Finance Social Justice

Taking Away When Needs Are Greatest

» California Governor proposes cutting state support for transit to balance the budget.

The most stormy period of the recession may have passed us by, but states and cities continue to face the devastating consequences of the millions of jobs lost over the past two years. Unlike the national government, which is able to maintain a budgetary deficit, lower-level governments in the U.S. federal system have a legal requirement to produce a balanced budget each year — a difficult task to fulfill when raising taxes is political suicide even as citizens expect a minimum standard of minimum public service.

As falling tax returns have become standard, that’s bad news. It’s especially troubling for transit systems in California, which may face a collective $1 billion cut in support if Governor Arnold Schwarzenegger gets his way on the state’s next budget.

California’s legislators faced down a massive budget deficit earlier this year, closing a gap of $43 billion in February and $26 billion more in July only by cutting aid to schools, health care institutions, and prisons. For next year, it has another $21 billion for which to account, and there are fewer and fewer places from which to skim the fat.

The Governor is expected to argue that the state’s commitment to mass transit ought to be one such casualty when he announces his proposed budget early next year. His plan would transfer about $1 billion in annual funds currently devoted to public transportation operations to other essential services, basically leaving local transit agencies to fully sponsor their own services. The gap would have an immediately destructive effect: Los Angeles’ Metro transit agency, for instance, has come to rely on $50-100 million in yearly state appropriations. This is compared to the system’s roughly $3.8 billion budget for FY 2010; in other words, this is no minor loss, and the same principle applies to the state’s other bus and train networks.

Mr. Schwarzenegger has been fighting to reduce funding for transit agencies for years, despite his claims to be a “green” politician at the recent Copenhagen Climate Conference. Since 2007, he has led the state legislature in redistributing transit money towards other programs, though that effort was declared unlawful by the State Supreme Court in June, leading to the repayment of $3 billion in missing tax revenues to needy transit systems.

Another such transfer would be similarly against the law, so the Governor has invented what his staff sees as a novel policy to get around the issue: get rid of the source of the problem. Mr. Schwarzenegger would simply eliminate 5¢ of the state’s sales tax currently pointed towards transit programs and replace it with a new excise tax of an equal sum designed to go to the general fund. Protections for highway spending, of course, would remain entirely in place. The Governor plans to ask Washington for aid, but no support has yet materialized. Offshore oil digging is an additional element of the plan.

Whether the Governor will get his way in his last year of office is up for question — particularly since he currently has a 27% approval rating. Yet the legislature will have to find spending cuts somewhere, since the assembly’s Democratic majority isn’t large enough to vote for increased taxes that would be necessary to prevent any service reductions. California’s constitution makes it very difficult for the legislature to agree to new sources of revenue.

The proposal would strike at the heart of the state’s transit systems after a difficult year. Generally poor economic conditions resulted in an overall decline in ridership nationwide of 3.8% in the first nine months of the year, according to the American Public Transportation Association. That statistic will not improve if transit agencies continue to make service cuts as a result of fewer revenues — before the state cuts spending any further. Already planned for next year: AC Transit in Oakland will reduce operations by 8%, San Francisco’s Muni will increase fares, San Jose VTA will delay the purchase of dozens of buses, and San Diego will cut more than half its services on Sundays. This is no easy time for the state to reduce aid.

Last Christmas, I wrote of the need to use transit as a tool to encourage social justice, and I maintain that public transportation must fulfill a role beyond that of simply increasing “mobility.” Reducing public transportation service is an outrageous idea when driving is simply too expensive for a large percentage of the population, as the environmental consequences of carbon emissions mount, when the lives of our cities demand alternatives to the automobile.

California’s predicament is no easy one: it could maintain state financing for transit, but it would have to reduce spending somewhere else, probably just as important. The state’s politicians have a responsibility to their constituents: to be courageous enough to fight for increased taxes to pay for the vital needs of their communities. That may require altering the constitution, or it may necessitate convincing a few Republicans of the need to augment revenues. Either way, something must be done; a cutback in services is no way to celebrate the new year.

16 replies on “Taking Away When Needs Are Greatest”

Convincing a few Republicans to do something sane? Don’t make me laugh. You might as well try to convince the Earth to stop rotating.

It requires altering the State Constitution.

look, of course transit users and advocates are upset about budget cuts to transit, but you gotta appreciate how horrifically bad the state and local budget situation is in California and how widespread is the pain. K12 education has been slashed from what were already the lowest per-pupil funding levels in the state. Low-income blind and disabled Californians are losing state supported in-home services. It goes on and on. To complain, in the face of this human suffering, that LA Metro is going to lose between 1.3% and 2.6% of its budget is beyond ludicrous. Sure, you can say that we should just increase tax rates in order to maintain transit services, but the argument is equally or more strong for other, worse-hit areas of the social safety net (don’t forget, state support for public transit in California is a tiny share of total budget; the remainder remains in place), and there is only so much capacity to increase tax rates before creating other (economic and social) problems. The simple fact is that there is no way to avoid severe pain across the board and across the state; transit is going to have to take it in the shorts along with dozens of other important public services.

