Closing CNYRTA's Operating Budget Gap: A Local Approach
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Constrained by six consecutive years of flat state aid, compounded by rising operating costs and falling local revenue sources, the Onondaga County public transit authority faced a $4.5 million budget shortfall. The policy proposal contains actionable recommendations to increase and diversify the transit authorityโs local revenues.
![Closing CNYRTAโs
Operating Budget Gap:
A Local Approach
[Alexandra BetGeorge]](https://image.slidesharecdn.com/slcnyrtapresentation-150621055146-lva1-app6891/85/Closing-CNYRTA-s-Operating-Budget-Gap-A-Local-Approach-1-320.jpg)
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Closing CNYRTA's Operating Budget Gap: A Local Approach
- 1. Closing CNYRTAโs Operating Budget Gap: A Local Approach [Alexandra BetGeorge]
- 2. Outline โข Overview of CNYRTAโs financial position โข Trends in Public Transit Funding โข 3 Proposals โข Syracuse metropolitan area route map, CNYRTA
- 3. CNYRTA Overview โข Service area spans four counties โข Smallest of the four upstate regional transit authorities [RTAs] established in the early 1970s, which also include: โข RGRTA, NFTA, CDTA Route Service Distribution
- 4. How it happened: FY 2016 $4.5 million Operating Budget Gap โข Falling Revenues โข Inconsistent and declining local revenue streams โข Stagnant and/or declining federal and state aid โข Rising Expenses โข Workersโ compensation claims โข Healthcare claims โข Vehicle maintenance for off-warranty bus fleet โข A Limited Solution โข An April 1 injection of $1.6/$10 million in emergency upstate operating assistance from the state budget
- 5. FY 2015 Revenue Comparison: Upstate Regional Transit Authorities โข CNYRTA has the lowest local revenue to total revenue ratio โข Highest dependence on state-controlled revenue sources โข Lowest median household income of the four upstate RTAs
- 6. Trends in Public Transit Operating Assistance โข Transport operating costs have risen faster than inflation since the 1980s [Sciara, 2007] โข Rates of federal and NYS taxes supplying dedicated mass transit operating assistance are not tied to inflation [FTA, Sect. 5309 & NYSDOT] โข Flat or decreased funding from local or state sources affects 71% and 83% of US public transit agencies, respectively [APTA, 2011] โข Average revenue sources for public bus transit by operating expense [Schmidt, 2001]: โข 30-40% fare box revenue โข 10% by federal subsidies โข 50-60% by local government subsidies
- 7. Upstate Operating Assistance in NYS [STOA, 1976] โข Upstate tax fund for operating assistance receives revenues from the Petroleum Business Tax, not tied to inflation โข Issues for CNYRTA: โข STOA funding accounts for 46% of CNYRTA 2015 operating expenses โข Unreliable and inadequate: [STOA County Match] โข Each member county must contribute a local matching sum to its RTA โข Issues for CNYRTA: โข The county sum has been โhold-harmlessโ since the early 2000s [Mortgage Recording Tax] โข A tax levied at .25 cents per every $100 in mortgage principal, collected by county mortgage recording officer and disbursed monthly to RTAs โข Issues for CNYRTA: โข 4.6% increase in housing prices since 2009, but very low sales rate compared to other upstate RTA counties
- 8. Proposal 1: Higher Bus Fares for the NYS Fair Problem: โข CNYRTA accrues $400,000 in losses each year for its service from 15 parking locations throughout the four counties to the state fair Justification: โข Cost to fair-goers is minimal: โข One-way bus fare is $2/adult and $1/child and free parking โข State fair service generates about 144,000 riders annually New Revenues: โข Raising $4.50/adult and $1.50/child allows a small $32,000 surplus
- 9. Proposal 2: Remove Unnecessary Local Business Tax Exemptions (A) Remove MRT Tax Exemption for IDAs Problem: (1) Undue burden on residents; (2) Inconsistent and insufficient revenues Justification: Lack of democratic oversight on IDAsโ design of incentive packages for new firms means undeserving businesses might often receive them New Revenues: Estimates range from $1 to $3 million [Common Council Member, 2015] (B) A Destiny USA Special Line PILOT Problem: CNYRTAโs rider fares comprise 24% & special line transit comprise 40% of operating revenues Justification: Destiny USA mallโs property tax agreement New Revenues: $1.5 million special line PILOT annually to CENTRO
- 10. Proposal 3: Raise the Onondaga County Gas Tax Problem: Apart from the MRT, CNYRTAโ lacks an adequate dedicated revenue stream from non-users Justification: โข The other three upstate RTAs, with a minimum of 11% lower dependence on state funding than CNYRTA, have dedicated sales tax in select counties. โข Onondaga County has a 4% sales tax, which is lower than several counties with 4.25-4.75% caps New Revenue: If Onondaga County raised its sales tax to 4.75%, based on 2015 revenues, the tax would generate an additional $1.9 million in revenue
Editor's Notes
- problems federal capital funding to operating via preventative maintenance service cuts low and unreliable MRT revenues uncontrollable rise in healthcare clams that it cannot foresee/control inability to raise local fares ucontrollable rise in operating costs monopsony of labor from transport union never issued debt(?)
- Service area spans four counties Smallest of the four upstate transit authorities established in the early 1970s, which also include: -RGRTA, NFTA, CDTA Smallest in terms of RVM (revenueโd vehicle miles*) subsidiaries, ridership, bus fleet, staff. *http://www.ntdprogram.gov/ntdprogram/Glossaries/pdf/Glossary2013.pdf
- Falling Revenues: -CNYRTA cannot rely on sporadic emergency state assistance. -CNYRTAโs current financial predicament is largely a result of rising expenses and revenues over which it has no control. More specifically, revenues over which it has no control. -A local solution will reduce CNYRTAโs reliance on three sources of state-controlled funding, which account for 60% of its revenues.
