Capital Metro is back, baby!
Wait, it went away? I could swear I’ve seen big green buses tooling around pretty much every day for the past five years.
No, just its bank balance and credibility went away. Now, they’re in comeback mode.
Longtime Austinites may recall an extended period of time, something like 20 years, when Capital Metro had more money than it knew what to do with — and board members who often proved that they really didn’t know what to do with money.
Those who got here just a few years ago, on the other hand, instead have experienced a transit agency strapped for cash, with almost no financial reserves and a huge debt to the city of Austin. And a board that, having blown through a $200 million savings account last decade, was essentially fired by the Legislature.
Well, news flash: Capital Metro has beaten by about three years a legislative deadline to restore its financial reserves. And the agency seems, finally, to have a board of directors both qualified and motivated to keep an eye on the books. The upshot is that Capital Metro might again have the resources to do more than merely keep the buses and a handful of trains running.
And maybe help pay for the city’s urban rail dream. More on that in a minute.
Back in 2009, under the old board and in the wake of a several-year binge of spending on MetroRail and other facilities, Capital Metro’s reserves at one point got down to $4 million. That equated to about 10 days of spending, way below what any local government (outside of Detroit) typically has on hand.
Even worse, the agency at that point owed the city more than $50 million and faced several years of $4 million-a-year debt payments on MetroRail cars. Capital Metro, unable to pay what it owed, had to go to the city hat in hand and work out a deal to slow down payments. Oh, and there were short transit strikes in 2005 and 2008.
Legislators were not amused. In the 2009 session, they reformulated how Capital Metro’s board would be appointed, demanding some management and finance experience for some of the members. The Legislature also required the agency by 2016 to keep on hand reserves equal to two months of operating costs, or about $30 million. And it mandated that Capital Metro fix a 20-year-old labor problem, either outsourcing all of its union workers or bringing them all in house.
Things began to happen. As that new board was being put together in late 2009, the agency’s longtime president and chief executive officer was encouraged to retire. The new board — it had two holdovers, Austin City Council Members Mike Martinez and Chris Riley, and six newbies — took over in January 2010. It passed a full slate of new financial and management policies over the next year and by August 2010 hired a new president, Linda Watson, who has served for almost three years to good notices. Watson in turn brought on the well-respected Billy Hamilton, who had been a key aide to several Texas comptrollers, as her chief financial officer.
Ah, yes, the finances.
Remember that $4 million savings account? At the end of Capital Metro’s last fiscal year, Sept. 30, the agency had $47 million in reserves. By the end of this September, it expects to have $75.3 million. That $30 million mandate for 2016 from the Legislature, in other words, is looking pretty achievable.
Now, there are some caveats. The $75.3 million includes $10 million (out of $20 million that the agency borrowed to buy new buses) that it expects to spend in 2015. Capital Metro still owes the city $38 million (but is making the payments), and $15 million on its rail cars. And it owes $18 million on the bus loan. So, its debts and reserves are about equal at this point.
And the new board, while it has been good, has also been lucky with the recovering economy. Capital Metro’s budget depends heavily on revenue from a 1 percent sales tax, and that annual take has shot up the past two years. The agency collected $151 million in the 2010-11 fiscal year and $165.3 million in 2011-12, and it expects to get $176 million by the end of this year, almost 10 percent more than it predicted in the 2012-13 budget. The early prediction for next year: $182.2 million.
Balancing the books is a lot easier when revenue keeps racing past your estimates.
But spending is also below budget, and the overall financial picture looks far better than it did in 2009. Which explains why some city officials, looking for ways to pay for the capital and operating costs of Austin’s proposed urban rail system, had said out loud in recent few months that perhaps Capital Metro could help pay for it.
My thought when I heard that: Good luck getting blood out of that turnip.
Turns out that Capital Metro is no longer a financial vegetable. But there is no shortage of big ideas for transit around here. Capital Metro itself would like to add a second track to more sections of the MetroRail line and buy more cars, increasing the capacity of the commuter service.
The board’s challenge now: Make sure those dreamers don’t write checks you can’t cash.