Thursday, January 24, 2013

Mass Transit - At Least Respect the Taxpayers Enough To Show Us the Numbers

Yesterday's Indy Star had a letter to the editor from a George Hodgson of Noblesville.  I'd provide a link to it, but I cannot find any trace of it on the IndyStar website.  Even a Google search using the text of the letter was not helpful in finding it.

The headline was "Voters deserve honest on transit's real costs".  The author complimented Andrea Neal for her recent editorial, suggested folks read Wendell Cox's Urban Transport Fact Book, Breach of Faith: Light Rail and Smart Growth in Charlotte.  His last paragraph struck a cord with me:
As for Indy Connect, I have yet to read anything but the most rudimentary estimates of cost to the taxpayers and no discussion about ongoing operational costs.  Before we go to the ballot on this high-cost, high-risk question, taxpayers should be provided with this information as well as ridership estimates and break-eaven opertational costs.  What will happen if there are shortfalls, as Neal suggests?  Raise the county income tax again?  Higher sales tax? Or higher property tax?  Local politicians and the promoters owe taxpayers an honest discussion.

I have been trying for over 4 years to get more than the cursory numbers regarding the series of mass transit plans.  My latest effort was Saturday, when McANA's guest speaker was Lori Miser, Director of  DPW, who promoted the current mass transit plan.  We shall see if any real financial information is ever given to the public.

Here is what limited information I've been able to find. has so little financial information, it should be a crime.  The entire funding page text fits in one screen, and mentions the 0.3% income tax, the $1.35 billion 10-year buildout, and $1.38 million per year operating costs after phase I is complete.

IBJ reporter, Chris O'Malley ferreted out the most detail.  In his December 13, 2011 article (yes over one year ago) he had this breakdown of revenue that he attributed to the Central Indiana Task Force:
Capital revenue (in millions)
Long-term bonds                             $481.8
Federal New Starts                          $294.6
Operating revenue contribution       $179.4
Federal Grants to IMPO                   $159.6
Federal urban funds (1)                    $135.4
Tax-increment revenue (2)               $  42.4
TOTAL                                                 $1.3 billion
Annual operating revenue in 2021 (in millions)
Transit tax (0.3%) on income           $89.3
Fare receipts                                      $28.8
Marion County property tax (3)        $21.0
State transit funding (3)                     $12.6
TOTAL                                                   $151.7
(1) includes money already allocated to IndyGo bus system
(2) generated from tax increment financing revenue at stations
(3) largely what currently is allocated to IndyGo
So, they ARE intending, and in fact relying, upon TIF districts sucking up all of the economic development benefits that might be spurred by the rail line.  It is interesting that the annual operating costs are significantly higher in this estimate, than the $135 million per year being tossed around in other articles and sources.

O'Malley also notes that about half of all the cost will be due to the lone rail line proposed for phase I:
— Operate a 22-mile rail line between Union Station and Noblesville atop the Nickel Plate rail corridor by 2021. This is the most expensive element in the $1.3 billion plan, at $625 million.

In an article just one month earlier, O'Malley dissects the fare box contribution to operating expenses.
“We anticipate that we’ll receive fare box revenue equal to about 25 percent of operating costs,” said Ehren Bingaman, executive director of the Central Indiana Regional Transportation Authority.

That would be an improvement over what Indianapolis’ bus line, IndyGo, received from fares last year—amounting to 17 percent of its $57.4 million pot of operating money. Most of that $57.4 million came from local, state and federal tax dollars. Capital projects are funded separately, mostly from federal grants.

In theory, the more money raised from the fare box, the less public subsidy is needed. With an estimated cost to build of $2.5 billion and annual operating budget estimated at $135 million, the issue is not insignificant.
If you grab your calculator, you'll see that the estimate from the Central Indiana Task Force was for fares to support 19% of the annual operating costs.

And here are some fun facts. 

>>Looking back through O'Malley's various reports, we find the average taxpayer contribution to be consistently $180 per year, even though the plan is scaled back repeatedly over time.

February 10, 2010 - $6.7 billion plan - costs $180 per taxpayer per year
November 8, 2010 - $2.4 billion, 25-year plan - costs $180 per taxpayer per year and half the cost would come from federal grants
November 19, 2011 - $1.3 billion, 10-year plan - costs $180 per taxpayer per year

>>Currently before the Legislature is HB1011, the mass transit bill.  The Legislative Services Agency does an analysis of the state and local government financial impact of each bill.  They find some interesting things about HB1011.
In 2011, 16% of IndyGo's operating budget came from fares
In the next few years, a 0.3% increase in income taxes for Marion and Hamilton County residents would generate about $85-90 million
>>The bill itself (page 47 of the pdf) anticipates and allows a TIF district to be created 1/2 mile on either side of any rail line made a part of the mass transit system - which amounts to 15-16 square miles in Marion County alone for the single line planned for phase I - with the revenues split between the transit authority and the City of Indianapolis.  Unfortunately, LSA did not analyse the TIF aspect of this bill.

