The Internet is abuzz with the news that Mayor Villaraigosa and his allies on the Metro Board are pushing for the acceleration of three transit projects that are partially funded with the now incoming Measure R funds. LAist breaks down the new plans, outlined in a power point presentation for this Thursday’s Measure R Committee Meeting at Metro Headquarters.
Meanwhile, the Gold Line Foothill Extension Authority is in "Why Not Us" mode, and is demanding that their favorite project, the Gold Line Extenstion to Azusa and beyond, be similarly accelerated.
But I have a different concern than what projects are getting accelerated and what project aren’t: where is the money coming for this? After all, we know that sales tax revenues are coming in lower than expected so it’s not like Metro is overly flush with cash right now.
Based on what is available in the power point, available on pages 28 and 29 for those following the presentation at home, it seems the plan is to borrow against future revenue. The interest created by the debt would be partially offset by the savings Metro will see because of avoiding the increased costs of doing construction in the future. At this point, there are no firm figures available to show us how much debt would be accrued or if the proposed acceleration would seriously damage Metro’s ability to operate in the future; except that the accelerated project list means a $3.5 billion funding gap and a larger than anticipated operating defecit which would result in either fare increases or service cuts. In fact, the debt created by accelerating just the Downtown Connector is over two and a quarter billion dollars over more debt.
Of course, many transit advocates think the fares are too low as it is, and want to see them go up so that the system, as a whole, can run better. However, we have to recognize that it’s not going to be an easy political decision for the board to raise fares in the short and long terms, especially after promising to use Measure R funds to keep fares low.
Bart Reed, executive director of the Transit Coalition, explains, "They haven’t had the political courage to charge the right price for
their service. To operate the kind of system that we need, they should
be charging $2.25 per ride. Right now they are collecting an average
of sixty-nine cents per boarding, and they can’t run the kind of
service they’re talking about here on that amount."
All we have to evaluate these two proposals, accelerated schedule versus "strict" schedule, are these two sets of bullet points on the pros and cons of the acceleration. According to Metro, if we accelerated the schedule here would be the results, besides having these three rail projects done earlier,
- We would have up to $3.5 billion funding gap
- We would incur additional debt and operating costs
- We would save on construction escalation costs
- We would require 2/3 vote of the Board to accelerate Measure R funds
Conversely, here is what shape following the plan as passed by the voters would have for Metro’s fiscal state:
- Projects would be delivered in accordance with Measure R Expenditure Plan
- After operating deficit is resolved there would be no funding shortfall
- We would not save in construction escalation costs
- We would not incur additional debt and operating costs
In other words, let’s not mark down "Downtown Connector Opening Party" on our calendars for 2018 just yet. There’s a lot of big and real fiscal hurdles that Metro needs to jump through to show it can afford the acceleration before Villaraigosa can deal with the politics of trying to get 2/3 of the Board to follow his wishes.