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John Charles testimony for the 9/22 TriMet board meeting

John A. Charles, Jr.
Subject: TM Resolution 10-09-44

Members of the Board:

I will not be able to attend the board meeting tomorrow. Therefore I wish to enter the following comments into the record today regarding TM Resolution 10-09-44:

There is considerable risk in purchasing this property because it is unlikely that the Milwaukie LRT line will ever get built.  Notwithstanding the oft-made claim by Mr. McFarlane that TriMet is considered to be “an A student” by FTA officials, TriMet has clearly been defrauding the federal government by taking capital grants for rail projects without operating them successfully for 20 years, as required by law. In May 2009 TriMet announced that service on the Green Line would be cut before it ever opened. Service was cut again earlier this month. Cuts have also been made on other federally-subsidized rail lines. Until TriMet restores service on those lines, they remain out of compliance with past funding agreements. Why would FTA spend even more money on TriMet under these circumstances?

Moreover, the next TriMet audit will almost certainly show that TriMet’s off-book debt of $907 million in unfunded post-employment obligations has gotten worse. TriMet’s unfunded OPEB liability is the highest in the entire transit industry (as a percent of covered payroll) and the agency has no plans to fund the OPEB trust fund at any significant level until 2019. Since this will force the agency to continue its reliance on a pay-as-you-go system, the yearly OPEB obligations will cannibalize revenues needed to restore service.

TriMet is in a fiscal death spiral and the board has yet to devise an exit strategy. It is imprudent to assume that FTA will simply ignore this between now and June 2012, when the staff speculates that FTA might sign a FFGA. What happens if FTA refuses to sign? TriMet will have already spent hundreds of millions of dollars on property acquisition and a “bridge to nowhere.”

Finally, it is politically untenable to continue cutting dozens of bus lines serving lower-income riders while TriMet spends more than $200 million per mile on a gold-plated train to Milwaukie. TriMet can only survive with the popular support of elected officials, editorial writers, and business trade associations. That support is rapidly eroding as TriMet’s institutional bias against bus riders becomes more widely known.

New rail project are a luxury; basic bus service a necessity. It’s time for hard choices, and the more you procrastinate in terminating this poorly-conceived project, the more you will regret it later. I urge you to begin the long journey back to responsible fiscal stewardship by voting “no” on this Resolution.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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