BART’s financial troubles will continue unless agency dramatically changes course

18 Aug

Luckily, the BART strike has been averted and commuters can relax a bit, but unfortunately, BART’s financial crisis is unlikely to end this year. Probably as soon as next year, they’ll have to make more service cuts or raise fares again to balance the agency’s budget.

The BART board and BART spokespeople have done a great job scapegoating the unions for the financial woes of the agency. I won’t dispute the reality that government employee unions across the state have been renegotiating contracts and giving back, in the form of salaries or benefits. And I won’t dispute the likelihood that BART did need the unions to renegotiate in order to save some money.

But I’d like to examine the figure BART has been using throughout contract negotiations – the “need” to save $100 million in labor costs over four years. BART has consistently made it seem that the only place for these savings were to be found were via labor, but that is not the case.

Let’s take a look at the 2009 BART budget. It’s true that labor costs are a huge portion of this budget, at $388 million. But there are other substantial numbers that could be or could have been reduced if the BART board had made better decisions:

  • $70 million in debt service
  • $17.5 million to SFO reserves
  • $107 million for system expansion

(I can’t find detailed breakdowns of these numbers so I’m going to extrapolate based on what I know. If anyone can point me to BART’s more detailed budget, I’ll write a follow up post with more information.)

The debt service and funding to the SFO reserves are costs that could have been avoided if BART had make better decisions in the past. Debt service comes from taking out loans for capital expenditures, much of which has been system expansion. The SFO funding is similar – BART predicted extremely high ridership on the SFO extension and it didn’t pan out. So now the core BART system is paying for these poor past decisions.

The $107 million for system expansion is different because a lot of that money comes from outside grants so it’s not being drawn from core system funding. However, BART does contribute some of this funding, as is stated in the budget, “The capital budget is funding primarily through capital grants; however District-allocated funds are also needed for a portion of the required local match and for expenditures which do not qualify for grants.”

So when BART says that they need to find $100 million in labor savings over the next four years and that service cuts and fare increases can’t be avoided, what they really mean is that they value system expansion over core service and labor. That means they’re choosing the Oakland Airport Connector and the extension to San Jose over running trains at least every 15 minutes at all hours.

Since there’s no sign that the BART board is going to change course and halt their wasteful expansions that endanger the core system, BART riders and BART unions should expect to be targeted during budgeting year after year. The $150 million dollar loan the BART board plans to take out to fund the Oakland Airport Connector will alone suck significant funds from the core system. Debt will grow and as ridership on the extensions does not pan out, the core system will continue to crumble.

The long term solution cannot just be about labor negotiations but must also include a change of course and prioritization. And for that, it might be time to get some new BART directors in office who, like Tom Radulovich, understand the need to protect the core system over expensive and wasteful extensions. Until the next election though, the best thing we can do is to stop the Oakland Airport Connector, which you can help do by signing the petition opposing the project and demanding a better connector.

20 Responses to “BART’s financial troubles will continue unless agency dramatically changes course”

  1. Robert August 18, 2009 at 5:00 pm #

    BART labor makes up about 60% of the operating costs of the system ($388M/$672M) and the unions were only asked to give 40% of the deficit reduction ($100M/$249M). This hardly seems draconian or an unreasonable request.

    • Becks August 18, 2009 at 5:07 pm #

      Robert – I never said it was draconian or unfair (it’s really hard for me to say since I was not part of the negotiations). I was simply explaining that BART does have other options besides finding savings from labor and by cutting service and raising fares. Also, that’s just the operations budget. If you look at the entire budget, labor makes up 28% of the budget.

  2. david vartanoff August 18, 2009 at 5:47 pm #

    indeed BAAT needs to rethink much of how it operates in both senses. Both OAC and the San Jose fiasco should be scrapped/stopped. The wildly improbable ## for these projects will be like the ## for the SFO mistake.

    On a more basic level, the entire service scheme needs a rethink. Running the full length evening trains to PBP when half the riders are off by Macarthur is wasteful of both electricity and hours of use on the empty cars. Small things like turning off the down escalator at Ashby after rush hour can again both save energy and extend the lifetime of the unit. This may seem petty, but a systemwide review of such savings should be done.