However, pathetically, the “Repair California” criminals are proposing a Constitutional Convention which would be *PROHIBITED FROM FIXING THE 2/3 RULE*. This should be opposed because it’s just evil and stupid.

Support Lakoff’s “Majority Rule” initiative instead.

Please update your article to reflect this unfortunate fact — “repair california” wouldn’t repair anything. Californians for Democracy *would*.

The fundamental problem in California is that 1/3 (plus 1) of one house of the state legislature can block ANY tax increase and ANY budget.

California has plenty of room to fix taxes to restore its social safety net. Vast majorities of people support forcing large corporate property owners to pay taxes on the *current* value of their property rather than the value when they bought it in the 1970s. Oil severance tax increases are extremely popular.

However, those vast majorities aren’t quite large enough to get 2/3 in both houses of the legislature.

The majority needs to be able to run the state. This pain is not necessary, none of it is necessary — it is the fault of Howard Jarvis and other fanatical “anti-tax” “drown government in the bathtub” organizations, and their ability to pass prop 13 through deception back in the 1970s (many of the people voting for it had no idea that it required a 2/3 vote to pass a budget or to raise any tax at all — they only heard about the property tax freeze.)

@ Nathanael, we can probably agree that California is deeply broken and needs fundamental reform … at to what shape that reform should take, this blog and this post is probably not the right place for that conversation.

Correcting typos in my post #2 above: Meant to say lowest per-pupil spending in the nation, not the state. And meant that state transit assistance makes up a very small share of *transit agency* budgets (with the vast majority coming from local sales taxes and, to a lesser extent, federal transit funds, and even some state gas tax funds)

The split roll property tax and oil severance tax are needed no doubt to broaden the state’s tax base, which is too reliant on income taxes, which fluctuate wildly. Also needed is pension reform. CA pensions are too generous, especially in an environment where the taxpayer has just a 401k plan that may or may not have a match. These taxpayers shouldn’t be expected to pay increasing pensions, while their own meager retirement benefits are being stripped away.

What about consolidation, and why hasn’t it been considered?

The nine-county San Francisco-Oakland-San Jose area, and the six-county Los Angeles area, from Ventura to Palm Springs and El Centro, each have dozens of big and small transit systems. If these systems were unified, they would be easier to market, cheaper to administer, be more convenient for customers, and would save money, hopefully enough to make up for the loss of state funds.

Consolidating transit in the Bay Area is regularly trotted out as a “solution” to the various problems with transit here. But this would make the transit problems WORSE because the entire region would inherit the most expensive, disfunctional labor contracts from Muni and AC Transit, forcing massive service cuts overall.

Give it a rest.

There has to be some way to do away with these “dysfunctional labor contracts” you mentioned, Michael, but I suppose that would mean Congressional legislation, and I wonder if the unions are at the front of the line ahead of the providers and users of public transit as far as Congressional favors are concerned.

At the same time, as someone who uses public transit, I wonder if any of the people who make the decisions at the public transit system level, or who work for APTA, ever believe in the service enough to actually ride it themselves regularly, and whether such belief in that product, or lack thereof, affects whether they get more money, whether through local tax increase referenda, or state or federal funds lobbying.

Consolidation would actually degrade transit service unless localities retained LOS control. Experience around Wash DC is instructive. WMATA Metrobus is so skimpy that Mongomery County in MD and Fairfax VA have fielded their own bus systems which of course have no fare interchange w/ the subway. On my most recent trip to visit my mother, I noticed that another Metrobus route which had served her neighborhood had been replaced by the Ride On system of Montgy Cty.
In Greater LA, MTA has done some devolution to more localized boards for the further flung service areas.
We could all dream about the economies of scale for bus purchases, but in fact Muni needs faster ingress/egress (double stream doors) and more standee space for the short trips which most lines attract.
OTOH, FORCING BART to accept local monthly passes for similarly unlimited rides in the same areas (rescinding the premium Muni is about to exact) would encourage riders to use the fastest/most efficient combination of routes without fare penalties. A further advance would be to have Sam Trans pick up riders inbound on Potrero outside rush , again honoring Muni FastPasses. The point is to get the riders moved faster at relatively minimal costs. AFAIK, the issue w/ SamTrans would be our “friends” in TWU 250 worried about turf. As long as absenteeism is around 20% I have no sympathy.

Steve wrote:

There has to be some way to do away with these “dysfunctional labor contracts” you mentioned, Michael, but I suppose that would mean Congressional legislation, and I wonder if the unions are at the front of the line ahead of the providers and users of public transit as far as Congressional favors are concerned.

Don’t forget contract law.

A collective bargaining agreement is a binding contract between labor and management. They can’t be done away with except through legal or arbitration channels.

Also, virtually all contracts contain a severability provision. If one portion of a contract is found to be invalidated, it doesn’t mean the entire CBA is rendered null and void.

One way to void a CBA wholesale is through bankruptcy. However, deliberately running an entity into bankruptcy for the purpose of shirking an agreement is illegal.

