MARTA service cuts looming

That failure coupled with projections that sales tax revenues -- MARTA's main funding source --  will come up  $130 million short in the next five years of what had been previously projected means the agency will have to make cuts to ensure it has the $40 million in operating reserves required by law.

"We will have to gut significant parts of the service," Scott said.

MARTA grapples financially because it depends on sales tax. By law it can only spend half the sales tax revenues on operations. In the economic downturn, the legislature suspended that state regulation to give the transit agency more financial flexibility but that exemption from the law ends in June 2013. The transit agency, banking on commitments from legislators,  expected to keep the exemption for at least three more years but without it expects to lose a projected total of  $9.7 million during that time.

That isn't much in a $400 million operating budget but officials said it is critical at a time when MARTA is struggling financially. They had wanted the state government regulation  lifted permanently but had agreed to a compromise  of suspending it for an additional three years. A cadre of house Democrats, however, fought the compromise because they opposed a short-term fix and also an aspect of the bill that undercut the Fulton County's Commission's board appointments.

Board Chairman Frederick L. Daniels said an upcoming management audit could identify inefficiencies that MARTA could target for savings. He also said that MARTA management's own internal reviews should identify other savings to keep service cuts from being draconian.

"I don't want our message to the public to be that immediately we are going to slash and burn," he said. "We have to be thoughtful at what we put on the table."

Chief Financial Officer Davis Allen presented figures showing the agency could alleviate the financial crunch in 2016 by a number of measures including  increasing health care contributions from non-union employees from 15 to 25 percent for $4 million in savings by 2016 and cuts in management for an additional $8 million. Plus, the agency now expects to collect $10 million more than anticipated in fares during that period.

But  even with those revisions, Davis said, MARTA's  financial reserves will fall from a projected $132 million this coming fiscal year --which starts July 1 -- to$23 million in five years.

State Rep. Mike Jacobs, the Atlanta Republican who chairs as state board overseeing MARTA, said that the legislature could pass the three-year compromise early next legislative session and give the transit agency some more flexibility.

"It was a shame that House bill 1052 was torpedoed," Jacobs said. "I think it is going to be very important for the legislative leadership, including me, to work behind the scenes with MARTA to assure them that we will keep the commitment we made to give them an extra three years of relief. Having made that compromise, it becomes a promise on which we should deliver."

Scott, however, noted that the the compromise still would not make the MARTA funding model sustainable for the long term. She and other officials said the current financial projections left open the possibility that some projects  might not be feasible even if voters approved a regional sales this July that has $600 million for MARTA for maintenance and upgrades for the aging system.

MARTA still won't have enough money to provide for long-term operating costs and maintenance under current projections, they said.

"If we don't have the ability to maintain it, we can't do it," said Dwight Ferrell, chief operating officer.

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