State Report Slams Cap Metro

As if Capital Metro didn't already have enough egg on its face, last week marked the release of the state Sunset Advisory Commission staff report on the agency – and the contents were not flattering. The opening paragraph captures both the report's grim conclusions and its scathing tone: "Capital Metro faces a crisis that could threaten its ability to maintain current services unless the Board takes immediate action to shore up the Authority's finances. In anticipation of building passenger rail, Capital Metro accumulated more than $200 million in reserve funds, but did not responsibly manage these funds. The Board took on financial liabilities without setting aside money to pay for its commitments, and did not adequately consider the long-term financial consequences of its decisions. At the same time, the Board did little to rein in the high costs of its basic services, and greatly underestimated the costs of developing commuter rail. Now, with little money left in reserve and sales tax revenues down, Capital Metro's overspending cannot be sustained."

The report spells out the details under four "issues": 1) irresponsible financial management; 2) high, unsustainable cost for in-house transit services (i.e., those managed by subcontractor StarTran); 3) insufficient safety conditions and safety plans for the commuter rail system; and 4) inadequate public engagement of stakeholders, consequently "eroding public trust."

None of these criticisms is brand new, as they've been the subject of public discussion in various contexts over several years, but the report adds a few sharp new details as well as some strong recommendations. In addition to the much-reported soaring costs of commuter rail (which in combination with the recession has acted to drive down Cap Metro's reserve fund to a dangerously low level), the report describes both administrative pensions and paratransit services as structurally too expensive. It reports that the Cap Metro board, acting in executive session, recently vested retiring CEO Fred Gilliam with the equivalent of a 35-year pension – after just eight years of employment.

The report describes both the StarTran bus services and the University of Texas' shuttle bus service (contracted to Cap Metro) as financially imprudent – and recommends subcontracting the former and raising UT's prices on the latter. It reports that 13 of 42 commuter rail bridges need major repair or replacement and describes the agency's public outreach as inadequate or worse; in particular, its "working relationship with the disability community is in serious disarray."

The report is only the first step in the Sun­set Commission process, nonstandard for Cap Metro in that the state authorized but does not fund the agency and "sunsetting" (that is, abolition of the agency) is not an option. But in 2009 Austin state Sen. Kirk Watson sponsored legislation to authorize the review, and at a press conference last week he and Cap Metro board Chair Mike Martinez welcomed the report – although in a subsequent roundtable with local reporters, Martinez and interim agency President/CEO Doug Allen suggested that some of the report's conclusions are either out of date or based on premises that the agency doesn't necessarily share. (For example, Allen said some of the bridge repair has already been done, and the board has reorganized for better public engagement.)

Cap Metro will issue a formal response by May 6, and the legislative Sunset Advisory Commission will hold a public hearing on the report in late May, followed by possible recommendations for legislation next year. In a statement posted on the agency's website, Allen echoed his Friday comments to reporters: "This report has made many good recommendations on how to strengthen and improve Capital Metro. We will use the Sun­set review as an opportunity to continue positive change in our agency."