Since we last wrote about the year-end FY10 budget, MTA adjusted the amount of savings that would result from certain measures and incorporated $6 million of funding from the Oakland Airport Connector’s ARRA component to be applied toward operations and preventive maintenance. The MTA Board has since confirmed its desire to move forward with the general budget package that has been on the table, including the cable car/express bus $70 premium pass, and a 10% system-wide service cut, which would save $4.8 million in May and June 2010. However, the discount pass hike to $30 was eliminated. The 8X/8AX/8BX route, which is a critical all-day service despite its express designation, was also quite correctly exempted from the premium express pass measure.
SPUR’s Budget Proposal
At the February 26, 2010 special budget meeting, SPUR released its own budget proposal (PDF), offering 28 suggestions for MTA to increase revenue and realize additional savings. The recommendations will be familiar to those who have spent time following Muni issues. They include the reduction or elimination of department work orders, increased enforcement of parking meters, consolidation of bus stops where appropriate, advertising, reducing overtime, hiring part-time operators, and redirecting Muni-related 311 calls to 511 — among other recommendations. If all the recommendations were to be implemented, SPUR estimated that its proposal would not just completely account for the budget deficit, but would actually result in a $2.1 million surplus in FY10, and a $9+ million surplus in FY11.
More noteworthy are the measures that SPUR did not call upon — those very measures that have occupied most of the MTA Board’s attention: discount pass hikes and service cuts. Some of SPUR’s recommendations have more merit than others. Some are relatively straightforward to implement, while others, for all intents and purposes, are prohibitively difficult because they require a legislative adjustment at the State level. But collectively, SPUR’s recommendations emphasize an important point. Contrary to whatever the MTA Directors might believe, there are indeed stones that remain unturned. SPUR has not recommended novel, long-term revenue streams. Mostly, it has recommended that existing programs be made more efficient, and that existing laws be properly enforced. Even limiting itself to those tools, SPUR’s proposal manages to emerge with a surplus, all while avoiding significant service cuts and other undesirable measures. It is somewhat disconcerting that MTA did not pursue these measures in its own FY10 budget proposal. Why should MTA need to rely on outside advocacy organizations to learn how to balance its own budget?
The FY11-12 Budget
With the FY10 budget process wrapped up, the MTA will now move forward to approve a two-year FY11-12 budget next month. Existing sources of revenue — parking garage, meters, tax receipts, fares, parking citations, among others — fell short of expectations, opening new deficits to balance. And among other expenditures, MTA also proposed a needed $10 million toward materials and parts. When all is said and done, a $56.4 million deficit looms in FY11, which translates into a $45 million deficit in FY12.
- MTA is finally looking more carefully at parking. Extending parking meter enforcement across-the-board could generate $6.3 million in the first year of implementation, and $9 million each year thereafter; Sunday parking meter charges, taken in isolation, would generate $2.8 million. Adding one thousand new metered parking spaces in areas of especially high parking demand would generate $0.8 million in a half year, or about $3 million annually in subsequent years. Elimination of free, reserved, on-street spaces could generate $2.8 million. Actually enforcing the requirement that garages zoned C-3 charge on an hourly basis would generate $3 million in the first half-year, and about $6 million annually in subsequent years. Extending this C-3 policy citywide would almost double that revenue. What we conclude is that if MTA were to implement the most robust parking proposal, about $26 million annually would be added to MTA coffers after the first year of implementation.
- A 10% reduction of work orders could add about $6.5 million.
- Raising fees to recover various costs could generate $1.5 million.
- Noting that about 15% of boardings are transfers, MTA proposed either charging 50 cents for a transfer (generating $7.5 million) or eliminating them altogether (possibly generating $20.4 million in annual revenue).
- Consolidation of transit stops would result in about $3 million.
- Regulatory penalty schedule for taxis would generate $0.1 million.
- Transit vehicle window advertising wrap would generate about $1 million.
- Indexing fare and pass increases could generate $3.5 million.
- Each additional 5% cut to service (reduction of 156,500 service hours annually) that is implemented would save $7.2 million.
The parking measures are not a panacea for the budget deficit; but when they are taken together, they represent a significant source of revenue that must be kept on the table. There is simply no excuse for ignoring such an obvious and straightforward budget solution.
As for the proposed elimination of free transfers: this idea has been raised in the past and has been consistently rejected. It should be rejected once again. The orientation of Muni service is a matrix of routes that fundamentally depends on free access to transfers. Changing the transfer policy should ideally be accompanied by a reorientation of service to include more angular-shaped routes; but no such reorientation has been discussed. Moreover, any additional cut to service, fast on the heels of the 10% cut, would render the Muni system increasingly unusable and is thus similarly unacceptable. The MTA Board properly rejected both of these proposals.
The MTA has also begun to evaluate revenue-generating ballot measures, which require various degrees of government approval:
- The vehicle license fee proposal (restoring the additional 0.85% of vehicle purchase price) would generate about $33 million annually, but it would require authorization at the State level, in addition to the Board of Supervisors adding it to the ballot. In terms of effort exerted per dollar of expected revenue, this measure would not provide the best bang for the buck, and thus would not be the most strategic choice for a ballot measure.
- There are a few smaller measures that the MTA Board has the authority to approve without approval at higher echelons of government. These include a 1% increase in the hotel occupancy tax (generating $15 million), a 10% increase in the commercial off-street parking tax (generating $20 million), and a parcel tax (generating $20 million).
- The measure that could provide the most bang for the buck is a 0.5% increase in sales tax, which would be put on the ballot by the Board of Supervisors. In light of the current economy, a sales tax is a hard sell to voters. However, if passed, the sales tax measure could provide $70-75 million annually and would do the most to stabilize future MTA budgets without the need to pursue approval at the State level.
This post has gotten rather lengthy, so I’ll close it here for now. Future posts will include further discussion of budget-related issues.