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

Capital Metro chief stepping down
Gilliam's 7 years at helm marked by union turmoil, laggard rail line, sinking reserves.

By Ben Wear
AMERICAN-STATESMAN STAFF
Thursday, October 01, 2009

link to story: http://www.statesman.com/news/content/news/stories/local/2009/10/01/1001...

Fred Gilliam, who as Capital Metro's leader since April 2002 has presided over struggles to open the transit agency's first rail line and operate bus service with falling tax receipts and depleted savings, said Wednesday he will step down.

Gilliam's possible departure has been a subject of public speculation and private pressure for months. He decided to take the agency's early retirement package on the last day possible for that option. He will leave the agency Oct. 16.

Doug Allen, the agency's executive vice president and chief development officer, is likely to replace Gilliam on an interim basis during a national search for a permanent replacement, board member John Cowman said.

The early retirement package should net lump sum payments for Gilliam, 67, totaling more than $50,000, based on data from Capital Metro.

And it could push his annual pension above the $92,750 figure released by the agency earlier this year because early retirees get extra years of service or age added to pension calculations.

In 2008, Gilliam was paid $238,000 in salary and bonuses, and accrued $65,000 in deferred compensation, agency figures show.

Despite controversies over rail delays, a dwindling reserve account, bus rate hikes and two union strikes during the past several years, Gilliam said no one on the agency board of directors had asked him to leave. Had the early retirement deal not been available, Gilliam said he would not be leaving.

"It's been a remarkable ride," Gilliam said, pointing to improving on-time arrival of buses from 83 percent to 90 percent of the time, and cutting the bus accident rate by almost 20 percent.

His greatest disappointment: not being able to gain the trust of the union representing agency drivers and mechanics. The union in 2007 rebuffed giving up its right to strike and going to "meet-and-confer" type negotiations such as Austin police and the City of Austin use.

Under Gilliam, ridership has declined slightly, although in the middle of his tenure, as gas prices spiked, it was higher than the 32.5 million boardings this past year.

And the agency's once-robust savings account — it was more than $200 million when Gilliam succeeded former agency head Karen Rae — has fallen to $3.8 million. That is well below a cushion of two months of operating costs — about $27 million — that agency officials say would be a prudent minimum.

The reserves, as well as money from yearly revenue, financed a $300 million spending blitz that included more than $100 million on the yet-to-open commuter rail line, a new North Austin bus and rail operations center and numerous park-and-ride facilities.

The agency has had near-constant labor troubles under Gilliam, including two strikes, as the union representing about two-thirds of Capital Metro workers rebelled when bus routes were assigned to outside contractors. The agency now has 80 fewer drivers on its payroll than when Gilliam took over.

Amalgamated Transit Union Local 1091 printed bumper stickers saying "Kill Rail. Fire Fred" in 2005 and has filed numerous unfair labor practices charges against the agency during Gilliam's tenure.

Local 1091 President Jay Wyatt called Gilliam's departure "long overdue."

"The morale here is way past zero," said Wyatt, who was fired last month from his job with the Cap Metro unit that supervises union contract employees. "To get (morale) back up, they're going to have get someone who is good with employees and the public, someone who doesn't have to guess what he's doing. And someone who's not anti-union."

Capital Metro has taken a public relations hit this year as it fought glitches in its 32-mile commuter rail startup that have delayed the opening of service by about two years. The agency announced Monday that the soonest the Leander-to-downtown-Austin MetroRail will open is in the first quarter of 2010.

But Cowman said Gilliam deserves credit for creating a more efficient bus system.

Assigning routes to contractors saves money for Capital Metro, the agency argues, and that's "beginning to run Capital Metro like a business," Cowman said. "Mr. Gilliam has operated in an effective and efficient way, not trying to hurt anyone but to make Capital Metro more efficient. Because that's what Capital Metro needs."

The agency's operating budget has increased from about $97 million the year before Gilliam took over to $164.7 million in the fiscal year that begins today. Accounting for inflation, the cost per rider has increased during that time from about $3.50 to nearly $5.20, an increase of almost 50 percent.

Riders are now beginning to bear a greater share of that cost.

Under Gilliam, the agency last year passed its first fare increase in 20 years, a two-step doubling of the base fare (with some discounted fares increasing by higher percentages) that would have riders paying close to 10 percent of the cost of bus operations.

The bulk of the agency's operations and capital investments are supported by its 1 percent sales tax. Many transit agencies around the U.S. are similarly dependent on sales tax revenue and, like Capital Metro, have experienced budget problems in the past year as the economy struggled.

Gilliam, before coming to Capital Metro in 2001 as deputy general manager, had been second-in-command at Houston Metro but left there after failing to get that agency's top job. He then worked for a bus and trolley manufacturer in Wichita, Kan., and moved from there to Capital Metro.

Gilliam milestones

September 2001: Gilliam hired by Capital Metro as deputy general manager and manager of StarTran, the agency operations division.

February 2002: Becomes interim general manager when Karen Rae leaves.

April 29, 2002: Hired as president and CEO for $125,000 a year, Capital Metro's 10th leader in just 17 years.

November 2004: Voters approve commuter rail with 62 percent of the vote.

September 2005: Union drivers and mechanics stage a one-day walkout. Union puts out bumper sticker: "Kill Rail. Fire Fred."

January 2006: Just before another strike, and with intervention by Austin Mayor Will Wynn, agency and union agree on a stop-gap 17-month contract.

October 2008: Agency announces that commuter rail line, already several months past its original projected opening date, will open March 31, 2009.

November 2008: Union stages three-day strike, which ends with a three-year contract only after intervention by state Sen. Kirk Watson.

March 2009: Statesman reports that the agency's reserve fund, about $200 million when Gilliam took over in 2002, has been depleted by a massive capital program on rail and other facilities, and will near zero by the end of the fiscal year. Opening of commuter rail, beset by various lingering problems, is delayed indefinitely.

September 30, 2009: Gilliam announces retirement.