- the CNYRTA case: *in aggregate 3 main sources of income?rose so little poorest median household income cnyrta has highest stoa ratio and highest fares? highest poverty rate? lowest car ownership? These three revenue streams rose, in aggregate, an average of .52% since 2009, which has been insufficient for CNYRTA to cover its rising operating expenses.
- -1964, nationwide, public transit as an industryโs farebox revenues became insufficient to cover costs, due to rising car ownership. (Gomez-Ibanez, 1985) Transport operating costs have risen faster than inflation since the 1980s [Sciara, 2007] -Federal govt began providing public transit companies operating assistance, under Federal transportation Act, in 1974 (Sciara, 2007) Rates of federal and NYS taxes supplying dedicated mass transit operating assistance are not tied to inflation [FTA, Sect. 5309 & NYSDOT] -Federal gas tax=.18cents/gallon since 1986 & PBT (for upstate operating assistance) not tied to inflation Flat or decreased funding from local or state sources affects 71% and 83% of US public transit agencies, respectively [APTA, 2011] -These factors impose exceptional financial strain on transit agencies, since we all know Inflation limits buying power of aid disbursements whose nominal values do not change Average revenue sources for public bus transit by operating expense, under TEA-21 [Schmidt, 2001]: 30-40% fare box revenue 10% by federal subsidies 50-60% by local government subsidies
- STOA= Statewide Mass transportation operating assistance, 1976 -Funded by tax revenues earmarked for the Mass Transit Operating Account, divided into upstate & downstate funds. Upstate tax fund for operating assistance receives revenues from the Petroleum Business Tax, not tied to inflation Issues for CNYRTA: STOA funding accounts for 46% of CNYRTA 2015 operating expenses Unreliable: - formula reductions (2009, 2010) and dedicated taxes eliminated (2011) Inadequate: -emergency infusions from the state in 2011 and 2015 were necessary to supplement baseline STOA allocations, due to overreliance on it STOA County Match Each member county must contribute a local matching sum to its RTA Issue for CNYRTA: The county sum has been โhold-harmlessโ since the early 2000s [MRT] Mortgage Recording Tax A tax levied at .25 cents per every $100 in mortgage principal, -collected by county mortgage recording officer and disbursed monthly to RTAs Issues for CNYRTA: 4.6% increase in housing prices since 2009, but very low sales rate (and therefore, tax base) compared to other upstate RTA counties. [Brookings] faster than inflation how much federal/state pays v farebox 1970s? s-m size cities- carlessโ need bus poor disproportionately affected real time arrivals (utica- 7%) ridership in NYS is up! In 1964, fare revenues proved insufficient to cover operating costs for the mass transit industry as a whole, due to increased car ownership. Through the 1960s and 1970s, local governments assumed mass transit services that received substantial federal and state subsidies. However, the rates of federal and New York State taxes that supplied revenues earmarked for mass transit operating assistance were not tied to inflation. Furthermore, inflation further limited the buying power of transit grants whose present values did not change, especially as transportation costs have risen faster than inflation. Gomez-Ibanez, Jose A. โThe Federal Role in Urban Transportation.โ In American Domestic Priorities: An Economic Appraisal, edited by J. Quigley and D. Rubinfeld, 183-223. Berkeley: University of California Press, 1985. Fisher, Ronald C. State and Local Public Finance. Glenview, IL: Scott, Foresman, 1988. Print. Alabama, Hawaii, Louisiana, Nevada, and Utah do not provide state funding for mass public transit. Please see: http://www.apta.com/resources/reportsandpublications/Documents/survey_state_funding_FY_08.pdf Subsequent changes to the Federal Public Transportation Act Sciara, Gian-Claudia and Wachs, Martin. โMetropolitan Transportation Funding,โ Public Works Management and Policy, 378-194. 2007.
- Remove MRT Tax Exemption for IDAs Problem: (1) Undue burden on residents; (2) Inconsistent and insufficient revenues -2009 MRT revs: 5.8 million; 2014 MRT revs: 5.1 million Justification: Lack of democratic oversight on IDAsโ design of incentive packages for new firms means undeserving businesses might often receive them New Revenues: Estimates range from $1 to $3 million [Common Council Member, 2015] A Destiny USA Special Line PILOT Problem: CNYRTAโs rider fares comprise 24% & special line transit comprise 40% of operating revenues -RGRTA passenger fares cover 14.1% and special transit contracts cover 19% of operating revenues -Special line transit contract are route subsidy agreements with community businesses, nonprofits, etc that benefit from CNYRTAโs fixed line services. -It already raised its fares the most (200% basic single ride) since 2009 of all the upstate thruway authorities. Special line transit contracts cover 40% of operating revenues. Justification: Destiny USAโs property tax agreement -Destiny pays no property taxes, but pays a PILOT. Unique pilot: payment of construction debt in lieu of a PILOT. Since he pays some form of PILOT, collected $0 million in property tax credits since 2010, which he puts toward mall debt. For example, mall debt payment was $15.7 in 2012. Costs city $19.4 million per year in foregone property taxes. New Revenues: $1.5 million special line PILOT annually to CENTRO -Unique PILOT agreement aside, With its dependence on late-night and early morning bus transit for many of its customers and employees, the mall should contribute to CENTRO aymentsHe has collected $10 million in property tax credits since 2007, which he puts toward mall debt payments. (These amounted to $15.7 million in 2012). The arrangement of using PILOT