  3. Kevin Dwyer August 18, 2009 at 10:12 pm #

    I ride to Embarcadero daily. It seems that the escalator near the cable car/Hyatt entrance is out of order at least twice a month….that’s the one that goes to the street. The one that transports passengers from the turnsyles to the trains is out of order often as well.

    Does BART hire outside technicians to repair these? or internal workers? These two escalators need to be replaced apparently, but instead BART tinkers with them (repairs them with bubble gun and band aids?) over and over and over. The cost of labor and parts for these two escalators alone must me incredulous. What of other escalators system wide?

    It is sad to watch the elderly and disabled confront this. And the recordings over the loudspeakers about out-of-order elevators is depressing as well.

    Just curious. I’ve always weighed enviable employee salaries against the rotting infrastructure but, I don’t have an insider’s view.

  4. David August 19, 2009 at 9:09 am #

    The difference is that presumably system expansion, capital spending etc would improve service (I know that’s a big assumption with BART, but that is supposed to be the goal, and yes, I think the OAC is a waste). However, with labor, we’re just pouring more money into the same low-quality workers (ever see a station agent lift a finger?), and kicking into a gigantic, unsustainable pension scheme is not going to improve service one iota. You can do a quick search on BART comp and find that $60K is the threshold that puts you into the BOTTOM quintile of BART workers. $60K/year is close to the MEDIAN (50th percentile) HOUSEHOLD income (many, if not the majority of households have 2 earners) in most communities of the Bay Area. These guys are overpaid, period. If you have a cost that’s hugely out of line, that’s where you should look to cut first. For BART, that’s labor.

    • V Smoothe August 19, 2009 at 10:12 am #

      David, can you give us a source to support your assertions?

      • Robert August 20, 2009 at 8:34 am #

        try here

        http://bartrage.com/node/2110

        • V Smoothe August 20, 2009 at 8:53 am #

          Hmm. The numbers there don’t gel with David’s claims at all.

        • Robert August 20, 2009 at 3:44 pm #

          V, I don’t know where David got his numbers, and at first glance the CCTimes list doesn’t quite match up, however…

          There are about 768 BART employees out of 3200 mading 60,000 or less, so about 24%. Or, the bottom quartile of BART pay is $60K, instead of David’s bottom quintile. I don’t think this difference makes a fundamental difference in his case.

          Also, that database doesn’t identify part time employees, and I would think that full time pay is a better comparison than part time pay. 185 BART employees made $20K or less, and these would be just some of the part time or part year employees. If we pull just this many part timers out of the comparison, then the numbers become 583 making 20K to 60K, out of 3015 total making more than 20K, or 19%, right in line with David’s quintile estimate.

          Bottom line, regardless of whether you like subtracting the part timers, 75 to 80% of BART employees make more than the median Bay Area income. With generous benefits.

  5. david vartanoff August 19, 2009 at 9:47 pm #

    Actually system expansion is counterproductive as long as BART insists on building into the sorawlburbs. A serious look at ridership ## shows that riders east f the hills are massively subsidised by riders in the urban core. As an example, the only CoCo County station in the top ten (ridership) is ECDN huge parking nd buses from all over. BART needs to realign its service pattern to encourage more uban users as they cost less to carry.

    • Robert August 20, 2009 at 8:35 am #

      If you are really concerned about subsidies, why don’t we just get rid of all subsidies for BART and other transit?

      • Becks August 20, 2009 at 8:57 am #

        Would you then also argue for ending subsidies to highways, which are much greater than subsidies to transit?

        • Robert August 20, 2009 at 3:49 pm #

          I really wasn’t arguing that we shouldn’t subsidize, but pointing out only that we already subsidize all riders, and it is a slippery slope about where you draw the line.

          But, If we eliminated capital and operating subsidies for BART and other transit, I would readily pay capital and operating costs associated with my car… oh, that’s right, I already do.

