MARTA blew fiscal year budget by nearly 17%, officials say

MARTA officials are implementing monthly reviews to keep better tabs on spending after they said last fiscal year’s expenses went over budget by nearly 17%.

Every category of expenses ran over, and the agency’s net deficit, $92.9 million, would have been even higher were the costs not defrayed by better-than-expected sales tax revenue for the year ending June 30.

Board members were given the sobering report at their most recent meeting, along with a plan from General Manager and CEO Jonathan Hunt and other budget officials that includes new monthly check-ins with staff and six-month reviews with the board to avoid future overruns.

Greg Patterson, MARTA’s deputy chief financial officer, said his office previously would let department heads know when they were overbudget with the hope that officials would rein in spending on their own.

“What we’ve realized is the behavior never adjusts,” Patterson told the board, adding that now, hard controls are in place that will block spending until department heads get their budgets back on target. Managers won’t be able to put in new purchase orders, for instance, until they adjust spending.

“We are certainly going to put some heavier emphasis and deeper discipline on it,” he said.

MARTA’s most recent fiscal year lined up with a time of unprecedented change for the agency, during which the agency had plans to launch multiple major projects in addition to providing expanded service throughout the FIFA World Cup, which spanned six weeks starting in mid-June. Hunt was named the agency’s interim leader one month into the year.

The overspending happened on the operating side of the budget, which last year totaled $652 million out of MARTA’s overall $1.55 billion budget, officials said. The agency ended up spending nearly $762 million on day-to-day expense of operating buses, trains and other transportation services.

The unplanned costs will be absorbed by savings on the capital side of the budget, spokesperson Payson Schwin said.

The capital budget covers the cost of large, often one-time infrastructure projects that are designed to either keep the system in a state of good repair or to expand its services, as was the case with the construction of the Rapid A line, MARTA’s first bus rapid transit route that soft-launched in April.

There were savings on that side of the ledger because MARTA spent less on capital than it planned, and that meant the agency didn’t have to issue as much debt. Those savings will offset the unplanned operating expenses, Schwin said.

The World Cup expenses weren’t the main factor behind the overspending, Patterson said, and some tournament-related expenses are still in line for federal reimbursement, money that will count as revenue in this year’s budget.

The main driver was overtime, which was $18.2 million over budget. The majority of the overtime costs, 35%, accrued while doing scheduled maintenance, according to data provided by the agency. Another 8% of the overtime costs came from unplanned maintenance. Vacancies and absenteeism accounted for 22% of the overtime costs.

A ‘mistaken’ overtime payment

A “mistaken” $613,000 payment to a station cleaner, first reported by Atlanta News First, is also part of the overtime expenses. MARTA overpaid the employee in April and didn’t discover the issue until July, according to a lawsuit the agency filed last month against the employee.

MARTA told the court that when he was asked to return the money in August, the employee said “he no longer had any of the money.”

Neither the employee who was overpaid nor the employee responsible for the clerical error are still employed by MARTA, Schwin said in a statement. It’s unclear when they left the agency, whether they were fired or left voluntarily.

Citing ongoing litigation, Schwin did not answer questions asking whether MARTA Police are investigating the incident criminally or whether MARTA has asked the GBI for assistance.

Fare gate delays

There were early signs that last year’s budget would be tight, and a little more than a dozen administrative employees were laid off going into the fiscal year. Another 174 vacant positions were eliminated and a hiring freeze on certain positions was also implemented.

MARTA also budgeted for its fare revenue to be lower than usual during the transition to new fare gates, a process that was supposed to have been completed before the World Cup but which is still ongoing.

Fare gate revenue is a small percentage of MARTA’s budget, about 10%. The agency budgeted to collect $14 million less during the transition period, where gates were opened and payment was either impossible or on an honor system, and ended up forgoing $19 million.

Those losses are still continuing. Schwin said the agency does not have an estimate on how much fare revenue will be lost this fiscal year and plans to develop a forecast after the first quarter concludes.

MARTA does not receive regular state funding. Its largest source of revenue is sales tax revenue, which accounts for about 63% of the operating budget.

The budget expected a sales tax boost from World Cup festivities, and revenue ended up about 4% higher than expected.

Board needs to be ‘grounded’

Three months into the current fiscal year’s budget, Patterson told board members that some areas are already trending overbudget.

Instead of waiting, Patterson said they’re making adjustments now.

Jacob Tzegaegbe, a board member representing Atlanta, told Patterson he appreciates the changes they’ve put in place and said it’s also on board members to keep the budget on-track.