RTA leaders may delay tax bid for at least two years

October 2, 2018

RTA leaders may delay tax bid for at least two years

CLEVELAND, Ohio—Leaders have talked about a transit tax bid this year or next year. Now they’re talking more like 2020.

Floun’say Caver, interim general manager of the Greater Cleveland Regional Transit Authority, told an RTA board committee Tuesday that he thinks RTA can maintain current services through 2020 without a tax measure at least until that year.

Caver said that successful tax bids usually take two to three years to plan and advocate. Earlier this year, RTA contracted for outside studies of its fares, efficiency and economic impact. Draft reports are expected early next year.

Meanwhile, Caver expects to commission outside studies soon of service redesign, rail cars and an overall strategic plan.

Caver said RTA needs the studies to justify a tax hike and make the best use of the money. “We have to communicate that we can deliver.”

Caver said that RTA needs to seek wide input from constituents and local leaders. “We need to give this board and community the time to develop a unified plan.”

He also said a permanent general manager would need time to help sell the plan. The board hopes to pick a leader to start work March 1.

Caver hopes to present a 2019 budget and a preliminary 2020 budget next month.

After Tuesday’s meeting, RTA President Dennis Clough said the board will have to weigh how long the authority can maintain current services and wait for a tax hike.

Said trustee Karen Gabriel Moss, “We’re going to do our best to get by.”

Trustee Valarie McCall said the studies are crucial. “If we keep pointing in the dark, we’re not going to get anywhere. If we do what we’re supposed to do and do it right, we shouldn’t have to sell anything. [A plan] will make its own case.”

Trustees have blamed some of the tax’s delay on a scandal: the departure last March under pressure of long-time RTA President George Dixon III amid the allegation that he owed RTA more than $1.1 million for healthcare benefits, premium underpayments and cell phone use. The Cuyahoga County prosecutor’s office is reviewing the case.

McCall said she’s glad the board can focus on finances again. “It’s good that we’re back to business.”

Since its birth in the mid-1970s, RTA has relied mainly on a one percent sales tax. Meanwhile, yearly state aid for transit has plummeted from about $45 million in 2001 to less than $7 million now.

Local sales tax receipts have fallen, too, partly because the state agreed to let Medicaid stop paying taxes on reimbursements for managed care. That loss alone cost RTA $20.2 million per year, or about seven percent of the authority’s budget, currently $247 million.

In recent years, RTA authority has raised fares, cut the frequency of rail and bus service and lost riders. Early this year, then General Manager Joe Calabrese cut services again and predicted more cuts before 2019.

But leaders of the advocacy group Clevelanders for Public Transit warned against a “death spiral” of slumping services and riders. Reversing course, Calabrese put off any further cuts in services this year, and the board postponed a long-planned fare hike.

Meanwhile, RTA’s expenses and revenues have run better than expected so far this year, as in most recent years.

Then two pieces of good news came this summer: The state met budget projections, a feat that automatically kicked in $3.1 million in one-time aid to RTA. And the U.S. Supreme Court approved sales taxes on residents internet purchases from other states. Leaders estimate that RTA might get $3 million per year at first and much more in years ahead.

Four of the studies combined will cost RTA $632,000. The other two have not been priced yet.

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