        • Becks August 20, 2009 at 3:56 pm #

          Riders going from Oakland to Oakland (which a surprising amount of people do) actually subsidize the rest of the system. I encourage you to read an excellent post on Future Oakland about this.

        • Robert August 21, 2009 at 3:20 pm #

          Although that link did not give any actual data, I will give you that short distance riders pay proportionately less than long distance riders. But both short and long distance are still subsidized by funding other than fares.

          Also, it is very reasonable that short distance riders do pay more than long distance, because BART’s costs included fixed costs for boarding (think cost of the station) and a distance variable element (think power to run the train). So the unit cost per distance travelled starts off high and then declines the further you travel. In the absence of hard data, it is not possible to figure out if the subsidy is proportionate to actual costs.

  6. david vartanoff August 20, 2009 at 9:08 am #

    short answer, I am a socialist. But, if you seriously believe in free markets how do you account all of the “goodies” that are an inherent part of organised civilisation? What share should you pay for the cleaning of the air by ending lead in gasoline? It is subsidising your life expectancy. Pay up! Silly isn’t it? So since subsidies of various sorts are a necessary aspect, the smarter set of questions revolve around what to promote, what to discourage. I believe those decisions are better made on the basis of one person one vote rather than one share one vote.
    On the more quotidian issue of BART policies, the opportunity costs for gaining new riders increase astronomically when the tracks go to ultra low density autocentric suburbs.

  7. david vartanoff August 20, 2009 at 9:01 pm #

    @ Robert, no, actually, you don’t. The general waste of land and thus taxes caused by acres of asphalt for freeways, parking, low rise car dealerships, repair shops, gas stations, is a huge subsidy to tyhe auto usage sector. The ‘user fee’ of gasoline tax does not pay for chp, traffic squads of local police, traffic lights or any of the public health deficits caused by auto genersated toxics, refinery neighborhood pollution, ground water contamination from gas stations rtc. Not to mrntion the billions pissed away on bailing out dinosaur manufacturing entities. So, I would describe our society as having very few areas of undistorted economic endeavor. Evwn the illegal drug trade has subsidy in it forotherwise useless narks, ADAs and the huge prison money sink.

    • Robert August 21, 2009 at 3:48 pm #

      I was careful about what I said, so yes, I do pay for capital and operating costs. Environmental and lost opportunity costs were not included. It is reasonable that environmental impacts such as pollution be accounted for, but then you will have to account also for the environmental costs of hydroelectric dams that partially provide energy for BART, the costs associated in transmitting that power, along with the pollution associated with the diesel engines of the buses, etc.

      Lost opportunity costs are a far different matter. Although you may not like cars, they were a powerful economic engine for many years in this country, which accounts for the parking lots, dealerships, etc. In case you haven’t noticed, Oakland does not have a shortage of land, including privately owned parking lots. So it is not clear what the lost opportunity really is. The fact that the parking lots have not been developed and converted to other uses suggests that they currently do have higher value as parking lots than for other uses. The valuation of this ‘lost’ opportunity is subject to a lot of philosophical shading, and extremely difficult to accurately value.

      And quite honestly, dealerships and parking lots aside, if there were no cars we would still have almost the same local street grid, and a similar, although perhaps somewhat smaller, highway network. The local street grid came into existence long before there were automobiles, with pretty much the same street widths. And this street grid would still be needed to carry on commerce and living even if the primary transportation mode were something other than cars.

      I think you are right that there are a lot of subsidies, hidden and visible, in our society. But I don’t know that elimination of all of them for transportation necessarily works out in transit’s favor.

  8. V Smoothe August 21, 2009 at 8:12 am #

    Robert –

    You and David are of course forgetting that the area median income includes the “incomes” of a large number of people who are un- and under-employed. Since everyone who works for BART has a job, they’re off to a headstart already. It’s a misguided comparison you’re trying to draw.

    • Robert August 21, 2009 at 3:25 pm #

      V, I was just pointing out that the comparison made by David is reasonably based on the data available on salaries. Whether that comparison is appropriate, or whether BART employees are overpaid or not (or over-employed?) is not something I intend on getting into here.

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