RTA statement and position on 2009 operating shortfall
Kansas City, Mo., Budget Hearing at Lakeview Middle School on Feb. 17, 2009
The Regional Transit Alliance (RTA) is well aware that Kansas City is under severe pressure because of the recessionary economy. Revenues from most sources have declined substantially but the needs and expectations of the community are the same or expanding. The city manager’s 2009–2010 budget proposal is indeed bleak. We understand city council has many difficult decisions ahead in the next six weeks leading to the adoption of the budget on April 1.
The Kansas City Area Transportation Authority (KCATA) receives the vast majority of its local funding from sales taxes, most of it from Kansas City residents. KCATA is also faced with difficult decisions because of the downturn in the economy and the resultant decline in sales tax revenues.
KCATA’s sales tax revenues are down as a result of an economic one–two punch. People are spending less so they’re paying less in taxes. But the big blow is from TIF diversions — most TIF-financed projects are not meeting their obligations and the city must make up the difference from sales tax revenues. This is estimated at nearly $10 million in the coming year.
As distressing as this is, there is little if anything we can do about these two.
But there is something that can be done about the third punch — one that we hear less about. The city has been diverting funding from the ½-cent Public Mass Transportation Fund for years. The manager’s draft 2009–2010 budget proposes to divert $4.6 million for non-transit purposes. The actual increase in these funds from the previous year are about $1.6 million.
KCATA services are funded by two separate sales taxes. The ½-cent tax for transportation in Kansas City that was approved by the state legislature in 1971 and a 3/8-cent sales tax that was approved by voters in 2003 and renewed for 15 years just last year. The taxes differ in that the ½-cent tax revenues can be used for transit and other “transportation” purposes. The 3/8-cent tax is more restricted — it is directed to the KCATA for transit only.
The RTA Board is fully aware that the so-called diversion of the ½-cent sales tax funding is legal, and is rightfully done at the discretion of city council. As previously stated, we are also aware of the dire needs the city has.
But, we believe the city should cease the practice of diverting revenue from KCATA. Our position is based on the following:
- When the voters overwhelmingly approved the 3/8-cent sales tax in 2003 and again in 2008, they did so believing that the revenue would be in addition to existing revenues, not to replace existing revenue. The new tax was sold to the residents as a way to avoid service cuts and support service improvements. We know this because the RTA vigorously supported the tax, campaigned for it and has worked with KCATA the past five years to ensure improvements have been made. To continue to divert funding from the KCATA is tantamount to breaking a promise made to the voters, not once, but twice. It was for transit service, not street lights, traffic signals or any of the other eligible projects that have benefited from the diversion.
- KCATA has done a credible job keeping their promise. Service has been improved, service cuts avoided and they have administered the funding in a responsible manner.
- KCATA is taking steps required in this difficult economy. They are moving forward with a fare increase that is expected to generate nearly $1 million additional revenue, off setting some of the decline in sales tax revenue. RTA supports the fare increase as a difficult, but necessary, decision under the circumstances.
- The RTA Board believes it is simply wrong to ask the city’s bus riders to pay a higher fare and then reduce their bus service by as much as10 percent.
- We are also aware that the practice of diverting ½-cent sales tax funds for non-transit purposes has a cumulative effect that will be felt in future years. If the service reduction is five percent in 2009–2010 it is likely to be more the following year. This is exactly the downward spiral in transit service that we voted twice to tax ourselves to avoid. Please do not let this happen.
Finally, in bad economic times, more than ever, transit service is valued. Transit offers a lower cost alternative to the automobile that more and more residents are going to need. And this doesn’t even consider the volatile future of gasoline prices. Just a few months ago we couldn’t get enough buses; let’s not cut them now.
The Regional Transit Alliance requests the following:
- City council should cease the diversion of ½-cent sales tax funding to non-transit programs.
- City council should formally recognize the dedicated transit funding from the ½-cent and 3/8-cent sales taxes by resolution. Decision on programs should be made in this light.
- Funding diverted to non-transit purposes since the 2003 transit sales tax election should be repaid into a transit fund over a period of 10 years. The total diversion is estimated at over $15 million. These funds can be used for transit purposes agreed to between the city council and the KCATA Board, and can include funding for operations to avoid service reductions, needed capital improvements, and new services and extensions.
Margie Richcreek, RTA Chair
February 17, 2009
KC Budget Hearing at Lakeview Middle School
