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Whoever the new CEO turns out to be, she'll have her hands full
By the time you read this, the Capital Metro board of directors may have already decided who will lead that agency into the future – the board has a special called meeting today (Thursday), likely to announce whether it has chosen New York's Deborah Wathen Finn or Orlando's Linda S. Watson as its new CEO and president. (See austinchronicle.com/newsdesk for latest updates.)
Whoever gets the job, she'd better be the type who relishes a challenge. While a bus or train metaphor might be more appropriate, the phrase that comes to mind of late when most Central Texans think of our metro area's transit authority is most likely to be "sinking ship."
The organization's failures and missteps throughout its history could easily fill an article unto itself, but just to summarize the past few years, Capital Metro:
• spent down almost all of its cash reserves, which once stood at a healthy $200 million;
• stopped payment of money owed to the city of Austin;
• spent much more than anticipated in building Austin's first commuter rail line;
• took two years longer than anticipated to complete the line;
• reduced bus and paratransit service while building the line;
• endured a three-day strike by an unhappy union; and
• sent off the retiring CEO who presided over these troubled years with what a state report characterized as a "lavish" compensation package.
Hey, who wouldn't want to step into a situation like that?
Actually, there are positives. Or, at least, potential positives.
For starters, former CEO Fred Gilliam, who presided over all these wrong turns, is gone – he left in October 2009 to take advantage of that retirement package.
Cap Metro's board – reviled by some as simply rubber-stamping staff proposals and lacking the expertise needed to run a transit agency – was reconstituted in January by state legislation requiring some members to have financial and executive experience. Only three members of the old seven-member board carried over to the new eight-member body, including Council Member Chris Riley, who joined the board in July 2009.
The rail line did finally open. Whether much of anybody will ride it still remains to be seen. In its first few weeks of revenue service, few had.
And the agency avoided going broke, narrowly. It took out a $10 million line of credit just in case, but has yet to touch it.
So Watson or Wathen Finn won't necessarily be assuming captaincy of the Titanic. But it won't be an easy assignment.
Above and before all else, that assignment starts with the budget. For the past year, the agency has been walking a financial tightrope and simply can't afford to be careless with the dollars.
In that same state report – a specially commissioned review by the Sunset Advisory Commission, a body normally devoted to auditing state agencies – the money situation was stated bluntly:
"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."
It's possible that a change in direction could occur after the new CEO is named, but the current interim management has been mapping out a strategy to pinch pennies and raise revenue. In a series of (unfortunately poorly attended) budget workshops, staff has been asking the public to rank a variety of unpalatable options in order of preference.
Possible moves for raising additional revenues: increasing the base fare by 25 cents (it's currently $1), increasing the costs of multiride passes (for example, a 24-hour pass is currently $2, and a 31-day pass is $28), eliminating free fares (approximately 20% of riders currently pay nothing, including seniors, people with disabilities, and Medicare cardholders), increasing the MetroAccess (paratransit) fare from anywhere between $1.20 to $2, and increasing fares for UT and ACC students.
How much that last option might actually bring in is uncertain, because it would require renegotiating a contract with both educational institutions, but Cap Metro estimates the other four – if all were enacted – might bring in an additional $2.6 million total, topped by the 25-cent base fare increase at $1.3 million. If the free-fare customers were asked to pony up 25 cents – something board member and Leander Mayor John Cowman strongly advocates – that could pull in another $955,000.
"We're not a social service agency," said Cowman at a board meeting last year, a sentiment he has repeated many times since. "Twenty-five cents will take a senior around the city. ... Everybody should be paying. I don't mean to be cruel or insensitive, but I think it's very important that we empower each other and all pitch in to build Capital Metro."
Those additional dollars aren't small change. Assuming projections of increased sales tax revenue in a rebounding economy come true – 1 cent of every dollar purchase within the Cap Metro service area currently goes to the transit agency; the fiscal year 2010 budget anticipated $134 million from this source, and the fiscal year 2011 budget estimates $140 million – that little bit of extra dough could be just what the CEO ordered.
