No Easy Fixes for SORTA's Budget Woes

A new outside report shows few options for avoiding deficits under Metro's current funding system

click to enlarge Metro buses at Government Square - Nick Swartsell
Nick Swartsell
Metro buses at Government Square

There is not likely to be an easy way out of the budget crunch faced by the Southwest Ohio Regional Transit Authority, an independent analysis says.

But that probe into the transit agency’s finances by Ernst & Young stopped short of mentioning a potential sales tax levy SORTA is mulling to shore up its lagging Metro bus service.

The SORTA board must decide soon whether to ask Hamilton County taxpayers for that levy, and just how much it will ask for. SORTA could seek anywhere up to a 1 percent sales tax increase. In the meantime, facing declining ridership and receiving most of its government funding from a single source — City of Cincinnati income taxes — the transit agency’s finances look grim.

“I’ve had more fun at a funeral,” board member Peter McLinden said after Ernst & Young’s presentation at SORTA’s board meeting yesterday.

The mood was indeed grim as E&Y’s Rob Tague outlined the report commissioned by the chamber of commerce. It found that SORTA’s projected $184 million deficit over the coming decade is split more or less evenly between daily operations, the need to replace aging buses and facilities upgrades.

There aren’t any nagging inefficiencies in SORTA’s operations that can be easily trimmed. Metro’s farebox recovery — that is, how much it makes from each rider — is about at the industry standard 20 percent, though it will likely fall slightly this year. SORTA compares favorably in most categories to 12 peer cities considered in the report on most metrics.

That’s a double-edged sword for SORTA. It shows that it has been operating a tight ship, board chairman Kreg Keesee pointed out. But it also provides few opportunities for easy financial salvation.

Tague admitted that suggestions from the E&Y report — charging for Metro’s park and ride program, deferring new bus purchases, instituting dynamic fare pricing, cutting service and other ideas — are merely temporary solutions.

Some of those solutions — like delaying replacement of aging buses — also come with consequences. With about 30 percent of its 300-bus fleet beyond normal life span, Metro is already pushing its newer buses harder, meaning they will age quicker and likely cost more to maintain over time.

“We didn’t identify a lot of low-hanging fruit,” Tague said. “There’s not a lot of opportunity here.”

Metro’s funding woes come from a perfect storm of adverse conditions.

Declining ridership has played a big role, E&Y’s report says. Metro’s ridership has gone down steadily over the past number of years. The bus system gave about 17.4 million rides in 2012. Last year, it gave 14.27 million. This year, it is on track to give just 13.74 million. That translated to a loss of $3 million from the $22 million in fares Metro collected in 2012.

Those declines look likely to continue over the next several years, according to E&Y’s report, and are fueled by lack of geographical reach for Metro, unreliable and infrequent service and Greater Cincinnatians’ dependence on cars.

About 40 percent of jobs in the city — some 75,000 — aren’t reachable by transit at all, according to a 2015 report commissioned by the Chamber, and many others require long, daunting commutes. The region ranks lower than 11 other peer cities when it comes to job accessibility via public transit, including regional neighbors Louisville, Indianapolis, Cleveland, Columbus and Pittsburgh, as well as cities like Denver and Austin, Texas.

There is also the fact that the state of Ohio is among the stingiest in the nation when it comes to transit funding. Ohio ranks 45th among states when it comes to public dollars per capita spent on transit, even though it ranks 14th in ridership.

Then there’s the fact that only the city pays into a system that extends throughout Hamilton County — a highly unusual funding arrangement for a major city’s bus system.

“We’re working under an antiquated 1972 agreement,” McLinden said after the report was presented, referring to the city’s contributions to the bus system via its earnings tax. “We all agree, it's not working. We need help from the federal government. We need help from the state. We need to bring people together and have a regional transit talk."

The talk about a regional solution mirrors ideas by Hamilton County Commission President Todd Portune, who opposes SORTA's potential sales tax levy. Portune would rather move forward with an ambitious effort to create a system that spans three states, eight counties and more than 200 local governments.

But regional plans will take too long, transit advocates say, and in the meantime, bus riders are suffering.

Trump isn’t going to send any money for buses to Hamilton County and sure we could ask the state, but that’s not enough to cover the deficits,” Cam Hardy, president of Cincinnati’s Better Bus Coalition, wrote on social media after the meeting. Portune has had 15 years to think about this. Show me a transit initiative Todd has supported. 2020 will be here fast and maybe the public can send a strong message if his people are able to hold this up.”

The Better Bus Coalition has advocated for a full 1 cent sales tax increase to fund Metro, and the city’s Charter Committee has endorsed a .9 cent increase. SORTA could seek an increase as low as .5 percent, which would keep the system at status quo without any major upgrades. 

[MORE: Here's what voters would get with a sales tax increase for Metro]

But board members and some elected officials are dubious about the levy’s chances in a county that has seen a number of recent tax levy asks by the Public Library of Cincinnati and Hamilton County, the Cincinnati Zoo and Cincinnati Public Schools.

"I'm not going to sit up here and say it's going to be an easy thing," Hardy said earlier this month about the levy. "It will be an uphill battle. You're going to need to convince people who don't use transit. But I think it's extremely doable. The demographics in the county are rapidly changing. We've got more poor and minority people being moved to the suburbs, and those people rely on transit. We have to reach those people."

Levy or no, E&Y’s report is the latest set of data showing a change of course is needed for Metro.

Board chair Keesee pointed out that the current situation SORTA faces presents a dangerous cycle: fare increases or cuts to service to shore up the budget will likely lead to decreased ridership, which will continue to chip away at revenues and further hurt the budget.

Keesee says the board will make a final decision on a sales tax levy ahead of a July deadline to do so.