City's actions violate contract, reduce Metro's 2011 budget by $1 million net
CINCINNATI– The government board that operates Metro is taking steps to protect public transit interests, in response to the City of Cincinnati's decision to take more than $2.4 million from an account intended for transit funding only.
The Southwest Ohio Regional Transit Authority (SORTA) opposes the city's plans to use transit funding to pay utility costs for street lights, a non-transit expense. The city's action violates the 38-year funding contract with SORTA. Multiple legal opinions from the city's attorneys since 1973 have protected the transit fund from the city's attempts to use the tax revenue for non-transit purposes.
The $2.4 million reduction comes on the heels of a 2009 budget shortfall that forced SORTA to reduce Metro service by 12%, make changes in Access service for people with disabilities, increase fare, and layoff employees to balance its budget due to a severe reduction in the city earnings tax collections.
The net reduction to SORTA's 2011 budget is estimated to be about $1 million, assuming the city's increased earnings tax projections are correct. The impact could be higher, if projected earnings tax revenue does not materialize.
SORTA's loss of revenue could affect access to employment, health care, and education for thousands of commuters, people with disabilities, and low-income residents who depend on Metro and Access service for people with disabilities.
"The city's decision to use dedicated transit funding to pay for a shortfall in its general city budget is a direct violation of the contract between our two organizations," said Sean Rugless, SORTA chairman. "We are sympathetic to the city's budget dilemma, but we have a responsibility to maintain public transit service for the community. We intend to vigorously protect public transit interests and to oppose the city's attempts to use transit funding for other purposes."
The SORTA board directed Metro staff to evaluate all options, both legal and operational, to address this fiscal crisis that threatens SORTA's ability to maintain current service on behalf of the citizens that rely on Metro and Access for 19 million rides per year.
Today, the SORTA board also sent a letter to Cincinnati Mayor Mark Mallory and City Council outlining the SORTA board's position:
- Using transit funds for non-transit purposes violates the contract between SORTA and the city and runs counter to 38 years of past practice.
- Using the transit fund for non-transit purposes ignores the will of the voters that passed the transit tax levy in 1972.
- The transit fund was never intended to and cannot be used to offset City budget shortfalls.
- SORTA depends on the transit fund for almost half of its operating revenue, for bus purchases, and to secure federal grants.
- The city's actions jeopardize transit service to the community and threaten Metro service levels and fares.
- The continuous erosion of Metro and Access transit services collapses the foundation on which to build future transportation options. Attempting to use the transit fund for non-transit purposes sets a dangerous precedent and is not good public policy.
Transit fund background
SORTA receives earnings tax revenue collected by the city under the terms of a 1973 contract between the two government entities called the "City-SORTA Agreement." In 2010, the city retained about $700,000 to cover the cost of collecting the 3/10th of 1% of the earnings tax revenue dedicated to transit and to cover transit-related staffing and liability expenses. For 2011, the city voted to more than triple that amount and use about $2.4 million for city budget purposes.
SORTA 2011 budget background
The earnings tax revenue collected by the city was originally projected to fund about $41.3 million of SORTA's operating and capital budgets this year. Last week, the city approved 2011 funding for SORTA of only $40.3 million.
The first transit fund payment to SORTA for 2011 was received on Monday, and it reflected the city's unilateral decision to reduce the amount that SORTA receives.
Metro and Access are non-profit public services of the Southwest Ohio Regional Transit Authority, providing about 19 million rides per year in Greater Cincinnati.