Staff currently estimates total fiscal year 2011 expenditures at $229.6 million, but revenues at only $228.2 million. Of course, due to the dependency on sales tax, revenue projections are something of a crapshoot, but in the past year, the tone set by Chief Financial Officer Randy Hume seems to be one of estimating on the conservative side.
The measures to cut costs:
• reducing bus service (a 3.5% reduction in service hours has been suggested, for a possible $2 million saved),
• reducing the MetroAccess service area to the minimum allowed by the Americans With Disabilities Act (within three-fourths of a mile of fixed bus routes, a policy already being implemented, but there are still 400 customers outside that area being served; Cap Metro says eliminating those 400 would save another $1.7 million),
• contracting out more service at lower costs (guaranteed to be controversial and likely to cause more clashes with the employees' union), and
• cutting capital spending.
Underlying all of this strategy is the need to build up those depleted reserves. Perhaps the projected $1.4 million budget gap could be closed just by not putting more money into the bank, but that would carry its own risks. At the beginning of fiscal year 2010, the reserves were at a perilous $3.8 million.
Current projections are that the reserves will rise to $14.7 million at the end of fiscal 2010, and the fiscal 2011 draft budget would raise that total slightly to a still-too-low $16 million. If Cap Metro suddenly found itself in an emergency fiscal situation, that amount would cover only 35 days of operations. In its highly critical review, the Sunset Commission recommended that the agency bulk up at minimum to a two-month reserve ($28 million) and preferably to three months' worth.
A Tough Audience
Simultaneously, while trying to balance those numbers up on the high wire, both the new CEO and the board will have to juggle various political demands.
Advocates for people with disabilities are determined to keep MetroAccess service at least at its current levels and argue that it should go back to the even broader area it once served. The chair of Cap Metro's Access Advisory Committee, Diane Bomar-Aleman, and local attorney Pat Bartel, both of whom have visual impairments, have expressed opposition to hiring Watson for the CEO job, saying the stringency of no-show policies at her Orlando transit agency violate the ADA (Watson denies this).
Other disability advocates such as ADAPT will have little patience for capital spending being cut or frozen – as the Chronicle detailed earlier this year (see "Can't Get There From Here," Jan. 22), nearly two-thirds of Cap Metro's 3,000 bus stops do not meet the current accessibility requirements of the ADA, and the $3 million per year promised to address the problem was cut in half in the fiscal 2010 budget.
"I resent having to risk my life to do everyday things," ADAPT activist Jennifer McPhail told the Chronicle back in January. "It's been a problem throughout Cap Metro's existence, and you can kind of live with it and be patient if people are making a real, sincere effort to provide you access, but this isn't a sincere effort."
Cap Metro isn't solely to blame in that latter regard – many of those stops also don't have connecting sidewalks, which is the responsibility of the city of Austin. Then again, perhaps if Cap Metro hadn't been forced to stop payment on the $51 million it owes the city for mobility projects, the city might build more sidewalks. Cap Metro and the city recently hammered out a plan to resume the payments and get the total paid off by the end of the decade, and earlier this week, the city announced that five major sidewalk projects in East Austin were nearing completion and several more would be included in the $85 million November bond proposal.
Labor – and its many supporters in this Democratic city – will be tough to please as well. A three-day strike in November 2008 didn't exactly shut transit down, but it did hobble it. The union now has a contract through June 30, 2011, but still hounds the agency on various issues. In a recent luncheon with selected stakeholders, Watson boasted of implementing a two-tier wage system in Orlando. A similar proposal here helped precipitate the 2008 strike. (Somewhat surprisingly, union President Jay Wyatt told the Chronicle he favors Watson for the job because of her greater experience actually running a transit agency.)
