Bus Riders Union of Austin, Texas | El Sindicato de Pasajeros

EDITORIAL
Capital Metro's lax fiscal oversight
EDITORIAL BOARD
Thursday, March 19, 2009

It has yet to be determined whether Capital Metro acted improperly in using money promised to the City of Austin and other local governments to help pay for passenger rail, park-and-ride lots, freight rail improvements, a bus-and-train facility, a child care center and other projects. That is a question for an independent auditor.

There are more issues that should be examined regarding Capital Metro's spending and financial policies after Ben Wear's revealing report Sunday in the American-Statesman. Those issues include Capital Metro's lack of transparency in budgeting and spending, the rapid depletion of the agency's reserve funds and delays that have stalled the start of commuter rail for a third time. These issues must be addressed before the transit agency's battered credibility is irreparably harmed. Capital Metro's primary source of income comes from a 1 cent sales tax.

Capital Metro's board of directors should secure an independent auditor and get answers to those questions. The board also must make the transit agency financially accountable, notably by installing controls to ensure it is operating efficiently and transparently. As Wear's article pointed out, Cap Metro seemed to be making decisions in a vacuum with little accountability or full understanding of the impact of its spending.

Wear reported that the agency spent $300 million on rail and other projects from 2002 through 2008. That was more than the agency generated in income in that period. To meet those expenditures, Capital Metro relied heavily on its healthy reserve fund balance. Yet key Cap Metro officials and board members were unaware that the agency was rapidly depleting reserves.

In 2002, reserves totaled $214 million. Six years later, those funds had dipped to less than $44 million. About $38 million must be kept on hand as a cushion for operations and self-insurance. The spending left the agency without enough money to meet its commitments to Austin and other cities. Cap Metro owes Austin and other governments in its jurisdiction between $85 million and $110 million.

Several board members, including Austin City Council Members Brewster McCracken, Mike Martinez and Lee Leffingwell, and Travis County Commissioner Margaret Gómez, said they were unaware that Capital Metro was spending down its reserves so rapidly on commuter rail and other capital projects. Instead, they erroneously believed the agency was budgeting for capital items annually within its sales tax revenue and not depleting cash reserves.

All but Leffingwell, whose term expired in 2007, are current board members. Gómez is chairwoman of the board.

They were not the only ones in the dark. Doug Allen, the executive vice president and chief development officer, told Wear that the agency had a good handle on spending for commuter rail but that oversight of capital spending overall was flawed and the "burn rate" of the agency's reserves happened faster than expected.

The financial problems surfaced as the agency announced yet another delay in opening its much anticipated commuter rail line, which will run from Leander to downtown Austin. We're now told that technical problems and safety violations during test rides have pushed the start of the Red Line from this month to April.

Austin has long needed commuter rail service and is behind cities of comparable size in getting it. But no matter how great the need, the public won't support an agency that runs its publicly financed business so carelessly. Capital Metro must act more responsibly, transparently and efficiently if it wants the public's trust.
link to story:
http://www.statesman.com/opinion/content/editorial/stories/03/19/0319cap...