Crisis Management Isn't Working for Transit

Those who follow local government, and those who ride the bus, have a keen sense that the Milwaukee County Transit System is in or nearing fiscal crisis. We hear about it every summer, when cuts in service or increases in fares are discussed as part of the County budget. We hear about it whenever new transit improvements are considered, as many, including those who might ordinarily be predisposed to support such improvements, argue that we can't build new systems until we properly fund the one we have. And, we are increasingly hearing about it from business and civic organizations, such as the MMAC and GMC, which have placed finding a solution to this problem at the top of their 2008 "to do" lists.

If there is any truth to the old saying that "misery loves company", then perhaps Milwaukeeans will take comfort in the fact that we're not alone. In Boston, the head of the Massachusetts Bay Transportation Authority recently asserted that their system is "broke" despite a $70 million fare hike enacted last year. And closer to home, Illinois officials approved a quarter-cent sales tax increase and $3.00 hike in the real estate transfer fee to address a severe funding crisis facing the Chicago Transit Authority.

In both Boston and Chicago, the funding crises were predictable. Both emanated from unhealthy issuance of debt, exhaustion of reserves and deferral of maintenance - strategies that are typically used when the growth in operating costs exceeds the growth in revenue sources and the political will does not exist to address the situation head-on, such as by developing a new business model, cutting service or raising taxes. So, the problem gets pushed off from year to year until the inevitable crisis emerges.

Here in Milwaukee, our budding crisis can be attributed to a number of similar factors. One is the depletion of reserves, in this case a pool of Federal capital funding that has been plugged into the operating budget and will soon be exhausted. Another is deferral of needed bus purchases, which can no longer occur. Other factors include a governmental accounting change that now forces the Transit System to budget annually for its retiree health care liabilities, and the growing cost of paratransit services. The combination of these factors has led the Southeastern Wisconsin Regional Planning Commission to project that a 35% cut in service will be required as early as 2010 if a replacement for the depleted federal revenue is not secured.

The Public Policy Forum is about to place research and analysis of this issue at the top of its "to do" list, as well. While it is possible that the full-blown crisis can be delayed past 2010, there is grave danger in waiting. For one thing, many of the solutions that have been put on the table so far -- such as a dedicated sales tax or capturing the annual growth in motor vehicle sales tax revenue for transit -- could take years to enact and implement, particularly if referenda are involved.

For another, crisis management seldom yields sound and long-term public policy solutions, but more typically yields band-aid approaches that address the immediate problem but don't really solve it. As Chicago and Boston have learned, when all of the reserves have been depleted, when debt has mounted to an unsafe level, and when bus purchases cannot be delayed any longer is not the time to search for creative solutions.