In the audit by the Sunset Commission, the state practically painted a target on the workers' backs, saying the current labor arrangement "is increasingly untenable for Capital Metro in these financial times." That arrangement, for those who haven't followed this saga, is a bizarre setup necessitated by conflicting state and federal labor laws – the former forbids Cap Metro's employees from collective bargaining, while the latter requires they have the right to do so. To get around this conflict, none of Cap Metro's drivers or mechanics are technically employed by the agency – they work for one of three contractors, the best-paying of which, StarTran, is actually a shell corporation created by Cap Metro.
Sunset complained that StarTran, which employs most of those workers, "exists as a perpetual sole-source provider that offers no better performance for its higher costs than Capital Metro's two other contracted transit providers." Scrap the arrangement, Sunset said, and competitively bid out the services for the best deal possible.
That's going to create some painful tensions – board chair and Austin Mayor Pro Tem Mike Martinez launched his political career from the presidency of the Austin firefighters' union. Yet, he told the state legislators on the Sunset Commission, "We view this report not as a recommendation but as marching orders."
Blood on the Tracks
And then there's the battle that could be bloodiest of all: rail.
We presume Chronicle readers didn't think the rail battle was over once the Red Line launched. If anything, it's just begun.
City Council is pushing to get a real light rail system in Austin. But after the difficulties of getting its Red Line up and running, sentiment is strong that Cap Metro would not be the organization to build the city's urban rail. Operate it, maybe. That effort is currently bogged down over logistical questions, however, which got rail booted out of a planned transportation bond election later this year.
Meanwhile, Cap Metro is indeed planning another commuter rail line, this one out to Elgin (the "Green Line"). Before that goes anywhere, Austinites are going to want to see the Red Line work. It's still early, but the Red Line is off to a slow start – in April, its first full month of revenue service, boardings were only 901 per day. Assuming the riders are using the train for its intended purpose – commuting to work, then returning home – then that comes out to only 450 actual people per day on a train that cost more than $100 million to build and will cost $9 million annually to operate. In fairness, there are surely a few one-way trips in there, but it's still not a massive – or even substantial – number.
Even if Cap Metro reaches its stated goal of 1,700-2,000 boardings per day, that's low enough to give rail critics like former Tracor CEO Jim Skaggs, former Texas Monthly Publisher Mike Levy, and former Travis County Commissioner Gerald Daugherty plenty of oppositional ammo. They can't be written off as mere cranks – using the simple campaign slogan of "Rail: Costs Too Much, Does Too Little," rail opponents built a constituency to narrowly defeat a more comprehensive light rail system at the ballot box in 2000.
They'll make the argument – based on the premise that Cap Metro is primarily a social service agency serving the needs of the transit-dependent – that money spent on rail to pick up "choice" riders takes from the needy, with too little result to justify the expense.
"Wasteful spending on ineffective trains, which are the least cost effective of all solutions, devastates transit service for those who need it and have no choice," Skaggs told the Chronicle in an e-mail.
Coming from the other direction will be the Downtown Austin Alliance and other movers and shakers who argue that Cap Metro is a transit agency serving all and must put the "mass" in mass transit by attracting as many customers as possible. It's a constituency that often gets what it wants, and it'll make the powerful counterargument that rail can drive sustainable development patterns in a way that bus service never will.
The Gang's All Here
And all of this occurs in a city where local politics are considered a full-contact sport (notwithstanding the regularly dismal turnout at the ballot box). It's a culture that former CEO Gilliam didn't handle well, operating behind a veil of public information officers and press releases rather than fully engaging the community. When publicized properly, a Capital Metro public hearing can fill a room with some very vocal critics.
The two candidates have already been exposed to how involved locals can be through the hiring process thus far: "Certainly Austin is the poster child for public engagement," said a rather surprised-sounding Wathen Finn at last month's public forum – held after a whirlwind day of meetings with community stakeholders and board members. "I think I'm going to write a story about this process, because I don't think any of the other [transit] agencies have done it quite this way."
Welcome to Austin, Ms. Watson or Ms. Wathen Finn. Have fun.