves.  It is reflected in actual brain activity and some studies have shown that aggressive behavior can result if actions are perceived as unfair to the group.

One way this is often expressed is the concept of “social equity”.  Except for those serious tax-haters, most people still recognize that we should, in effect, redistribute resources (wonkspeak for “money”) from those who can afford to pay to those who have less but who still have human needs that we recognize as a societal responsibility.  I’ll share my cookies with you rather than see you go hungry.  But note that concept of the “deserving poor”.  If you eat my cookies and then pull a candy bar out of your back pocket which you eat in front of me without sharing, I’m going to be angry.  Many people are suspicious that others are in essence doing this, taking benefits and then using their own resources for private purposes rather than paying their own way.  “Paying your own way” can either mean that you put just a small contribution into the common pool, or that you carry out some obligation that you have accepted as a condition of receiving the benefit.  An example would be that you use a scholarship to obtain a degree and become a productive worker, rather than spending it all on beer and pizza.

Regions used for the survey (click for larger map)

AATA has endeavored over the last several years to start a broad public discussion about public transit, how it is used, what its importance is, how desirable it might be.   There have been endless public meetings, press releases, and educational materials about their Transit Master Plan.  (See Moving You Forward for history and the TMP reports.)  There have also been surveys to gauge public response, and the latest has finally been released.  The Ann Arbor Chronicle’s account is probably the most accessible way to review the results.  (The full set of presentation slides is here.)  It is clear that public acceptance of transit is very high.  Almost all the respondents (91%) said that transit was important, and the AATA itself got a positive rating from 89%.  But once the subject of how this will be paid for was raised,  approval became more fractured. The overall response to the question,  “would you be likely to vote for a 1-mill tax to support an expanded program?” was 59% (after some discussion of the issue); but this was strongly influenced by geography.

The survey was taken in four geographic regions (the full report that discusses actual distribution of samples has not yet been released), and the results differed by region.  While 68% of Ann Arbor residents said that they definitely or probably would vote for a millage, 56% of Ypsilanti and Pittsfield residents, 48% of Saline and eastern townships, and only 42% of the western townships, including the city of Chelsea, gave this positive answer. (Click to see a full-size chart.)

The telling reasons behind reluctance to vote for a millage even when approval of the idea of transit is so high are (quoting from the Chronicle):

They were asked about the idea that it’s unfair for everyone in the county to pay for a tax that mostly benefits Ann Arbor and Ypsilanti. And they were asked about the idea that it’s unfair for people in Ann Arbor and Ypsilanti to pay more than others for transit benefiting everyone. A roughly equal number of people agreed or strongly agreed with each of those sentiments (32% and 30%).

In other words, the underlying question in many minds is really a question of fairness.

Next: evaluating the question of fairness in the transit transition.

Note:  Other posts in this series are listed on the Transportation Page.

UPDATE: The final report on the survey is here.
Like any 97-page report, it will take time and study to analyze, but it gives an interesting insight into the difficulty of conducting a proper survey (sampling controlled, etc.) under the current conditions in which many people, especially younger ones, no longer have landline telephones that are listed in public directories.

Following the Money for (Washtenaw) County-wide Transit

In our previous post, How Much “County” in Washtenaw County-wide Transit, we examined the likelihood of full countywide participation in the New Transit Authority (Act 196 authority) and the Transit Master Plan.  Our conclusion was that it is not likely to happen.  (After all, somewhere between four to five townships have already opted out even of participating in preliminary talks.)  We presented several scenarios and calculated how much revenue a 1-mill tax could produce in each case.

The Financial Task Force appointed by the AATA board to review finances for a future countywide authority was supposed to produce in January 2012  a “white paper” explaining how the ambitious TMP would be funded.    But they were disrupted in their orderly progress toward this goal by Governor Snyder’s introduction of new transportation proposals (see the Ann Arbor Chronicle’s account).  In the light of the uncertainty introduced by a proposal for a four-county Regional Transportation Authority and new vehicle fees that might fund transit to replace the use of property tax millages, the FTF instead created a subcommittee to do some heavy lifting on “uses” (namely, what programs would actually be included in the TMP, with part of the consideration as how well they would pay their own way).  Again, the Chronicle has captured the work of that committee very well.  I must say that the group was very impressive in their ability to read spreadsheets quickly and pick out the substantive questions, identify issues to be resolved, and move quickly toward a set of recommendations.