>>On page 38 of the pdf of HB1011, you'll note that even though the newspapers are reporting a referendum in 2014, the bill itself authorizes a special election on November 5, 2013.

Any taxpayer who wants to be informed about the costs of the mass transit proposal has to do a hell of a lot of digging on their own and then decide if the information is out of date.  The mass transit proponents have an ethical duty to have the most current, most accurate financial breakdown readily available on their website.  I'd just advise that the public not hold its breath waiting.


Anonymous said...

Pat, two points. One, they won't ever reveal the true dollar cost because of taxpayer sticker shock. Two, considering that the total bond debt for Marion County is about 1 billion dollars will anyone consider the constitutional debt limit of 2% of assessed valuation or just ignore the debt limit when they add billions more of debt?

Had Enough Indy? said...

Excellent points. Someone else recently used the analogy of how you cook a frog - put it in a pan of water and slowly raise the temperature. We're the frogs.

Gary R. Welsh said...

The constitutional debt limit is skirted by creating yet another distinct unit of government that won't count against the debt limit of either Marion or Hamilton.

Anonymous said...

Suppose the Legislature passed a bill, allowing a referendum, and at the same time requiring that referendum to detail both the cost to the taxpayer, and the precise services to be provided?

Had Enough Indy? said...

Gary, I sure would like to understand how the 2% limit is continuously ignored - LEGALLY. What a mess. But you are right, it's not just another muni corp, its a muni corp on steroids that has no accountability that can ignore limits, public sentiment, and fiscal responsibility with abandon.

Had Enough Indy? said...

Anon 10:26 - would that not be wonderful? We "get" the public input, just with a dishonest description of the actual question. They might just as well ask "do you like the color blue?".

Pete Boggs said...

Once again the public is being railroaded and eventually net traffic will be one way out.

Anonymous said...

In short, they are lying and will continue to lie because they know they can get away with it.

Had Enough Indy? said...

Anon 3:22 - I'm not sure they are lying so much as keeping as much information from the public as they can.

Anonymous said...

If they can lie with impunity, and in this county that is de rigeur, there is no reason to tell the truth. What is really galling about the mass transit pr bs is that the feds are funding the pr! Gotta love it, government pimping for the government.

Had Enough Indy? said...

Yes, Anon 7:04,it is unseemly that our tax dollars are used to fool us.

Anonymous said...

So in today's Star we see an article by Aaron Renn touting mass transit as a necessary step to save Indianapolis's urban core. And yet in the same article he also states,"the same auto-oriented product as the suburbs, but with higher taxes, don't expect many takers." Mr. Renn correctly notes that higher taxes are one of the main causes of job losses as well as population losses, adding billions more for mass transit doesn't fix that issue.

Had Enough Indy? said...

I love Renn - but the circle of tax donors enlarges, while the circle of tax recipients stays the same.

All Renn's graphs imply is that you have to gentrify downtown/center township for this to work. Its always just one more thing that we have to pay for. But, this time, poor people have to leave Center Township. This transportation plan does not accomplish that goal, nor should it.

Central IN isn't growing, but is being tapped for tax revenues to try to get young urban professionals to live and work downtown.

Quick - name three young urban professional employers downtown?

Too late. I spell it (sorry Aaron) an intergenerational Ponzi scheme.

I could support this same tax increase for IndyGo alone. I recognize it is subsidizing the fare box, and I'm okay with that. But to put all this money in the hands of unaccountable, regionally distributed 'bosses' does not make sense to me. Nor does the absolute need for TIFing 15-16 square miles of Indy for 25 years to support one line to parts north.

Andrea Neal's point about low density is important in this discussion. Either all of us are in this together, or some of us are being used. I don't see where the southside benefits one molecule, yet we will pay our taxes to the new, unaccountable, regional transportation authority.

Nope - not getting my support for things as currently proposed.

Anonymous said...

It appears that we will be inundated with pleas for mass transit every day until November. In today's Star under conversations is another "why we need mass transit" article authored by the Central Indiana Regional Transportation Authority.
In that article these claims are made; mass transit will provide an economic boost to the region, for every dollar invested in mass transit there will be a four to six dollar return and for every 10 million dollars invested there will be a 30 million dollar economic boost. Of course there aren't any references cited to bolster those claims but they also claim that this particular article is a public information campaign.
But not to worry we are assured that the plan is in place once we approve the funding.

Had Enough Indy? said...

They also claim they have an 'information campaign' going on - I'd say its an old fashioned madison avenue PR campaign, as little to no information is being provided.

The TIF district they intend to create along the rail corridor will suck up any economic development benefits that actually occur - plus any that would have happened anyway. Plus, if that TIF performs as poorly as most of our TIFs (and there is no reason to suspect otherwise) we just might see 15 square miles of current assessed value cannibalized by the TIF and removed from the common good - which pays for public safety and schools and the like.