MARTA plan contributed to financial woes

By Carrie Teegardin and Ariel Hart


The Atlanta Journal-Constitution

Five years ago, MARTA’s leadership embarked on an ambitious plan to expand service and add new sparkle to the city’s transit system.

Income projections were rosy and transit systems around the country were expanding.

MARTA’s accountants warned the plan would eventually lead to a deficit, but the system’s board was not deterred. MARTA hired hundreds of employees, restored previously cut bus routes and train cars and doled out double-digit raises to workers who had gone years without pay increases.

Today, although it can boast of low operating costs compared to similar systems,
 MARTA is in a deep financial hole. MARTA officials blame lagging sales tax revenues and an inadequate funding structure.

But an Atlanta Journal-Constitution examination of five years of MARTA budgets shows the hole was made deeper by decisions that were financially shaky even before the economy tanked.

In recession, MARTA has had to eliminate more than 700 positions. It also cut bus service by 10 percent and rail service by 14 percent, effective Sept. 25.

While MARTA says it needs a new source of money, many elected officials and transportation experts believe metro Atlanta needs a more comprehensive approach to public transit, uniting the region’s various systems, including MARTA.

Last week, a state commission began studying the potential for an integrated new public transit system and MARTA’s future.

“The status quo is not acceptable,” said Rep. Edward Lindsey, R-Atlanta, a member of the commission. “How we fold these transit systems into a unified plan and how we fund it is still up in the air.”

Spending vs. funding

When MARTA’s managers discuss its dire finances, they focus on the need for new sources of public money.

MARTA covers the largest share of operating costs with the 1 percent MARTA sales tax collected in Fulton and DeKalb counties. Fares rose last year to $2, but fare revenues cover less than a third of operating costs, which is not uncommon among transit agencies.

Sales tax revenues are expected to fall $86 million short of projections this fiscal year and more than $100 million annually short in years to come.

MARTA officials have spent less time discussing the other side of the ledger, which shows significant jumps in spending.

Among the trends:

● Between fiscal years 2006 and 2010, spending on operations increased by 30 percent.

● Payroll increased 31 percent in the period, driven by a 16 percent increase in the workforce and 12 percent higher salaries.

● Benefit costs were projected to climb by 61 percent between fiscal 2006 and 2010, driven by higher health insurance costs and larger contributions to prop up underfunded pension accounts hit by the recession.

The board embarked on its expansion plan in a year when it was financially solid: booming sales tax revenues and increased ridership allowed MARTA to finish its 2005-2006 fiscal year $18 million in the black.

Richard McCrillis, then MARTA’s interim general manager, said at the time, “MARTA has its financial picture together.”

Expensive restoration

MARTA’s leadership debated how to handle its fat wallet.

Coming out of a decade of deficits and service cuts, the board opted to spend the money on new hires to allow
MARTA to restore service and pay for raises and customer service projects to address riders’ complaints.

“What I wanted to do was put as much service back on the road as we could put, because we had cut so much,” said Michael Walls, an Atlanta attorney and former MARTA board chairman who still sits on the board. “We were very thin on staff in a lot of places.”

But pumping up service, then taking it back didn’t necessarily sit well with MARTA users.

Gwethalyn Young, who has no access to a car and depends on MARTA, said Friday the agency’s approach was “sloppy management.” She wants
MARTA to offer more service, but offering what it can’t sustain hurts people, she said.

“Don’t offer it for a short period of time,” she said. “People get used to it. They move into areas because of buses. Then they stop the bus service.”

And, in the big picture, restoring service while launching new programs was so expensive that even booming tax revenues couldn’t forestall red ink again by 2010, according to budget documents and interviews with MARTA accountants.

MARTA’s board felt the system simply needed extra resources. And it envisioned an unlikely benefactor: the state of Georgia.

The Georgia General Assembly has never been an enthusiastic supporter of MARTA. But the system’s own documents say it anticipated getting
$50 million a year from the state.

“Somehow it came up that the state of Georgia, somehow, was going to start giving MARTA an infusion of roughly $50 million a year for its operation,” said Davis Allen, chief financial officer.

“We never budgeted $50 million. We just talked about it,” Allen said.

Walls, the former board chairman, said it has been apparent for years that MARTA needs another funding source. By the late 1990s, when MARTA
had built the system out, “it was obvious to anybody who was paying any attention that the penny sales tax we were getting would never be enough on a long-term basis to sustain the system.”

