CAT House Appropriations Transportation Testimony

PA HOUSE APPROPRIATIONS COMMITTEE
BUDGET HEARING
MONDAY, FEBRUARY 25, 2013
1:45 PM
ROOM 140
MAIN CAPITOL BUILDING

WRITTEN TESTIMONY

CAPITAL AREA TRANSIT
MR. WILLIAM A. JONES
GENERAL MANAGER

GOOD AFTERNOON MR. CHAIRMAN AND MEMBERS OF THE COMMITTEE.

THANK YOU FOR INVITING ME TO DISCUSS THE FUNDING ISSUES FACING PUBLIC TRANSPORTATION IN THE COMMONWEALTH TODAY.

WE ARE GRATEFUL THAT GOVERNOR CORBETT AND SECRETARY SCHOCH HAVE COURAGEOUSLY ADDRESSED THE ISSUE OF TRANSPORTATION FUNDING WITH A COMPREHENSIVE PLAN THAT WE ALL CAN HELP DEFINE OUR LOCAL SERVICE NEEDS OVER THE NEAR TERM.

CAPITAL AREA TRANSIT, KNOWN AS CAT, IS THE TRANSIT AUTHORITY THAT SERVES THE MID-STATE IN CUMBERLAND AND DAUPHIN COUNTIES, AND THE CITY OF HARRISBURG.

WHILE TRANSPORTATION SYSTEMS IN THE CITY AND REGION DATE BACK TO THE CIVIL WAR, CAT WAS FOUNDED IN 1973. WE OPERATE 78 FIXED ROUTE VEHICLES AND 53 SHARED RIDE VEHICLES, WHICH SERVE ABOUT 3 MILLION RIDERS ANNUALLY.

SIXTY PERCENT OF OUR RIDERS ARE STATE, FEDERAL AND CITY EMPLOYEES AROUND THE REGION WHOSE DESTINATION IS TO CONNECT WITH THE CITY OF HARRISBURG.

ADDITIONALLY, ACCORDING TO THE CENSUS TRACK, 55% OF OUR ROUTE MILES ARE AT OR BELOW POVERTY LEVEL, AND 42% ARE MINORITIES UNDER TITLE VI STANDARDS. CAT’S SERVICES ARE ESSENTIAL TO THE FUNCTIONING OF THE MANY AND VARIOUS COMMUNITIES — FROM UNIVERSITIES TO GOVERNMENT TO BUSINESSES TO HEALTH CARE TO THE BASIC HUMAN NEEDS OF THE CITIZENS WE TRANSPORT AROUND THE MID-STATE.

CAT ALSO FUNDS SERVICES PROVIDED BY PRIVATE ENTITIES, INCLUDING EASTERN COACH COMPANY, FOR A PORTION OF CAT’S PARATRANSIT OPERATIONS, AND WOLF BUS LINES FOR CAT’S RURAL SHIPPENSBURG OPERATIONS.

AS WITH TRANSIT SYSTEMS EVERYWHERE, FUNDING PRESSURES REMAIN A CONSTANT CHALLENGE BECAUSE OUR SYSTEMS ARE STRESSED BY DEMAND FOR INCREASED SERVICES, WHILE PUBLIC FUNDING REVENUE REMAINS STATIC.

IN RESPONSE, THE TRANSIT AUTHORITIES OF THE MID-STATE REGION HAVE EXPLORED AVENUES TO SAVE MONEY AND IMPROVE SERVICE BY WORKING COOPERATIVELY. CURRENTLY, COOPERATIVE AGREEMENTS ARE IN PLACE TO PURCHASE VEHICLES, FUEL, AND SHARED-ADVERTISING SALES, AND WE ARE IN THE PROCESS OF ISSUING AN RFP FOR AUDIT SERVICES.

FIRST HAND AND VISIBLE EXAMPLES OF SERVICE IMPROVEMENTS ARE THE COMMUTER SERVICES OFFERED BETWEEN HARRISBURG, LEBANON AND YORK BY LT (LEBANON TRANSIT) AND RABBITTRANSIT (YORK AREA TRANSIT AUTHORITY).

CAT WILL CONTINUE TO COORDINATE AND COOPERATE WITH MID-STATE TRANSIT AUTHORITIES TO ACCELERATE THE PROCESS OF SHARED COST SAVINGS.

AS OF THIS FISCAL YEAR, 2012-13, CAT IS OPERATING WITH A BALANCED BUDGET. HOWEVER, THIS HAS BEEN POSSIBLE ONLY BY DEPLETING OUR CAPITAL FUND AND INCURRING ADDITIONAL DEBT TO BALANCE OPERATION COSTS.

