Via Portland Afoot – apparently one of the things discussed at this morning’s board retreat (I wasn’t there so I am getting this secondhand) is that the new Director of Capital Projects Dan Blocher (successor to Neil McFarlane, who is now the General Manager) is planning to ask the TriMet board to borrow an additional $20 million – on top of the $40 already being borrowed – against the future operating budget to put towards the Milwaukie Orange Line.
Meanwhile, I got this in my mail, and if you live in the Portland Metro area I’m sure you did too:
Oh Dorothy, my vote on Measure 26-119 isn’t going to give you reliable service
Right before this last round of service cuts at the beginning of September, I remember reading an article where someone, I think it was Neil McFarlane, said that the budget for building Milwaukie was separate from the budget for service. And even if Milwaukie was cancelled that minute, it wouldn’t free up any money to restore service. I’m not an economist, but I understand that money – especially when it’s federal money – is granted for a specific purpose and can only be used for that purpose, so it’s reasonable that money from the federal government specifically earmarked to build rail can’t be used for anything else.
But borrowing against our existing operations budget to focus on capital projects? Milwaukie rail should not be the main priority. I mean, take this bond measure for example – why is building new alignment more important than making sure our bus stops and buses are ADA accessible? If we’re going to borrow anything at all and vote on anything at all, why not vote on Milwaukie and borrow against our budgets to fix bus stops that people in wheelchairs can’t access? Shouldn’t maintaining our existing service come first before building something we can’t sustain?
Camelopardalis
MAX FAQs 
Excellent questions, I’d say. Jon Ostar of OPAL made the same point — why send core services to the voters while optional improvements come from general fund? — at the meeting where the ballot measure was introduced.
Also, careful with the language: TriMet staff wouldn’t be asking the board to borrow the additional $20 million. It’d be asking for permission to borrow the money as needed. Blocher says the agency still hopes to borrow only $40 million against future operations.
I’m not sure I understand the difference on the language thing. Is it that they’re not asking for the money outright, but the ability to go that high if the situation warrants it?
(and borrowing “only” $40 million is still a huge blow to service, so I’m not wholly comforted that they might not need the extra $20 million)
Oops, wrong OPAL link. Here you go.
Good post, as always!
I have mixed feelings about this measure that we are voting on, and already told you I have voted for it.
However, I doubt that it will pass – there are too many doubts about TriMet’s dealings right now for the voters to give TriMet money that could be a great help IF it were to be used to improve the 300 non ADA compliant bus stops that desperately need it, replace old buses that desperately need to be replaced, and so on, according to TriMet’s website.
Thus, Milwaukie light rail should be put on hold until other more pressing needs are taken care of (see previous paragraph), and our economy improves.
Put it off until light rail can be built all the way to the Oregon City Transit Center; it makes little sense to me to have it only go to Milwaukie…
Thus I agree with you asking: Shouldn’t maintaining our existing service come first before building something we can’t sustain?
I would like a *good* answer to that question…
Thanks for your objective and sensible thoughts on this issue – it’s an interesting contrast to make. (The idea of throwing away all of that the federal capital funding for the Orange line in order to avoid some millions in debt might indicate other reasons for borrowing against operating funds for Rail rather than Bus.) OTOH, operating costs will go up anyway with the new rail line. I’d have to see relative numbers on operating costs before formulating a more definite opinion. It will be very interesting to see what the Board decides.
I wanted to share with you TriMet’s response to this issue:
Funding for the Portland-Milwaukie Light Rail (PMLR) project will not affect money available for bus service. Here are the facts. In FY13, TriMet is slated to sell bonds to generate roughly $40 million for its contribution to the Portland-Milwaukie Light Rail Line. Like a mortgage, these bonds will be paid incrementally over 25 years or so. TriMet’s annual payment will be approximately $3.2 million for debt service on the bonds. This borrowing won’t begin until FY13 and has no impact on current service levels.
Where does TriMet plan to get this money? Not from bus service, but from an increase in payroll tax revenue that was authorized by the Oregon Legislature in 2003 specifically for service expansion of light rail and other service in our region. This was the same revenue source that paid to build and operate the Green Line.
Over the past three months we have been working to close the final $137 million local funding gap for PMLR. Since then, our regional partners have contributed nearly $102 million to fill the gap, leaving just two percent of the $1.49 billion project to be covered. TriMet is looking to other partners to fill the remaining gap. Meantime, TriMet will ask its board of directors for authority to issue another $20 million in bonds as a placeholder if needed to close the gap. Those bonds, if needed, would not be issued until FY15. Again, it is important to stress that the bond issue five years from now has no impact on current service. The cost to the TriMet would be about $1.9 million per year. Where will this money come from? The answer is, from future increases in the payroll tax.
It is important to understand that the Oregon Legislature approved an increase in the payroll tax rate that is projected to take effect beginning in FY14 to pay for new service. This new revenue will pay for the debt service on the new rail as well as future expansions of rail and bus service.
Mary Fetsch
TriMet Communications Director
Thanks for sharing that. This is the part that sticks out to me: “Again, it is important to stress that the bond issue five years from now has no impact on current service.”
Impact to current service is not what I’m especially concerned about at this time, and my apologies if what I’ve written makes it sound like it is. I am concerned about how the impact of this is going to impact service in the future. “Just two percent of $1.49 billion” is still $28 million, and if I am interpreting the setup of this correctly, borrowing that kind of money against the future operating budget is going to affect future service. If I am correct, that is the part that concerns me.