Local in Ann Arbor

Michigan politics introduce even more uncertainty into the future of the Transit Master Plan.

In our previous post, we left AATA hanging on a hope and a prayer that the initiation of its Transit Master Plan will play out as planned.  As we said, the AATA board has moved to “bet the farm” in putting forth a deficit budget that is to “catapult” (the AATA board chair’s expression) the organization into its transformation to a countywide transit authority that presents a transit menu with all the bells and whistles.  The budget includes pre-funding (in advance of actual revenue) several parts of a more regional approach.  Those include express commuter routes to Chelsea and Canton (yes, Wayne County) as well as a new service to the Detroit Metro Airport.  Every indication has been that the TMP’s supporters anticipate the additional revenue for the plan to come from a countywide millage, authorized by the voters next year.  Of course, that is a political judgment and it is a decided gamble to run out one’s reserves hoping for the good will of the voters.  (As we noted, the revenue from a new millage would not be available until July 2013.)

The Ann Arbor Chronicle has done an admirable job in documenting some of the rapidly occurring events in this area since that last board meeting.

Districts and representatives for u196. Note that four townships are not participating. Graphic courtesy of the Ann Arbor Chronicle.

As explained in that report, the new interim county-wide board (the unincorporated Act 196 board, or u196 board) had their first meeting on October 20.  Then the finance committee met on October 28. They were to come up with a “white paper” by January outlining the map to financing the TMP through a process of subcommittees and work groups and multiple meetings before the end of the year.

There was some impressive staff work available to them.  Materials prepared for the meeting included complex schema showing fully fleshed-out project-by-project capital and operational funding needs, and likely funding from already known sources, including passenger fares.  (The Hypothetical Transit Master Plan Budget, Years 1-5, required a 17″ x 23″ page to be printed in very small type.)   There was also a prepared PowerPoint presentation (not actually presented) on how to promote a ballot measure and a handout detailing case-by-case how well transportation funding ballot measures nationwide have done.

And then it all fell apart.

Michigan Governor Rick Snyder gave a significant address on transportation and infrastructure on October 26.  A full summary of his proposal was then released.  There are many elements, but here are a few that are especially relevant to the fate of the TMP.

• A significant revision of Act 51.  This is the Michigan law that governs transportation funding.  Snyder would make major changes to the state formula for allocating revenue from the gas tax and other transportation funding to local entities.
• A new source of funding for transportation: increased registration fees for passenger vehicles.  The fee would be based on the value of the vehicle, so as now would vary according to the age and original price.  As stated, it would be “an additional $10 per month on the average passenger vehicle”.  This would raise an estimated $1 billion per year.  In addition, he would allow “a local or regional registration fee of $40 per year on the average vehicle” that would be collected by the state and returned to the “local agency”.  The local fee could only be imposed by a vote of the people affected.
• A Southeast Michigan regional transit authority.  “I propose a new Regional Transit Authority for southeast Michigan, one with the teeth and the commitment to coordinate existing bus services and permanent, dedicated regional funding to invest in rapid transit. My proposal is for a new authority, free of legacy costs, which will establish rolling rapid transit along four critical routes including Gratiot, Woodward, Michigan Avenue and the M-59 corridor.”

This is one of those classic good news and bad news stories for the TMP.  One of the problems that its supporters have faced is the very limited range of options that Michigan state law gives to local governmental entities for raising money.  Almost all forms of taxation that local governments use elsewhere are excluded. As we noted in the previous post, sales taxes and local vehicle taxes have been more or less off-limits without either state legislation or constitutional amendments, hence the millage is the only option.  This explains the comment that AATA chair Jesse Bernstein made at the October 20 u196 meeting.  In discussing the impending finance committee meeting, he said “Everyone talks about a millage, but I’m hoping that the Governor will light a candle over the weekend.”  Apparently Bernstein had some knowledge that the local vehicle registration fees were in the works.

But the problem is that this new revenue, and indeed the entire enterprise,  may have been taken out of the AATA’s (or the u196 board’s) hands.  The announcement by Snyder of a Regional Transit Authority (RTA) to address the chronic problems in Detroit area transportation might have seemed to have little to do with our local plans.  After all, though we certainly want the Detroit Metro area (Wayne, Oakland and Macomb counties) to prosper, we are not really a part of their system in most senses. Little did most realize that a September 21 resolution by the Washtenaw County Board of Commissioners took a first step in committing Washtenaw County to being part of a new regional authority.   As reported by the Ann Arbor Chronicle,  the BOC passed a resolution supporting the regional authority on September 16 with very little discussion.