MARTA supporters have long bemoaned the fact that, unlike almost all large transit agencies, MARTA’s operations are not supported by state funding. Its leadership felt the area’s need for public transit is so great that the Legislature would finally come around.

The General Assembly never got close to giving MARTA a major infusion of cash. In the last session, MARTA struggled to get the state to lift for three years a restriction on how it spends its sales tax revenues, allowing it to dip into capital reserves to cover operations.

But after three years of lobbying on transportation funding problems, attitudes at the Capitol may be evolving. Rep. Ed Rynders, R-Albany, an advocate for rural Georgia who serves on the transportation and appropriations committees, said he can envision providing state money to help run MARTA, with oversight.

“I think that what happens in transportation is we get, in too many cases, in a turf war,” said Rynders, who considers himself a tax conservative. “I can honestly make an argument that MARTA is no more or no less important than having corridors for economic development in South Georgia.”

House Speaker Pro Tempore Jan Jones, R-Alpharetta, said she might support folding
MARTA into a regional transit system with regional funding.

Still, she added, it is hard to argue for state funding for what she sees as a “bloated” system designed to create paychecks.

“Generally, legislators are interested in funding services that they perceive will provide value to their constituents and serve a need,” Jones said.

With just a fraction of the population riding MARTA, she said, “MARTA does not fit that definition.”

Regional plan on hold

Beverly Scott walked in
MARTA’s door just before its finances began to unravel.

MARTA’s board hoped Scott, who had held high-level positions at some of the nation’s largest transit systems, could help create a role for MARTA within a new regional approach to public transit.

MARTA riders comprise 87 percent of transit users in an 18-county metro region, according to the Atlanta Regional Commission.

But, rather than fashion an ambitious regional plan, Scott and her staff had to make dramatic cuts to keep MARTA afloat.

Scott is reluctant to criticize her predecessors and said she clearly understands the desire to restore service and to provide a cleaner and safer experience for MARTA patrons.

“Would I have made exactly the same decisions? I can assure you, no,” Scott said. “But in terms of understanding why they were made and in terms of general agreement with many of them, I would have done some of the same things.”

The core problem, Scott said, is MARTA’s funding structure. “It’s abysmal, it’s shameful and it’s been known for well over a decade,” she said.

Critics portray the agency as a bloated operation that spends more than it can afford. But, compared with other large transit systems, MARTA shines by several measures.

National transit experts “view MARTA as one of the more cost-effective systems in the country,” said Michael Meyer, a Georgia Tech professor who is a transportation expert.

An AJC review of federal data supports that national view.

MARTA’s per-trip operating costs for its bus system were significantly lower than comparable systems in Miami and Dallas in 2008, according to the most recent federal data.

MARTA also ranked favorably among systems that operate heavy rail. Costs per vehicle-hour in Atlanta were just two-thirds the costs of the Washington system, for example. Relatively low labor costs drive MARTA’s good ranking.

MARTA ranked in the middle among large systems for effectiveness because it didn’t carry as many passengers per vehicle as transit systems in New York, Boston and other more densely populated cities.

“The last thing MARTA is, is bloated and wasteful,” said Walls, the board member. “There has been study after study after study going back years that have compared
MARTA to its peers. We stack up very well every time.”

Favorable rankings, however, can’t overcome MARTA’s basic dilemma: it is spending more to run the system than its income streams will support. In fact, MARTA projects it will have run through all of its reserves by 2013.

Study comes before money

The Legislature’s answer is to establish a commission to study reorganizing MARTA as part of a regional system.

“We decided that simply pouring more money into
MARTA wasn’t the answer,” said Lindsey, the state representative, who serves on the transit commission. “The answer is stepping back and taking a comprehensive look at transit overall, rather than trying to fund one aspect of mass transit in metro Atlanta.”

Transit experts and even MARTA supporters agree Atlanta’s patchwork of independent systems doesn’t make sense.

“If we’re ever going to be a community or a region with a quality of life and an air quality that people who come here expect, we’ve got to do better,” said Walls.

Scott “has brought a breath of fresh air to MARTA and is a very good leader,” Lindsey said. “And Dr. Scott would be one of the first to tell you that the status quo is not acceptable.”

“Everything is on the table,” he said. “That’s the bottom line.”