Following the Money for (Washtenaw) County-wide Transit

In our previous post, How Much “County” in Washtenaw County-wide Transit, we examined the likelihood of full countywide participation in the New Transit Authority (Act 196 authority) and the Transit Master Plan.  Our conclusion was that it is not likely to happen.  (After all, somewhere between four to five townships have already opted out even of participating in preliminary talks.)  We presented several scenarios and calculated how much revenue a 1-mill tax could produce in each case.

The Financial Task Force appointed by the AATA board to review finances for a future countywide authority was supposed to produce in January 2012  a “white paper” explaining how the ambitious TMP would be funded.    But they were disrupted in their orderly progress toward this goal by Governor Snyder’s introduction of new transportation proposals (see the Ann Arbor Chronicle’s account).  In the light of the uncertainty introduced by a proposal for a four-county Regional Transportation Authority and new vehicle fees that might fund transit to replace the use of property tax millages, the FTF instead created a subcommittee to do some heavy lifting on “uses” (namely, what programs would actually be included in the TMP, with part of the consideration as how well they would pay their own way).  Again, the Chronicle has captured the work of that committee very well.  I must say that the group was very impressive in their ability to read spreadsheets quickly and pick out the substantive questions, identify issues to be resolved, and move quickly toward a set of recommendations.

Having produced their recommendations, the subcommittee was prepared to present them for discussion by the full group on January 27, 2012.  But the day before that meeting, the long-awaited package of transportation bills, including actions that could have major consequences for a Washtenaw County transit authority, finally was introduced into Michigan’s legislature.  (Please consult the overview of the package as described by the Ann Arbor Chronicle.)  At 11:45 a.m., a message went out that the 2:30 p.m. meeting had been postponed in order for the FTF to assimilate all this new information.

But even though the FTF is temporarily on hold, the materials prepared for their meeting are informative.  Several conclusions and observations can be drawn from them.

1.  The original estimate of a  “budget gap”  was $60 million over the first five years of the plan.  The subcommittee was able to bring it down to a little over half that.  A major part of this accomplishment was due to simply “zeroing out” some services.  The Downtown Circulator (also known in a previous incarnation as “The Link”, received little respect at committee meetings and was left to private funding.  The expensive rail and connector services were put aside as deserving a different form of consideration and financing, in essence removing them from the “countywide” plan for the time being.  The chart below shows operating expenses for 5 years; the last two columns are averages, the very last column a “rounded” average.  (Note the figures in red at lower right-hand corner, denoting an operating deficit of about $20.12 million.)

5-year operating expense projection. (click for larger)

2. The capital expenses for the 5 years are about $56 million, but it is anticipated that most of these will be picked up by Federal and state formula funds and discretionary grants.  Note that this estimate does not include commuter rail expenses, but does indicate a capital investment for the Washtenaw connector.   Even after grants, though, a $12.7 million balance remains to be picked up by local funding.  (Click to see a larger image.)

Capital expenses. Deficit is shown in red at the lower right.

3. The subcommittee was able to estimate that a millage of only 0.3 mills could fund operation of the plan, and an additional 0.2 mills could fund the local capital requirements.  But they are assuming that the millage includes a property tax over the entire county.  Here are the property values on which the 0.5 mills value is based.  They are based on the same Washtenaw County Taxable values table that we used for our previous post.  A separate estimate of TV excluding tax on personal property (given that the Governor is proposing to exclude that) is made, but both values yield a millage rate of 0.5 mills.  (Click on the image for a larger view.)

4. In addition to eliminating some services from this estimate, the committee recommended an across-the-board fare increase of $0.50.  One practical effect of this is that Ann Arbor and Ypsilanti taxpayers, in addition to paying an additional 0.5 mills in taxes, would see the cost of riding the bus go up.  They also sensibly recommended an increase in express bus fares.

Not resolved: the subsidy by Washtenaw County taxpayers for express services to Canton and Livonia, communities that do not pay a POSA and would not be contributing tax money.

In conclusion, even before the Financial Task Force – and the transit riders of Washtenaw County – learn how the changes in state transportation funding will affect us here, the question remains:  how can we have a county-wide transit system if much of the county does not participate?

(Note: posts relating to this topic can be found on the Transportation Page.)

UPDATE:  The FTF met today (February 29) and has now widely distributed their reports.  The basic calculations and conclusions appear to be the same, but the group emphasized that the 0.5 mill figure is only “a placeholder” and “is not a recommendation for a millage”, that is, another form of funding may be chosen.  This was after a verbal summary of the very little that is actually known about possible state finance measures for transit, including a vehicle “ad valorem fee”.  The discussion of the situation in the state legislature (the legislation is still in committee) left up in the air whether a future Regional Transit Authority would intercept the monetary flow from Federal formula funding.  The final conclusion was that there were too many uncertainties to make final firm recommendations, but the group expressed support for the continuance of the TMP process and the goal of countywide transit.  See the overview of regional transit bills by the Ann Arbor Chronicle.  House Bill 5309 is the one that would authorize the Regional Transit Authority for a four-county region in SE Michigan.

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One Comment on “Following the Money for (Washtenaw) County-wide Transit”

  1. David Cahill Says:

    Thanks, Vivienne! This is quite enlightening.

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