50-50 formula means strained MARTA can still spend

As MARTA board members sat down last week to the grim task of cutting back operations to balance the budget, there was a silver lining.

They also got to do some shopping.

The same day the board raised fares for the first time in eight years, cut bus and train runs, and used precious federal stimulus millions to fill a deep budget gap for operations, it also OK’d $775,806 on new, and better, control booths for bus supervisors in the field.

But it’s not as if they could have put the bus booth money toward bus drivers’ salaries or holding down fares, MARTA officials said. In fact, to do that would be illegal.

Because of a provision in the law that governs MARTA, it sometimes seems like two agencies, with two very different budgets:

— Operations — this budget covers keeping the system running on a daily basis. It has been in crisis, flirting with partial collapse.

— Capital — this budget covers projects including some major maintenance and expansion of the system. It’s strained, but it can still fund some purchases.

Call it a split financial personality. MARTA gets much of its funding from a penny sales tax levied in Fulton and DeKalb counties. According to the law, that sales tax money must be split 50-50 between capital expenses and operations. That same law leaves MARTA without the flexibility to move money from one budget to another in times of need.

The state representative who chairs the legislative committee that watches over MARTA, Jill Chambers (R-Atlanta), said the law was written to ensure the MARTA board would set aside enough capital funds for future needs.

Legislators who created MARTA “realized that political boards, made up of political appointees, didn’t always have the sophistication to know when they were being taken advantage of or induced into not-quite-ethical or maybe even corrupt situations,” Chambers said. “So the 50-50 split was designed to make sure there would always be funds to repair and maintain the system.”

She noted that the train crash that occurred outside Washington, D.C., last Monday may have been related to capital upgrades that were neglected. She contrasted that with 218 newly renovated MARTA train cars, a $246 million project MARTA finished earlier this year. Federal grants paid $167 million, and MARTA paid the rest, said MARTA’s assistant general manager for finance, Davis Allen.

While Chambers said she can’t know how much sales tax money the MARTA board would have set aside for capital projects without a legal requirement to do so, she has an idea. “If they’d have had so-called ‘flexibility’ all these years, that money wouldn’t have been there to do that.”

MARTA CEO Beverly Scott said MARTA placed a high value on keeping its vehicles in good repair, and she had a different interpretation of the legal requirement. “What it has done is created more of a schizophrenia through the years,” she said.

Even as MARTA was raising the alarm about service cuts, it continued spending: renovating broken-down staff rooms at train and bus stations — projects totaling more than $1 million in the last couple of years; $29,000 renovating administrative support areas around the executive office; and last year, $71,000 replacing 18-year-old carpet in the common areas of executive offices and other places.

Whether those projects were good or bad — and MARTA staff said they were badly needed — not a dime of the money spent on them could have been spent on bus drivers’ salaries or other operational expenses, Allen said.

He’s not thrilled with the state of the capital budget either, saying it had to be cut by $105 million for the fiscal year that’s about to start. “Right now we’re just barely holding on,” Allen said.

Scott said the purchases still leave the facilities “paltry” compared with other transit agencies.

The restriction can make for some dicey political situations. Board member Steve Stancil was worried about appearances with the bus booth purchase.

“I think our timing’s terrible,” he told the board, and voted against it.

Scott and her deputies said all of the capital projects were necessary, and some were safety issues — from a break-room ceiling that was so deteriorated it had broken through to the walkway above, according to documents, to torn carpet that could trip people. In addition, many of the projects, including the bus booths, fix facilities that were out of compliance with federal building laws, MARTA officials said. Some are long-running projects that started in better economic times. The new booths also contain updated communications equipment, they added.

Compare that to the stream of distress MARTA has emitted over its operating budget recently.

MARTA staff told legislators earlier this year that the operations budget was in such crisis that if they didn’t lift the legal wall separating the sales tax generated capital and operations funds, MARTA might have to shut down one day a week. They needed $24 million to keep operating seven days a week, they said, even though $65 million sat in capital reserves, untouchable for that purpose. Lawmakers left the issue hanging, and stimulus money — routed through the Atlanta Regional Commission — came to the rescue.

MARTA still had to trim costs and approved less drastic cuts, increasing wait times for trains and buses, furloughing employees, freezing pay raises, and raising fares and parking fees. It also plans to spend its emergency fund.

Scott cautioned that the stimulus money is a one-time fix, and a greater deficit will be back on MARTA’s doorstep soon.

The even division of sales tax money goes back to when the Legislature created MARTA at the urging of Atlanta leaders. Sam Massell, who was mayor at the time, said the first draft of the funding legislation had no mandatory division at all, and the 50-50 split was a compromise with conservative state leaders. He said at least part of the reason was they didn’t want to subsidize poor transit riders and make the service free, possibly making it a haven for “winos.”

“I don’t want to sound ungrateful, because it was a tremendous breakthrough for the state to be willing to give up the power to have a sales tax,” Massell said Friday. Under the MARTA law, the governments of Fulton and DeKalb counties and the city of Atlanta vote whether to continue collecting the MARTA tax.

But if Massell had a magic wand, he’d lift the restriction today to help keep fares low.

“When you price it beyond the means of the transit-dependent, then you’ve really aborted the initial intentions, which was to provide mobility,” he said.

Allen said he and Scott had found no other transit agency that had a legal requirement for a split like MARTA. A spokesman for the American Public Transportation Association, Mantill Williams, said he did not know if others had such legal divisions of sales tax money.

For transit agencies nationwide, Williams said, on average 74 percent of sales tax revenues are spent on operations, and 26 percent on capital projects. He cautioned that different agencies can have different definitions of what falls under capital and what is operations.

Chambers said she could consider lifting the 50-50 split in the upcoming legislative session, if MARTA governance was changed — perhaps a smaller MARTA board.

MARTA MONEY

MARTA’s budget for the fiscal year that runs from July 2009 to June 2010, as estimated now

Money coming in:

— Sales tax collected in Fulton and DeKalb: $306 million

— Fares: $103 million

— Borrowing: $250 million*

— Federal grants, real estate income and other sources: $248 million

— TOTAL: $907 million (*part of the $250 million borrowed will be spent in this fiscal year, and part saved for the following fiscal year)

Money going out:

— Operations: $399 million

— Capital projects: $255 million

— Capital debt payments: $134 million

— TOTAL: $788 million

Source: Davis Allen, MARTA budget office