A Regional Transit Authority: Will Consolidation Be Better?

A Regional Transit Authority: Will Consolidation Be Better?

Alluding to the dire financial forecast that threatens the Port Authority (PAT) in FY2013 a candidate for Allegheny County Chief Executive recently offered the idea that it would perhaps be better to have a regional transit agency, much like the Southeastern Pennsylvania Transit Agency (SEPTA) that serves the opposite corner of the Commonwealth, handle transit operations here.

 

 

This is not a new idea; in fact, high ranking officials have at various times over the years advocated the creation of a regionwide transit system for southwestern Pennsylvania that would effectively merge all the existing county agencies into one super agency. The candidate for County Executive, in proposing the scheme, laid out his justification in a newspaper article, stating “One of the advantages is we could learn from mistakes over the years and improve on them…Some have to do with work rules and legacy costs. I think there’s a way in which we can learn to make it better.”  Obviously, he was referring to PAT’s dreadful situation.

 

The “mistakes” over the years have been fostered and exacerbated in large part by provisions in state law granting PAT a monopoly in the County and allowing transit workers to strike. Indeed, absent these special endowments of government granted powers, PAT’s capital building binges, union ability to block competition and outsourcing, extraordinarily high compensation packages for current employees, work rules that seriously curtail management’s ability to design more efficient routes and work shifts, and the massive buildup of unfunded pension liabilities ($198 million) and post-retirement health care liabilities ($812 million) would almost certainly never have happened. These fiscal and efficiency problems are virtually intractable in the current statutory environment.

 

Nonetheless, let’s consider the notion of a regionalized consolidated transit system. What would such a system look like?  Would it cover Allegheny County and the four neighboring counties of Butler, Beaver, Washington, and Westmoreland that already have a publicly operated bus service?  Or would it be a larger system covering other counties contiguous to Allegheny County’s neighbors? Would state lawmakers and the Governor get appointments to the board of directors?  Would there be a new uniform funding mechanism?  How much would operators be paid and what benefits would they receive?  How would union and non-union workers co-exist, if at all? Would all the existing transit agencies be eliminated by state law and all employees terminated with the new super agency having the power to hire whomever it chooses? What happens to retirees and their benefits? These are just a few of the critical questions raised by the proposal to create a regionwide transit system. 

 

According to the Southwestern Pennsylvania Commission, there are ten providers of fixed route bus service in the ten counties comprising the southwest corner of the state. Seven of them-PAT, BTA (Butler), BCTA (Beaver), ICTA (Indiana), MMVTA (Mid Mon Valley), NCATA (New Castle) and WCTA (Westmoreland)-are separate authorities whose specific purpose is to provide mass transit service. Some run multiple forms of transit, but the focus here is on buses.  Total combined bus ridership for the seven authorities in 2010 was 59.9 million.  Total operating expenses for bus operations was $277.6 million, resulting in a bus rider cost of $4.63. 

 

Each authority is overseen by a board of directors appointed by the communities served, either by county commissioners or municipal officials.  They range in size from six members to twenty-one.  All receive Federal and state funding to support operations, and local matches come from either the respective county, member municipalities, or both. 

 

PAT’s enormous size relative to other regional operators is reflected in the fact that PAT accounted for 93 percent of both passenger trips and operating expenses in 2010. Therefore a comparison of the bus operations of SEPTA and PAT from the 2009 National Transit Database (NTD) is a useful starting point for a discussion over whether a regional transit operator would be “better” for southwestern Pennsylvania.  Based on the indicators of operating expenses per passenger trip, operating expense per vehicle hour, and expense per vehicle mile PAT was less costly only on per vehicle mile expense compared to SEPTA.

 

SEPTA vs. PAT

Operating Expense per…

SEPTA

PAT

PAT was…

Unlinked Bus Trip

$2.95

$4.44

$1.49 (33%) higher

Bus Vehicle Hour

$134.29

$148.85

$14.56 (10%) higher

Bus Vehicle Mile

$13.05

$10.94

$2.11 (19%) lower

 

In order to get per passenger operating costs to the level of SEPTA there are two things PAT could do: either grow bus ridership by 30 million to 88 million unlinked trips or cut operating expenditures to $172 million, down $70 million from the level reported in the NTD. Moreover, in light of the much lower population density in Allegheny County’s neighbors as compared to Philadelphia and its “collar” counties, it is extremely unlikely that a merged southwestern system could ever achieve SEPTA-like costs per passenger trip. At the same time, it would take a lot of work and careful attention to the expenditure side of the ledger to ensure that a new regional system would not just take the most troublesome aspects of public transit and spread them across a larger area.

 

There are ways PAT could improve by learning from other transit agencies in the region if management were open to them and the unions would permit them to be implemented. PAT officials and legislators ought to take notice if they have not already. First, three area agencies-BTA, MMVTA, and WCTA-contract out bus operations to private providers.  The 2010 data from the SPC showed these three carriers were higher on the per passenger costs than PAT (only one regional provider, ICTA, was lower) but all three were lower on bus costs per hour or per mile basis.  Much lower population density in the surrounding counties and accompanying lower ridership account for the higher per passenger figures.

 

Meanwhile, PAT union leadership has been consistently adamant in their opposition to any contracting out of bus service, vilify it, and try to downplay the positive cost and efficiency gains by any transit agency where contracting or outsourcing is practiced.  A marriage between the carriers that operate “in house” and those that contract out work is unlikely to go smoothly.  State law creating a new agency might stipulate that a certain percentage of vehicles or miles would have to be operated by contractors, something unions are sure to object to strenuously.  

 

Second, according to PAT its average bus driver wage currently stands at $25.48 per hour. A survey of several other transit agencies in the region (or firms with bus service contracts) found average wages considerably lower than PAT: $14 at BTA, $14.78 at ICTA, $15.90 at WCTA, and $18.75 at NCATA.  PAT is even slightly higher than the average for SEPTA bus drivers ($24.85). Clearly, wage differences of the magnitude between PAT and other transit agencies in the region pose insurmountable obstacles to merging workforces. And that does not even take into account the gaps in non-wage compensation levels. Raising the wages of drivers from an outlying county to the level of PAT drivers would instantly make the system more costly. Conversely, very few PAT drivers would be keen on working for a much lower wage.

 

Third, addressing the gigantic legacy cost problem at PAT will be a prerequisite to any talk of creating a regionwide transit system. Moving the liabilities associated with legacy costs off PAT’s books would necessitate a massive state infusion of cash and is therefore very unlikely. There are simply not enough projected benefits to taxpayers arising out of a merged system to justify incurring such a cost. Alternatively, some form of bankruptcy that would allow PAT to substantially lower its obligations to retirees could work but is likely to be politically very hard to sell in connection with an effort to regionalize transit.

 

All things considered, there appears to be little chance we will see a regionwide transit system in southwestern Pennsylvania any time soon. So rather than wasting time trying to figure out a scheme to consolidate PAT and six other carriers-a sure recipe to drown out the positives the smaller carriers bring to the table-perhaps a better approach would be to encourage PAT to look at what other transit agencies are doing right and encourage them to follow suit.

 

In the meantime, PAT needs the Legislature and the Governor to move ahead expeditiously on reforms that will help the Authority dig out from the death spiral it finds itself in. Dealing with PAT’s legacy costs and curbing the power of intransigent unions ought to be at the top of the General Assembly’s transit reform agenda.  Certainly, such reforms should happen before trying to decide how much more taxpayer money is going to PAT to fund retiree benefits and excessively generous compensation packages-which do nothing to provide bus service to County residents.