AFTER THE PASSAGE OF ACT 44 IN 2007, CAT CREATED ADDITIONAL SERVICES IN ANTICIPATION OF INCREASED FUNDING. UNFORTUNATELY, AS WE ALL KNOW, ACT 44 NEVER FULFILLED THOSE FUNDING LEVELS. ADDITIONALLY, INCREASES IN CONTRACTED LABOR AND BENEFIT COSTS COMPLICATED THE ISSUE.

WE ARE CURRENTLY OPERATING IN A 109 YEAR-OLD FACILITY AND ANTICIPATE NO INVESTMENT IN ‘STATE OF GOOD REPAIR’ PROJECTS IN THE FORESEEABLE FUTURE. WE ESTIMATE CURRENT AN FUTURE CAPITAL COST NEEDS TO BE AT LEAST $100 MILLION.

WITHOUT NEW FUNDING, MOVING FORWARD CAT WOULD CONFRONT AN OPERATIONS DEFICIT IN 2013-14 OF APPROXIMATELY $1.2 MILLION IF WE MAINTAIN CURRENT LEVELS OF SERVICE.

THIS DEFICIT WILL COMPOUND EACH YEAR THEREAFTER, WHICH MEANS THAT CAT COULD FACE AN OPERATING BUDGET DEFICIT OF ABOUT $15.8 MILLION OVER THE NEXT FIVE YEARS.

THE QUESTION IS HOW WILL THE GOVERNOR’S PLAN IMPACT THAT PROJECTED DEFICIT?

TYPICALLY, CAT RECEIVES ABOUT .8% OF STATE FUNDING ALLOCATED TO TRANSPORTATION SYSTEMS STATE WIDE. THIS MEANS IN YEAR ONE, CAT WILL PROBABLY RECEIVE FROM THE STATE APPROXIMATELY $320,000 PLUS ANY INCREASED LOCAL SHARE.

CAT WILL STILL NEED AN ADDITIONAL $800,000 IN FUNDING TO BALANCE THE $1.2 MILLION DEFICIT AT THAT TIME, AND THIS WILL COMPOUND FORWARD TO A DEFICIT OF APPROXIMATELY $7 MILLION BY YEAR FIVE.

LOOKING AT THE FIVE-YEAR TREND, AND ASSUMING CURRENT LEVELS OF SERVICE AND FUNDING, FROM THE PLAN, CAT’S OPERATING BUDGET WILL NOT BALANCE DURING THE RAMP-UP PERIOD.

ALL OF THESE CALCULATIONS ARE BASED ON THE GOVERNOR’S PLAN ESTIMATED REVENUE STRUCTURE AND CAT’S ESTIMATED BUDGET DEFICITS.

REVISED FEDERAL TITLE VI REGULATIONS RESTRICT CAT FROM CUTTING SERVICE TO MINORITY AND POVERTY AREAS. OVER 60% OF CATE RIDERSHIP IS COMPRISED OF STATE, FEDERAL, COUNTY AND CITY EMPLOYEES WORKING IN THE CAPITAL CITY OF OUR COMMONWEALTH. CAT COULD BE FORCED TO REDUCE THIS VALUABLE SERVICE.

THERE ARE INCREASING PRESSURES AND OPPORTUNITIES FOR EXPANSION OF BUS TRANSIT COMMUTER SERVICES IN THE MID-STATE, EVEN AS THE FINANCIAL SITUATION FOR TRANSPORTATION WORSENS.

IN ADDITION TO EXPANDING COMMUNITY-WIDE SERVICE NEEDS, SUCH AS GROWING UNIVERSITY AND HEALTH CARE SERVICE REQUIREMENTS, A RECENT TRANSPORTATION STUDY IN THE MID-STATE FOUND THAT BUS TRANSIT, AS A PRIMARY MODE OF COMMUTER TRANSPORTATION, HAS BEEN INCREASING OVER THE LAST FIVE YEARS TO ITS CURRENT 11% SHARE OF COMMUTER TRANSIT. MEANWHILE, ‘DRIVE ALONE’ COMMUTERS IN THE MID-STATE HAVE DECREASED BY 3% OVER THE SAME PERIOD.

THE GOOD NEWS IS WE HAVE A FINANCIAL PLAN; THE BAD NEWS IS IT ISN’T LARGE ENOUGH, AND IT DOESN’T RAMP UP FAST ENOUGH TO MEET TRANSIT SERVICE DEMAND IN THE CAPITAL REGION.

