State Senator Steve Glazer (D) deserves praise for having the courage and persistence to oppose the $3.5 billion BART bond on the November 2016 ballot.
The bond is funded by a 48-year tax increase on property owners in Contra Costa, Alameda and San Francisco counties.
"Despite my strong support for the BART system, I am going to vote no on the bond," Sen. Glazer stated. "I don't think we should reward bad behavior and expect anything to change," Glazer said, according to a recent San Francisco Chronicle Report.
Glazer said that the recent contract extension with the unions succeeded in staving off a possible strike for five years but was too costly and failed to address critical issues including training replacement workers and assuring any bond money can't be spent on labor, according to the San Francisco Chronicle.
The reality is that BART cannot be trusted with additional public funds, particularly the type of deal put together for this bond which is essentially a "blank check" to cover exorbitant labor costs and other cost overruns until the money runs out.
If Bay Area voters approve this bond, nothing will change at BART and they will be back for massive fare hikes and more bond funding a lot sooner than everyone would like.
There are more issues than can be discussed here in a short report, but the quick and dirty conclusion is that BART has written a bond designed to let them off the hook for any type of cost controls in the near future.
Furthermore, BART's labor and benefit costs, which make up more than 70% of its operating budget are growing at unsustainable rates, but nobody is doing anything about it because everyone at BART is in on the "BART gravy train" which is funded at rider and taxpayer expense.
BART's pay and benefit packages are so lavish that management has refused to conduct a public compensation survey for the last two bargaining cycles, because everyone knows what it will find--that BART workers are compensated better than every comparable transit agency in the country.
The simple truth is that BART management and the BART workers need to give up something significant to earn back the trust of both the public and taxpayers.
The first thing that needs to go is the "me too" clause which provides BART management with the same contract terms (or better) that the unions achieve at the bargaining table. This clause essentially renders collective bargaining meaningless and prevents any real attempt by management to control districtwide labor costs at the bargaining table.
BART has some of the highest and most costly employee compensation packages of any public agency in California and the nation (i.e. six weeks vacation, no employee benefit cost-sharing, 13 holidays), but management does not so much as mention any reductions at the bargaining table because those same reductions would apply to them if enacted for the unions.
Collective bargaining at BART is really like a WWF pro-wrestling match where each side just puts on a good show before calling it a day. Nobody loses, everybody wins, except for the riders and the taxpayers.
East Bay Times Columnist Dan Borenstein likely deserves partial credit Sen. Glazer's the opposition to the BART bond for his excellent analyses of the recent BART contract and the BART bond deal itself, which is essentially "sour grapes" being sold as a legitimate bond proposal.
First, the bond was written by BART management who has every incentive to free up money to fund their future raise and benefit costs, as well as those of the rest of the BART system.
Borenstein finds that as much as $1.2 billion from the BART bond measure could go to indirectly fund transit district labor costs.
BART on the other hand is claiming that the $3.5 billion bond proceeds will only fund capital projects. But there are several loopholes that exist which would provide BART with numerous options on how to use the bond money to cover labor cost overruns.
According to Borenstein, BART says it is prepared to come up with $1.8 billion from its operations budget over the next decade through transfers from its operating fund to capital expenditures.
"Here's the kicker: District directors and staff refuse to commit to continue that full transfer. The ballot measure and other restrictions would only bind them to only about $600 million. The remaining $1.2 billion could be kept for operations," Borenstein states.
In other words, if the BART bond passes it will free up $1.2 billion in additional funds for BART employee compensation packages--essentially providing a "blank check" to management and unions which prevents any real pressure or need for cost containment until the bond funds dry up.
According to a brief analysis I produced at the end of this column, BART's projected labor and benefit annual cost increases are expected to average 4.9% per year over the next decade which is double the 2.5% average annual annual increase in total financial resources. These labor cost overruns, particularly the recent wage increases included in the spring 5-year contract extension, the primary driver of why BART projects a $477 million operating deficit over the next 10 years.
To illustrate, the 10-year costs of the recently approved 12% districtwide wage increases are roughly equivalent to, or even exceed, BART's projected operating deficit over the next 10 years, according to my calculations included in my April analysis.
So instead of making some tougher choices regarding their own wage and benefit costs, BART management is really counting on this bond to bailout their operating fund for unaffordable labor and benefit costs over the next decade and beyond.
Instead of even considering modest cost sharing measures or reductions to vacation packages, pension, retiree health care etc, BART management is simply going to voters to say "here you pay for it" under the guise of an infrastructure bond.
The question deserves to be asked, in the absence of the passage of this bond, how does the district propose to cover the $477 million plus gap between labor and benefit costs and operating revenues over the next 10 years?
That gap is likely to be even larger than projected and essentially guarantees another significant fare hike for riders within a relatively short period of time, unless they want to continue to go deeper into debt which has also continued to be the case.
A number of BART's other revenue sharing proposals to provide for the matching funds for the BART bond funding are also very questionable at best. BART is counting on local sales tax hike reauthorizations, which have failed in the past as well as $200 million in cap and trade funds which are not likely to materialize given the recent "crash" in the program and legal questions about its future.
BART also is counting on $24 million in annual revenue from a "regional gas tax" despite the fact that the California Legislature is current considering a massive gas tax hike to fund road improvements, which would come on top of the state's gas tax which is already the highest in the nation.
For these reasons and others, that's why I signed the opposition argument against Measure RR, and encourage Bay Area voters to reject it in November 2016. (see PDFs below)
Real reform is needed at BART before an infrastructure bond can be considered, and additional safeguards and protections need to be included to ensure that it does not serve to reward bad behavior.
Moreover, real cost containment and reductions to labor and benefit costs need to be fully considered and enacted before taxpayers are asked to make up the difference. For example, the market value of BART's total unfunded pension liabilities is $3 billion and growing, which is three times the amount of its current $1.1 billion in bonded debt, according to Stanford University (www.pensiontracker.org). BART's retiree health care debt is another $430 million and growing.
These mounting debts, and the unsustainable public employee compensation practices that created them need to be contained before additional public funds are given to the BART district to poorly manage.
Otherwise, BART management is simply going to be back in a few years with their hands out saying, sorry we need more money, things didn't quite pencil out the way we thought they did.
I say all this because I really appreciate BART, it's a great transportation system with significant potential, but the way it's currently being run is similar to the state's high speed rail program--on the fast track to taxpayer and rider ruin. That's another program with potential, if California could get its policy priorities straight and its fiscal house in order.
Related In-Depth Analysis of Budget and Compensation Issues at BART:
Insolvent Film Report (4-12-16): BART “Tentative Deal” Solidifies “Unsustainable” Public Employee Compensation Practices at Bay Area Rail System
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