MARTA, the backbone of public transit in metro Atlanta, on Thursday moved a step closer to privatization in an effort to put the troubled agency on a firmer financial footing.
Legislation was passed by state representatives that required the Metropolitan Atlanta Rapid Transit Authority to privatize major functions — from payroll and cleaning to paratransit services. The reform also requires moving new employees from a pension to a 401(k) retirement plan and capping the heavily indebted agency’s bond debt at 35 percent of sales tax collections. Some aspects may run afoul federal rules, putting critical federal grants at risk.
The bill was approved by a vote of 113-57, with mostly Republicans voting in favor and Democrats voting against, and sent to the state senate, which can modify it.
“Marta should be the crown jewel of Georgia’s capital city poised for growth, ” said state Rep. Mike Jacobs, R-Brookhaven, who chairs the legislative oversight committee for MARTA. “Instead, it is an authority that is mired in the business practices of the 1970s.”
A management audit by consulting heavyweight KPMG found that MARTA spent $50 million above the national average for employee benefits and that the transit authority could save between $60 million and $142 million over five years by outsourcing many functions.
According to the audit, the five-year savings if cleaning services were privatized would be $29 million to $49.5 million — although union leaders warn that MARTA has tried before to privatize cleaning and para transit services with disastrous results in terms of quality of service.
The MARTA board of directors, which commissioned the audit, and new General Manager Keith Parker have said they’re using the audit as a road map to financial sustainability. House Democrats questioned the wisdom of mandating privatization of specific functions until MARTA officials have vetted the actual cost savings and practicality.
“It is clear they need to improve and fix some business practices,” said Rep. Pat Gardner, D-Atlanta, a member of the transportation committee. “They are well on the way of doing exactly that. Why do we need to put into Georgia law what an entity must privatize?
“That makes me very nervous.”
Legislating the changes could put MARTA at risk for losing federal funds because it could undermine the Amalgamated Transit Union’s ability to bargain with MARTA administration over benefits, Georgia State University professor Philip LaPorte told The Atlanta Journal-Constitution. Other aspects of the legislation also might lead to federal funds being denied.
“Wages, hours, and other conditions of employment are mandatory subjects for collective bargaining,” LaPorte, a labor arbitrator and member of the National Academy of Arbitrators, wrote in an email. “The Georgia General Assembly mandating that a defined benefit pension plan be eliminated and replaced by a 401(k) plan would be viewed as violating workers’ collective bargaining rights and place MARTA in jeopardy of losing federal transit funds.”
Over the past five years, MARTA has received more than $550 million in federal grants for such things as maintenance, capital improvements and security, which agency officials have said have been critical for its operations.
The proposed law would require MARTA to place all new employees in a 401 (k) plan starting next January, allow MARTA five years to implement the privatization and six years to lower the bond debt to a 35 percent cap.
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