Atlanta Finance

MARTA at the End of Its Rope

Like New York’s MTA, Atlanta’s MARTA will have to cut service significantly if state legislature doesn’t get its act together

MARTA runs Atlanta’s transit operations, including the United States’ sixth largest metro system by ridership, and its patronage increased by almost 10% last year. Unfortunately, however, it’s facing a budget crisis – a $65 million operating deficit this year – due to the steady drop in sales tax revenue that has been affecting transit systems around the country.

Unlike those other agencies, though, MARTA does have the money; it’s just that it’s locked away due to the manner in which the 1¢ sales tax dollars, which fund more than half of the system’s costs, must be distributed. Under current state law, half of the money must go to capital expenses – in other words, the construction of new lines or the purchase of new rail or bus vehicles – while the other half is reserved for operations such as labor. MARTA’s general manager Beverly Scott is asking state lawmakers to change the law so that the system can use all of the funds as it wishes – including possibly devoting all of the money to operations. The Senate has already passed the bill, but the Georgia State House is skeptical.

Ms. Scott argues that without the change, the agency would be forced to cut service, including possibly all Sunday and maybe even Saturday service. But members of the House argue that MARTA had been given too much fiscal discretion in the past, and that the agency had made bad decisions. The AIG-leaseback deals, which cost transit agencies millions of dollars, come to mind. On the other hand, the federal government thought those deals made a lot of sense, so it’s hard to blame MARTA for getting into them.

But while I’m sympathetic of MARTA’s plight, and while it’s nice to know that there’s a whole bunch of cash waiting for the agency to use, I wonder if it does make good sense to devote half of the sales tax revenue to capital expenses. While operations must continue, Atlanta has a number of transit expansion projects in which it should continue investing; it will also obviously need to buy new vehicles in the future. Those funds are necessary… for capital expenses.

Fundamentally, allowing MARTA to simply transfer those funds into the operating account amounts to an agency attempting to live beyond its means. Like other cities, Atlanta must develop a more stable financing system that doesn’t rely on such fluctuating revenues as the sales tax. Otherwise, we’ll be discussing whether it makes more sense to pay for a driver or to maintain his bus.

One reply on “MARTA at the End of Its Rope”

The mandatory 50/50 split between capital and operations may have made sense earlier in MARTA’s history, but it’s not really serving its purpose today. With O&M costs increasing as the system ages, MARTA has basically maxed out its 50% operations allowance — which actually has the effect of limiting what capital projects it can advance. You can’t start a big system expansion project without demonstrating a solid capacity to operate the system over the long term, and MARTA can’t possibly make that case when its current operations budget no longer even covers the cost of running the current system. As such, they’re now spending all their capital dollars on short-term projects like vehicle purchases, faregate replacement, etc — important needs, no doubt, but not enough to warrant a 50% share of the sales tax revenues.

In any case, even if MARTA does get full control over its revenues (and I hope that they do), that still only buys them a year or two. The bottom line is that MARTA now serves as the backbone of a regional transit system that covers 10+ counties, yet it is still only funded by the innermost two (Fulton and DeKalb). This is simply not a sustainable long-term arrangement. Like MTA, MARTA needs a supplementary funding source, ideally at the regional or state level — absent that, we will be right back to this doomsday talk this time next year.

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