Having produced their recommendations, the subcommittee was prepared to present them for discussion by the full group on January 27, 2012.  But the day before that meeting, the long-awaited package of transportation bills, including actions that could have major consequences for a Washtenaw County transit authority, finally was introduced into Michigan’s legislature.  (Please consult the overview of the package as described by the Ann Arbor Chronicle.)  At 11:45 a.m., a message went out that the 2:30 p.m. meeting had been postponed in order for the FTF to assimilate all this new information.

But even though the FTF is temporarily on hold, the materials prepared for their meeting are informative.  Several conclusions and observations can be drawn from them.

1.  The original estimate of a  “budget gap”  was $60 million over the first five years of the plan.  The subcommittee was able to bring it down to a little over half that.  A major part of this accomplishment was due to simply “zeroing out” some services.  The Downtown Circulator (also known in a previous incarnation as “The Link”, received little respect at committee meetings and was left to private funding.  The expensive rail and connector services were put aside as deserving a different form of consideration and financing, in essence removing them from the “countywide” plan for the time being.  The chart below shows operating expenses for 5 years; the last two columns are averages, the very last column a “rounded” average.  (Note the figures in red at lower right-hand corner, denoting an operating deficit of about $20.12 million.)

5-year operating expense projection. (click for larger)

2. The capital expenses for the 5 years are about $56 million, but it is anticipated that most of these will be picked up by Federal and state formula funds and discretionary grants.  Note that this estimate does not include commuter rail expenses, but does indicate a capital investment for the Washtenaw connector.   Even after grants, though, a $12.7 million balance remains to be picked up by local funding.  (Click to see a larger image.)

Capital expenses. Deficit is shown in red at the lower right.

3. The subcommittee was able to estimate that a millage of only 0.3 mills could fund operation of the plan, and an additional 0.2 mills could fund the local capital requirements.  But they are assuming that the millage includes a property tax over the entire county.  Here are the property values on which the 0.5 mills value is based.  They are based on the same Washtenaw County Taxable values table that we used for our previous post.  A separate estimate of TV excluding tax on personal property (given that the Governor is proposing to exclude that) is made, but both values yield a millage rate of 0.5 mills.  (Click on the image for a larger view.)

4. In addition to eliminating some services from this estimate, the committee recommended an across-the-board fare increase of $0.50.  One practical effect of this is that Ann Arbor and Ypsilanti taxpayers, in addition to paying an additional 0.5 mills in taxes, would see the cost of riding the bus go up.  They also sensibly recommended an increase in express bus fares.

Not resolved: the subsidy by Washtenaw County taxpayers for express services to Canton and Livonia, communities that do not pay a POSA and would not be contributing tax money.

In conclusion, even before the Financial Task Force – and the transit riders of Washtenaw County – learn how the changes in state transportation funding will affect us here, the question remains:  how can we have a county-wide transit system if much of the county does not participate?

(Note: posts relating to this topic can be found on the Transportation Page.)

UPDATE:  The FTF met today (February 29) and has now widely distributed their reports.  The basic calculations and conclusions appear to be the same, but the group emphasized that the 0.5 mill figure is only “a placeholder” and “is not a recommendation for a millage”, that is, another form of funding may be chosen.  This was after a verbal summary of the very little that is actually known about possible state finance measures for transit, including a vehicle “ad valorem fee”.  The discussion of the situation in the state legislature (the legislation is still in committee) left up in the air whether a future Regional Transit Authority would intercept the monetary flow from Federal formula funding.  The final conclusion was that there were too many uncertainties to make final firm recommendations, but the group expressed support for the continuance of the TMP process and the goal of countywide transit.  See the overview of regional transit bills by the Ann Arbor Chronicle.  House Bill 5309 is the one that would authorize the Regional Transit Authority for a four-county region in SE Michigan.