OTHER ELEMENTS IN THE ACT MAY PROVE PROBLEMATIC.

THE LOCAL MATCH FOR CAPITAL TRANSIT FUNDING WOULD INCREASE FROM 3.33% CAPITAL COST FUNDING TO 20% OF THE STATE SHARE OVER FIFTEEN YEARS; WHILE THE LOCAL OPERATING MATCH WILL GRADUALLY INCREASE FROM 15 TO 20%.

THE LOCAL MATCH WOULD DROP BACK TO 15% IF LOCAL AGENCIES ACCRUE COST BENEFITS IDENTIFIED IN CONSOLIDATION STUDIES, AND ELECT CONSOLIDATION OVER A LONGER PERIOD OF TIME. FAILURE TO CONSOLIDATE WOULD RESULT IN A PENALTY INCREASE OF LOCAL MATCH TO 25% IN THE OUT YEARS.

THE POLITICAL IMPLICATIONS OF INCREASED LOCAL MATCH FUNDING LEVELS WITHOUT PROVIDING LOCAL FUNDING PARTNERS NECESSARY TOOLS TO INCREASE LOCAL LEVEL FUNDING, COUPLED WITH A POTENTIAL FOR THE PERCEIVED DILUTION OF LOCAL REPRESENTATION AND SERVICE OVERSIGHT, MAY PROVE CHALLENGING.

ONE SUGGESTION, IF I MAY MR. CHAIRMAN, WOULD BE TO PROVIDE AN ADDITIONAL, SHORTER-TERM OPTION TO STIMULATE COST-SAVINGS INITIATIVES AMONG LOCAL AND STATEWIDE TRANSIT OPERATIONS, AS AN INTERIM STEP BEFORE MOVING TO A PROTRACTED CONSOLIDATION POTENTIALLY YEARS IN THE FUTURE.

A SHORTER TERM COST-SAVING STRATEGY, ALREADY UNDERWAY, COULD BE INCORPORATED INTO THE PLAN TO PROVIDE INCENTIVES AND REWARD THIS INITIAL COST-SAVING STEP LEADING TO BROADER CONSOLIDATION ACROSS OUR OPERATING AREAS.

PERHAPS THESE COST SAVING MEASURES COULD BE REFLECTED AND REWARDED WITH INCREASED FUNDING AND REDUCTIONS IN THE LOCAL MATCH PERCENTAGES.

IT MIGHT PROVE HELPFUL IF THE LANGUAGE IN THE ACT CLARIFIES AND PROVIDES A LAYER OF INCENTIVES FOR THIS IMPORTANT INTERIM COST-SAVING STEP. WE WOULD BE HAPPY TO PROVIDE FURTHER INPUT TO THIS SECTION OF THE PLAN, IF REQUESTED.

ANOTHER SUGGESTION, IF I MAY MR. CHAIRMAN, WOULD BE TO PROVIDE SOME REVENUE GENERATING OPTIONS IN THE BILL TO ASSIST LOCAL FUNDING AGENCIES INCREASE REVENUE IN THEIR OPERATING AREAS IN ORDER TO AVOID FUTURE PROPERTY TAX INCREASES ON CONSTITUENTS AND USERS.

THE BOTTOM LINE REMAINS THE SAME: IN OUR VIEW, THE SYSTEM REQUIRES MORE FUNDING, AND AT A FASTER RAMP UP.

OVERALL, WE FIND THE GOVERNOR’S PLAN TO BE AN EXCELLENT FIRST STEP TO RESPOND TO THE CURRENT DILEMMA FACING THE TRANSPORTATION SECTOR HERE AND STATEWIDE.

WE AGAIN THANK GOVERNOR CORBETT AND SECRETARY SCHOCH FOR THEIR LEADERSHIP IN PROVIDING THIS MUCH NEEDED TRANSPORTATION FUNDING INITIATIVE.

THIS CONCLUDES MY WRITTEN TESTIMONY.

I THANK THE COMMITTEE FOR ALLOWING ME TO TESTIFY TODAY.

THANK YOU MR. CHAIRMAN. I’M PLEASED TO RESPOND TO ANY QUESTIONS THE COMMITTEE MIGHT HAVE AT THIS TIME.

Respectfully Submitted.

CAPITAL AREA TRANSIT
MR. WILLIAM A. JONES
GENERAL MANAGER

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