Oregon: Payroll Tax Increase Supports Portland Transit
House Raises Payroll Taxes,
Despite Agency Financial Abuses
I do not live in the Portland area, but as a State Legislator I feel responsible to the workers and employers who do. Yesterday, the Oregon House of Representatives authorized a payroll tax increase for TriMet—the Portland metropolitan area’s public transit provider of bus, MAX light rail, WES commuter rail and Portland streetcar services.
Senate Bill 34-A passed by a vote of 32 to 28. SB 34-A is a payroll tax increase for Portland area employers. It is paid with money that could have gone to wages for workers. SB 34-A increases TriMet’s funding and enables it to meet its expanding costs. Since hundreds of millions of State lottery dollars, and other State and federal revenues are consumed by TriMet projects, we need to see how our tax and lottery dollars are being spent.
TriMet is governed by a seven-member Board of Directors, appointed by the Governor of Oregon. One of TriMet’s “nine principles” to guide its long term efforts is to “maintain strong fiscal controls.” After the SB 34-A floor debate, instead of “strong fiscal controls,” it appears that TriMet’s spending is “out of control.”
Representative Matt Wingard spoke against SB 34-A. He shared testimony about TriMet’s financial dealings given by John A. Charles, Jr., President of Cascade Policy Institute. The key TriMet disclosures included the following:
–The present TriMet payroll tax (before SB 34-A’s increase]) generates more than $210 million per year, and the present regional payroll tax, which was raised in 2005, will increase every year until 2015.
–The salary & benefits paid at TriMet was $108,000 per full-time employee in 2008. (Up from $62,000 in 2001.)
–The family healthcare paid by TriMet for its employees and retired employees is $1,932 per month–the highest of any transit district in the USA.
–The employee benefit package in 2008 was 118% of wages! (In other words, for every $1.00 paid in wages, the benefit package costs an additional $1.18. The national average for transit districts’ benefit packages was 66% of wages/salary in 2006.)
–TriMet’s Budget Advisory Committee recently reported, “TriMet employees are fully vested in retiree medical benefits after 10 years of service at age 55, and the benefits received as an active employee continue after retirement for the employee and dependents.” In addition, the Committee stated, “TriMet’s current health benefit plan for active and retired employees is unsustainable and its impact on the bottom line will worsen the longer it remains unaddressed.” TriMet pays 100% of the costs for its union employees and their dependents, as well as for retired employees. (Regardless of changes in the plan that will affect future employees, the long-term actuarial liability for current and past employees is astronomical.)
Although the above numbers are shocking, we might feel a little better if TriMet’s ridership was up. Unfortunately, the ridership numbers are low, which makes the cost-per-rider outrageous.
–The full, subsidized cost of TriMet’s Washington County commuter rail (WES) has been estimated to be nearly $25 per boarding. (The cost was so high the federal government initially refused to approve $37 million in funding because TriMet violated the federal government’s maximum cost per rider of $20.)
–TriMet now estimates, the operating cost per ride on WES is $21 per boarding–compared to $3.77 for bus and $2.53 for Max light rail. (The actual cost paid by a rider for a 2-hour WES ticket is $2.30 per adult,$1.50 per youth/student, or $0.95 per senior/disabled rider.)
–The monthly financial losses of TriMet’s WES commuter rail were $336,000 in February, $412,000 in March, and $486,000 in April. After netting out subsidies from Washington and Clackamas counties, TriMet’s “red ink” from WES commuter rail totals nearly $250,000 every month. (February’s deficit alone equates to $265 per rider.)
In short, the Oregon Legislature previously increased TriMet’s payroll tax in 2003, and received promises of improved service and long-term financial viability. TriMet has failed to deliver. In fact, TriMet’s service has degraded. The number of “peak hour” vehicles have declined from 630 to 614; the number of vehicles miles offered to TriMet customers has decreased by 2%; yet, TriMet’s total revenues increased 60% from 2004-2008.
Once again, the “good intentions” of providing reliable and affordable public transportation with taxpayer subsidies have been overshadowed by the realities of excessive spending, “fat-cat” salaries, exorbitant benefits, and inadequate oversight by those in charge. Who’s at fault? The Governor selected the TriMet Board of Directors. The Legislature passed a payroll tax increase in 2003 and increased it again in SB 34-A. There is plenty of blame to go around.
The real tragedy was yesterday’s vote. Elected officials are stewards of the people’s money. We are fiduciaries. Yet after learning of the excesses and abuses taking place at TriMet, SB 34-A was still adopted by a majority of legislators. Thirty-two Democrats voted in favor of SB 34-A; four Democrats and all 24 Republicans voted against it. The lack of a sense of stewardship in the legislature over the taxpayers’ money continues to perplex me. Who is watching out for you, the citizens? You are the ones who elect your state officials and pay your taxes. After considering the facts about TriMet, you decide. Who is watching out for you?