I've been going through the audit
report Claire McCaskill had done on Metro after the Shrewsbury
lawsuit fiasco.
I wish there was some sort of honorary
degree in Public Transit I could get from a university. Just reading
through the legalese in these things is ridiculous.
I admit I have to read slowly, and
re-read a lot. But it is not completely incomprehensible. Let's look
at this paragraph from page 8 of the document, which is page 12 of
the PDF web page file:
The Cross County Extension Project
exceeded the original project budget by nearly $126 million and
resulted in the issuance of an additional $150 million in bonds in
2005 to finance the project and $20.8 million in bonds in 2007 to
refinance a portion of the debt service payments due in 2008 and
2009. The total debt service costs over the life of these additional
bonds will exceed $293.5 million and will not be fully paid until
2036. The additional debt service must be funded by the Proposition M
sales tax and as a result Proposition M sales tax funds available for
funding operations will be reduced. A proposal to increase the
Proposition M sales tax rate by ¼ cent had been placed on the
February 2008 ballot in St. Louis County. However, that proposal was
removed from the ballot by county officials following the unfavorable
outcome of the Metro lawsuit against the CCC. Also, in early 2008,
Metro was informed that St. Louis County would reduce Metro's funding
from the ½ cent transportation sales tax by $8.5 million for fiscal
year 2009 and $10 million for fiscal year 2010.
Now, those $150 million in extra bonds
is a problem. Not only did they go way over budget, end up in
litigation, lose the court case, end up paying a lot in legal fees
and settlements, they also created a bunch of debt for themselves (a
bond is essentially a way to borrow money, a big IOU).
And some of these bonds were to
refinance the debt service payments due in 2008 and 2009 on other
bonds!
They planned to repay this IOU (the
"additional debt service") by Proposition M, which actually
never made it to the ballot. (So, I was wrong that Prop A was a bond
measure re-packaged to voters, the Transportation Bond failed. Prop
A was just a quarter cent increase and three years later version of
Prop M.)
And it seems that any monies that come
from the County on Transportation Sales Tax IS decided by the County
Executive. In both 2009 and 2010 they are looking at increasing
reductions in the amount of money they can ask for.
So that explains A LOT about Prop A.
It also explains why Metro was hit so
hard by the sub-prime mortgage fiasco that hit all the banks, and in
turn, all bonds. The report continues with this:
As of April 30, 2008, Metro reported
holding cash and investments of approximately $131 million and
various trustees held $41 million. In March 2008, Metro prepared an
analysis of cash and investments that indicated about $71 million
would be available to fund operating deficits that were expected in
fiscal years 2008, 2009, and 2010, if additional revenue sources
could not be identified. The analysis predicted that cash and
investments available to fund operations would be about $12 million
by the end of fiscal year 2010. Also as of April 30, 2008, Metro and
its trustees were holding $28.2 million in Missouri Higher Education
Loan Authority (MOHELA) securities that they have been unable to sell
due to disruptions in the financial markets. The remainder of Metro's
cash and investments, about $72.8 million held by Metro and its
trustees, are restricted and unavailable to fund operating deficits.
As early as April 2002, Metro's
former Chief Executive Officer (CEO) informed the St. Louis County
Council that Metro was facing serious shortfalls in operating the
region's mass transit system. In the fall of 2006 and spring of 2007,
the former CEO and executives of St. Louis County met with
legislative leadership to discuss new state funding to abate the
pending financial shortfall. In May 2008, Metro adopted the budget
for fiscal year 2009 that included a projected budget deficit of
$10.8 million for fiscal year 2009, and also included $8.3 million in
budgeted "other revenue sources" which were described as
"the amount needed to balance the budget. The additional needed
revenue could come from a successful tax referendum in St. Louis
County, passenger fare increases, and/or revenues not yet determined.
If no other revenues are identified, service reductions will be
planned and implemented" during fiscal year 2009. The budget
also projected a deficit of $45.8 million for fiscal year 2010. The
planned spending for capital improvements was also reduced from
$360.6 million in fiscal year 2009 to $68.6 million in fiscal year
2010. Metro has scheduled a series of public hearings regarding
various options for fare increases that may become effective in
January 2009. Those options range from increasing the cost of all
passes and transfers to increasing all fares, passes, transfers and
cutting service.
The second is obscene, considering what
the former CEO was paid. In 2002 they KNEW BEFORE THE FINANCIAL
CRISIS that they were already FACING SHORTFALL!
What did they do? They jacked up the
public for more sales tax and higher fares.
SOUND FAMILIAR? (Yes, City voters, you
have ANOTHER Transportation tax in the coming election. Alderman
Lewis Reed was conducting a survey about it in the Missouri History
Museum a few weeks ago. The survey asked voters to choose what they
wanted to spend it on. Metro was one of the choices. I haven't had
a chance to look into the City yet at all, but I bet that money
doesn't go straight to Metro for basic operating expenses. I bet
there are a lot of restrictions on it. And Council and Commission
approvals. The people they should be asking, the riders, are not
even considered except as an afterthought.)
Metro has all the earmarks of Lehman
Brothers in September of 2008.
People that think the current system is
"doing the best it can" and "Metro is similar to other
Transit Agencies in cities of a similar size" need to consider
the lesson of Lehman Brothers. What they did was no worse than Bear
Stearns.
Metro might be doing what everyone else
is doing, but that doesn't mean they are doing what they SHOULD BE
doing.
Metro needs to be re-structured. It
needs another public audit. REAL SOLUTIONS need to be found. Those
solutions might be unique to St. Louis. Metro likes to brag that it
is the only public transit agency of its' kind in the country (still
trying to figure out exactly what this means-- something about the
way they are structured and the partnership with the two states). If
it is the only one of its' kind it shouldn't be too difficult to
actually make it work for the people that ride it.
And actually, right now, it is not
working for anyone.
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