How We Pay for Rail Expansion Matters
I'm looking forward to the Milwaukie Light Rail project opening around 2015. It's an important expansion of our regional LRT network and will improve connectivity across the river dramatically for transit, bikes and pedestrians at the south end of the Central City.
But I'm disappointed by one element of the funding strategy. TriMet will issue bonds for about $39M as part of the $1.4B project - just over 2% of the overall budget.
The rub is that the only way TriMet has to pay off these bonds over the next twenty years is to use payroll tax and farebox revenue to do so - money that would otherwise be available for operations.
TriMet says that debt service on these bonds will be about $3.2 million each year. Currently, it costs about $100 to operate a bus for an hour. That means that we're giving up the opportunity for 32,000 bus service hours (or a smaller number of more expensive light rail operating hours) in the first year. Over the 20 years the bonds will be paid off, allowing for some inflation in operating costs, we're talking about half a million service hours.
Surely as a region we're smarter than this? We should be able to find a way to complete our capital budget without robbing the precious funds that are available for operations.
Well, we could start by adopting a policy that says operating dollars are scarce and we don't divert them to capital uses!
I would love for the Feds to help with operations, but unless/until they do, we need to protect the operating dollars.
Chris Smith Says:
I'm not aware of any taxing authority (for bonds or anything else) that TriMet has that they are not already using.
Unfortunately this practice (bonding operating dollars) has been used on a number of LRT projects. It has generally been pretty opaque. I hope highlighting some public discussion on this will help TriMet look in other places for future projects.
I don't know if there is any hope of changing the funding plan for this project. I'd like to think so, but we're pretty far down the line on this one.