Kansas City has not been fully funding the transit system for several years. Instead, the city is systematically diverting funds previously used for transit to non-transit projects, such as traffic signals.
The transit system is funded by two different sales taxes. The 1/2-cent sales tax feeds the Public Mass Transportation Fund (PMTF). This fund is where the problem exists. The 3/8-cent sales tax is a transit-dedicated fund so the transit system gets those monies.
Since the 1/2-cent sales tax is for TRANSPORTATION, not TRANSIT, it is legal to use the money on things like traffic engineering or road signs. However, this fund has been the foundation of transit funding in the city since it was originally passed. When voters approved the 3/8-cent sales tax it was supposed to supplement the 1/2-cent tax to provide greater transit in the City. Soon after the passage of the new tax the City started diverting more and more of this money to other projects. When the supplemental tax was passed the KCATA was receiving 87% of the money from the PMTF. By the time the recession hit KCATA was only getting 80% of the money and the city’s portion had risen from under 5% to over 9%.
Then the recession hit in late 2008. What happened in the next budget? The transit funding was severely cut to 69% of the receipts while the city’s portion rose to 15%. Of course people expected to see reductions in service, after all this was a huge economic downturn. Therefore, people just bit the bullet and accepted the transit situation without a whimper. The City continues to siphon off more money for non-transit uses. It may be legal but it sure isn’t right!
When the 2009/2010 Budget was announced the KCATA had to scramble to adjust to the severe last minute cut. It reduced service nearly 10% and raised fares 20%. The sales tax receipts are more today than they were in 2003 yet the KCATA is receiving $5 million less from this fund.
The KCATA cannot maintain the current level of reduced service with the money it is receiving from the City. So how is KCATA funding the transit system at this level? By exhausting its reserve account. When the 3/8-cent sales tax passed the KCATA started a reserve account. They could see the trend of the City’s budgeting for the PMTF even before the huge shock with the 2009/2010 Budget. This reserve had been allowed to grow. With the reduced service and higher fares, KCATA calculates it can survive at the current level of service by using up the reserve until the end of 2013 when the money will be depleted. At that point KCATA might have to cut service another 35% unless things change.
This is a really ineffective way to fund a transit system. Transit funding might have to fluctuate with sales tax receipts, TIF obligations and city administrative fees, but it should not be subjected to city bureaucrats or city officials utilizing the money for non-transit related projects.
No business can manage effectively with wild fluctuations in revenue, especially when those fluctuations are not caused by the economy. If we want the KCATA to expand and improve transit we have to make sure they receive the funds they were intended them to have.
Transit Action Network wants to regain some sanity in transit funding. By putting a legal cap on what the city can use for non-transit projects, the PMTF can once again be the foundation for transit funding and the KCATA can regain the necessary confidence about it’s future funding to once again begin to plan for transit expansion. That security would allow KCATA to implement the recommendations that come out of the Comprehensive Service Analysis currently underway. KCATA could also feel comfortable maintaining a reasonable reserve amount.
Transit Action Network is already meeting with city council members. We have partnered with the Metropolitan Organization for Racial and Economic Equity (MORE2) to help bring about this change. We have started making appointments with neighborhood leaders in the Green Impact Zone. We hope to mobilize the residents of Kansas City to stand up for the transit system.
Let your council members and the mayor know you are concerned about this situation and encourage them to create a legal cap to restrict funding non-transit projects in the PMTF. Our solution is stated below in a document we are delivering to the council and the mayor. Or just ask them to implement the legal cap on non-transit projects proposed by the Transit Action Network (TAN).
We will be posting updates to this effort on this blog as well as on our twitter account http://twitter.com/transactionkc.
Document for City Council Members and the Mayor
TRANSIT ACTION NETWORK
Issue: 2011/2012 Budget for the 1/2 cent Public Mass Transportation Fund
Our Position: The City has diverted an increasing and excessive amount of the 1/2-cent Public Mass Transportation Fund away from transit to non-transit projects. We believe the non-transit portion of this fund should be legally capped at 4 percent of Total Revenues (Sales Tax Receipts less TIF). This cap will assure that the separate 3/8-cent Transit Sales Tax supplements the 1/2-cent Sales Tax to improve and expand transit for Kansas City’s citizens.
|Kansas City 1/2 cent Public Mass Transportation Fund|
% of receipts
- Drastic cuts to transit funding are crippling the transit system
In 2003/2004 the 1/2-cent tax generated $29 million, and $25 million (86.7%) was used for transit. The city used $1.3 million (4.6%) of revenue for non-transit purposes.
The City began diverting large amounts from this fund to non-transit projects after passage of the 3/8-cent transit sales tax in 2003. This trend began well before the current “revenue crunch” and had already reached 9.4% of receipts by the 2008/2009 Budget.
Receipts estimates for 2010/2011 are $29.6 million but transit will receive only $19.9 million or 67% (significantly less than in 2003/2004), while the city will increase its take to $5.4 million or 18.3%.
People expect to see cuts to transit services during severe recessions. Unfortunately, this expectation provided the cover necessary to nearly double the percentage used for non-transit projects to 18.3% in the 2010/2011 Budget as compared to 9.4% in the 2008/2009 budget by cutting transit funding.
When voters approved an additional 3/8-cent transit sales tax in 2003, and renewed it in 2008, they expected it to supplement the 1/2-cent tax, not replace it. Whereas the 3/8-cent transit sales tax was to increase transit, transit service has actually been shrinking and fares have been increased 20% because of the diversion of the 1/2 cent transportation funds. The City is not keeping faith with the electorate.
This budgetary trend jeopardizes the City’s ability to increase sales taxes for additional transit, such as a streetcar, or to receive emergency funding for transit services from state and/or federal sources.
The trend of using less of the sales tax receipts for transit and more for non-transit appears to be systematic and intentional and we believe this needs to be reversed.
In a recent survey by ETC Institute, 65% of local transit trips are for job related activities such as commuting to work or seeking employment.
A recent report from Transit Equity Network (TEN), More Transit=More Jobs, shows that there is more job creation with increased levels of transit funding than there is with funding roads.
Kansas City has recently adopted strong policies in support of sustainability and has undertaken a number of green initiatives. Transit is an integral part of making Kansas City sustainable and green. Diverting 1/2-cent sales tax revenues away from transit is not consistent with the Council’s adopted policies.
Transit Action Network
|Read David Martin’s Transit Article in the Pitch 9/15/10
KC’s lousy bus service stems in part from City Hall’s lousy budgeting