Michael Setty probably witnessed this firsthand. The city of Vallejo, Ca., had to file for bankruptcy protection because it could no longer make the compensation outlays for its workers. The city and its police and firefighters’ unions had signed a plum agreement that provided for very generous pension plans, but the economy made the agreement untenable.

Steve–consolidation of transit agencies wouldn’t necessarily be very beneficial. There are very few multicounty transit operators, and the most stable ones seem to be run as state agencies. In that category, you’d have RIPTA in Rhode Island, DART First State in Delaware, and New Jersey Transit. Very few metro areas are served largely or entirely by one agency; while MBTA in Boston is an example of a regional agency, you can counter its relatively strong performance with SEPTA in Philly. SEPTA is constantly struggling, and its rail network is no better than it was 30 years ago. Why? Because it’s funded by property taxes, and suburbanites are convinced that somewhere, somehow, any increase they approve in funding for service will only go to subsidize inner-city services. That has a lot to do with why Philly has shut down almost all streetcar lines, plus part or all of some regional lines. The inability of parties to agree on funding also helped kill the Schuylkill Valley Metro project to Reading.

Another example is what has happened in Cleveland. The Ohio Legislature passed enabling legislation for regional transit agencies in 1974, and the Greater Cleveland RTA was created the next year. RTA bought and absorbed most smaller operators, but a few survived as semi-autonomous divisions well into the 90’s. The consistent pattern has been that suburban lines have been eliminated, and the agency has done exactly nothing to work with any of the 60 municipalities in Cuyahoga County (surface area comparable to the city of LA) on dealing with transit-killing sprawl. Not only has RTA largely killed itself, but none of the surrounding counties ever joined the district because–again–they were convinced that suburban sales taxes would be used to run more service in the inner city. That’s why there is no regional rail in Cleveland–none of the suburban counties will accept the reality that the Feds want the designated regional transit operator to at least oversee a rail system. The money has to come through the MPO, and the MPO (NOACA–N.E. Ohio Areawide Coordinating Agency) points to RTA as the go-to.

California is very much like the Midwest and much of the East Coast. They are utterly fixated on “local control,” to the point that there are places in California where you can’t figure out just who the hell runs the damn buses. In LA County, the non-MTA services are still MTA-funded. Some of the systems–Santa Monica Municipal Bus, Long Beach Transit, Montebello Bus Lines–long predate MTA/RTD. Some–Antelope Valley Transit, Foothill Transit, LADOT–were created and/or funded to address local concerns, which were perceived to be a lesser concern for MTA. In the Bay Area, there is a strong logic in the scarcity of mergers. Who would merge with Golden Gate Transit? The bus operations are part of the same special district as the Bridge; while there are no other operators in Marin County, there are at least five operators in Sonoma County. Could they be merged with GGT? Maybe. As it is though, the SMART train line follows the same corridor as the trunk GGT routes (up the 101), but somehow SMART is separate from GGT. That is absurd. You have a better point to make in the East Bay. AC Transit serves most (but not all) of the urbanized shoreline, from Richmond south to Milpitas. Within Alameda County, this excludes Union City (small system) and Livermore and the Amador Valley (WHEELS). Contra Costa County is even worse–Walnut Creek and Concord are served by County Connection, Antioch and Pittsburg by Tri-Delta, and Hercules and Pinole by WestCAT. It’s local politics. Same goes when you head north into Napa, Solano and Yolo Counties. Why is it there are five regional rail operators in the Bay Area–CalTrain, BART, Altamont Commuter Express, Capital Corridor JPA, and SMART? Yes, it’s ridiculous, but there’s not much point in criticizing California’s insanity when the Feds do nothing to discourage this fragmentation.

SEPTA’s rail service has improved a lot in the last 30 years. 30 years ago, SEPTA Regional Rail was two disjointed networks; today, it’s the closest thing the US has to an S-Bahn. The agency did a remarkable job picking up the pieces after the strike and service cuts, raising commuter rail ridership from 13 million in 1983 to 35 million in 2008.

The inner city services have not grown so much, and the people I know from Philly criticize them as not very good in general. Yes, it’s a bad thing that Philadelphia’s subway is controlled by suburbanites, but consider the alternative. James Carville referred to Pennsylvania as Philly on one side, Pittsburgh on the other side, and Alabama in the middle. You’d much rather have Philadelphia’s transit controlled from King of Prussia than from Harrisburg.

It isn’t just transit in California – the disfunctional way in which state budgets are put together is eventually going to have to be remedied.

Maybe, it is time to look at the “Verkehrsverbund” concept. Yes, it is NIH, but it did wonders in Germany, Austria, and Switzerland, and elsewhere.

And maybe, it is time to put aside extremistic and fundamentalistic thinking, and start working on solutions.

All that needs a political will…

Maybe worthwile to think about that at the next election day…

FYI, Schwarzenneger’s proposed transit raid would involve a *tax increase* for state Constitutional purposes, the “excise tax”, and would therefore require a 2/3 vote in both houses of the legislature. I somehow expect this to be dead on arrival.

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