The resolution was presented by Commissioner Conan Smith, whose wife, Rebekah Warren, was the Senate co-sponsor (with, notably, the Republican chair of the transportation committee) of a package of bills to establish the authority.  The initial announcement did not indicate that Washtenaw would be a member of the authority. A package of three bills (Senate Bills 443, 444 and 445 ) that are “tie-barred” are apparently still in committee. Smith attended a summit meeting earlier this year as a representative of Washtenaw County and is now a member of the core group (dubbed the “Fab Five” by Mlive.com) who are working to make this happen; though Smith is only the chair of the Washtenaw County BOC (an office that rotates), he joins Detroit’s Mayor and three elected county executives.

At the finance committee meeting, Smith joined State Representative Mark Ouimet and Snyder advisor Dennis Schornak in explaining the Governor’s intent.  (As Smith said, “there are a number of things he hasn’t released yet”. )  Here are the basics:

• The RTA would be formed upon winning a vote in all four affected counties (Wayne, Oakland, Macomb, Washtenaw).  On questioning, Schornak said that there is no opt-out on a county-by-county basis; if the voters in all three Metro Detroit counties approve the RTA while Washtenaw County votes against it, we will be included.
• The RTA would then also float a ballot measure to approve the additional vehicle registration fee.  If it passes by a majority over the four counties, those monies would be collected by the state and forwarded to the RTA.
• Of the vehicle registration fee income, 90% would go to roads and 10% to transit.  There are constitutional restrictions in having more than 10% to transit, but this is an improvement for transit over some prior formulas. (Presumably, only the 10% for transit would go to the RTA, with the remainder going to commissions that administer roads.)
• Taxes thus collected (at a 95% rate) would be distributed back to the contributing counties proportionately in services.
• The RTA would handle all finances and governance related to transit in the 4-county area.  It would be the sole recipient of all state and Federal funds.
• The AATA would be a subcontractor, under the aegis of the RTA.

This news was a stunner to the financial committee and Berriz rather summarily (no discussion)  announced that the subcommittees, task assignments, etc., were off the table.  (There was one subcommittee of volunteers to look at what projects the TMP should undertake, described as “uses”.)  Also, the ambitious schedule to produce a white paper has been scrapped.   The next meeting of the committee was scheduled for December 16.

Why all the upset over a proposal (Snyder’s) that hasn’t even been enacted into legislation?  A draft bill has not even been revealed (it was to be discussed by the Fab Five today, November 7).  It’s simple – how is the finance committee to evolve a 5-year plan for funding an AATA-based TMP when it is just reasonably possible that all the rules will change?  Here are some major concerns that are surely in their heads, though not expressed.

• The biggie: the AATA would no longer have access to state and Federal formula funds and perhaps to grant funds of any kind.  In the hypothetical budget that never got presented,  formula funds were to supply about $55 million over 5 years.  The extensive capital requirements of the TMP (related especially to rail projects) were projected to use $19 million of Federal funds.
• Even today, state and Federal formula funds (which are reliable paychecks for transit operations based on long-standing legislation) account for $12.4 million out of $29.4 million budgeted revenues, or about 42%.  Thus, the loss of access to these funds would affect the current operations of the AATA adversely, unless they were returned to Washtenaw County in full.
• The new revenue from the registration fees would be nice, but probably not enough for ambitious new projects.  Smith estimated $4-5 million per year; it was not clear whether that was for Washtenaw County or for the entire RTA.  Snyder was projecting $300 million per year for the entire state at the maximum fee level, but his assumptions were not explained.  The five-year budget was showing that $60.8 million (about $12 million a year) was needed to accomplish the TMP beyond current revenues.
• Loss of local control.  The AATA/u196 would become a contractor, not the governance body.  As such, it could not direct policy at all but would have to supply the service they were told to provide.  So the entire TMP becomes moot, except perhaps as a source document for future planning by the RTA.

There are a lot of  steps between here and there.  Snyder must get his draft legislation through both houses of the state legislature and then some political steps will be involved in getting a vote together on forming the RTA. A question was asked at the meeting as to whether the Legislature would designate the counties to be included, but I didn’t hear a good answer.  Certainly the fact that the BOC passed a resolution endorsing the entry of Washtenaw County into the RTA will probably have some weight.

Maybe it won’t happen.  But I think that anyone who underestimates this Governor is making a mistake. It was obvious that the financial committee wasn’t planning to make that particular mistake.

Meanwhile, the AATA is still operating on a deficit budget.

This entry was posted on November 7, 2011 at 10:29 pm and is filed under civic finance, Transportation. You can subscribe via RSS 2.0 feed to this post's comments. You can comment below, or link to this permanent URL from your own site.