TriMet and the Trust Gap Part 5: The perfect storm and the $800 million fruit salad


A discussion of TriMet’s finances.
Better late than never.

This article was supposed to be part 3–but I decided to postpone it until after the election, to simplify the analysis; and then a few other post-election issues took center stage.

In the article TriMet and the Trust Gap, we looked at the phenomenon of an apparent lack of confidence in TriMet, particularly on the part of some system patrons who had expressed skepticism of Ballot Measure 26-119, the $125 million bond measure which failed in the November 2010 elections. In Part 2 of the series, more focus a bit more on TriMet’s governance, particularly on the belief that the agency exhibits a “bunker mentality”. Part 3 covered TriMet’s role in the planning process, and Part 4 covered the agency’s relationship with its workforce, and the general question of who should suffer (or benefit) when times are bad (or good).

Today, we look at an important issue which was omitted from the discussion of the first two articles (though conspicuous in the comments): the present state of TriMet’s finances. We’ll start with factors other than the pension issue, and then move on to that.

The perfect storm

The past several years have been a “perfect storm” for transit agencies around the country, including TriMet. A handful have shut down altogether, and quite a few more have experienced service cuts fare more serious than TriMet has made. Even those agencies which didn’t engage in any significant management missteps have been buffeted by a combination of high fuel prices leading up to 2007 or so, followed by the Great Recession. Most transit agencies have operations funded by a combination of fares and a volatile tax source, such as income/payroll or sales taxes. When a recession occurs, the economic activity on which the tax is based goes down, and fewer commuters use transit to get to work, as many of them have lost their jobs (and quite a few of the remainder switch to driving as congestion goes down and parking becomes more available). In addition, the rising cost of healthcare is another serious factor.

Unfortunately, TriMet has made a series of unforced errors compounding the problem. In response to the fuel crisis, TriMet entered into hedge agreements to protect it from further rising prices–right before the recession hit and oil prices went down, forcing the agency to pay above-market prices for diesel. While use of short-term futures contracts is probably a good idea for TriMet (to make the cost of fuel more predictable over a budget cycle), hedging against moves in the price of petroleum is not. Transit agencies already have a built-in hedge against fuel prices: higher fuel prices boost ridership (and lower prices have the opposite effect).

And the WES project… has been a disaster for the agency. Ridership is well below projections (though it has been improving somewhat); and the operational costs of the line are ridiculous. And this past Friday, TriMet suffered an additional $3.1 million setback, when a judge ruled that TriMet was not legally entitled to collect on a letter of credit issued on behalf of Colorado Railcar (to indemnify TriMet should CR default, which it did), and ordered the agency to refund the money to investors. (TriMet plans to appeal, though as the case was decided on summary judgment–legal-speak for “laughed out of court”–prospects for an appeal seem dim).

In short, the past few years have not been good to the agency; and a fair bit of that is TriMet’s own doing. And that’s not considering the elephant in the room–the pension situation.

Meet the elephant

TriMet recently issued its FY2010 auditor’s report concerning their financial statements, and it contains some rather ugly numbers: over $800 million in unfunded liabilities related to pensions and Other Post Employment Benefits (OPEB, in much of the literature). That TriMet has large unfunded liabilities is not a surprise; but the scope of the debt is. Much of the debt is due–again–to unexpected rises in healthcare costs, which TriMet is on the hook for.

Many of TriMet’s critics have pounced (here’s Wendell Cox, for instance), and GM Neil McFarlane served up a tone-deaf remarkto KATU, giving out a recipe for the healthy dessert mentioned in the title of this post (though those on cholesterol medication may want to skip the grapefruit), and providing transit opponents with a juicy soundbite. (Pun intended. Naturally).

A common narrative that has arisen is that this issue trumps all others facing the agency, and any future expansions of the system, particularly those that involve borrowing money, ought to be put on hold until the issue is resolved.

Just how bad is it, anyway?

$800 million is not a small number–especially for an agency the size of TriMet. It’s in the same ballpark as TriMet’s overall annual budget, and twice what the agency spends on operations each year. So it is certainly a significant problem–one which, if not dealt with, could severely impact service levels in the future.

On the other hand–this figure is an estimate of how much TriMet needs to satisfy its long-term obligations under its pension agreements. It’s not a figure which needs to be coughed up in a year–it’s an estimate of how much will be needed over time. (Unfortunately, with defined-benefit pensions, estimates are the best you can do; and often times are still too low–TriMet may find itself on the hook for even more, particularly if healthcare costs continue to rise). Contrary to some assertions from the peanut gallery that TriMet is nearing insolvency; TriMet has more than enough revenue from existing streams to pay off the debt as it becomes current. However, there is the definite potential for debt service to command a larger and larger share of TriMet’s budget, necessitating further service cuts–service cuts which will further reduce the agency’s farebox revenue. A “death spiral” of cuts and lost customers is entirely possible–either that, or the agency may be forced to signficantly raise taxes to pay off the pensions and maintain service levels–an act which may meet significant political resistance.

In short, it’s probably not an existential threat in the short term–but it is definitely a quality-of-service threat in the short term. And in the long term, it could very well threaten the agency itself. And thus, it is something that needs to be taken seriously.

Counting the beans

The sudden appearance of this issue on TriMet’s books, in such magnificent splendor, is in good part due to the intersection of two factors: 1) As already mentioned, rising healthcare costs, which have caused the amount TriMet must pay for retirement benefits to skyrocket well beyond what was expected, and 2) A change in pension reporting requirements promulgated by GASB (Government Accounting Standards Board, the public-sector equivalent of FASB) which required that government employers make and report sound actuarial estimates of their post-employment benefits. Prior to 2008, TriMet reported retirement expenses on a “pay-as-you-go” basis–recording such expenses on the books as incurred–but GASB 45 now requires that the total liability be estimated and reported.

Public agencies are still permitted to pay such liabilities on an unfunded basis–in other words, not setting aside reserves to pay for the liabilities, and instead paying for them out of the general fund as needed. Unlike the private sector (where retirement funds must be funded and separately administered, to protect retirees from fraud or bankruptcy of the employer), the risk of public-sector default on retirement benefits has traditionally been very low–as public agencies generally don’t “go out of business” and have taxing authority which can be used to repay debts if a default does occur.

However, recent events throughout the US suggest that pay-as-you-go accounting for such benefits is just as foolish in the public sector as it is in the private. Just as the federal government is fond of borrowing money to provide politically-popular goodies to the public in the absence of taxation to pay for them; so are local governments. While local governments can’t borrow money like the Feds can–one way they can get away with buy-now-pay-later budgeting is through off-books deferred compensation to public employees. And governments all across the board have been doing just that.

And now, it appears that the bills are coming due.

When sorrows come, they come not as single spies…

A battalion of other bad news has stormed the agency’s gates in the past years. As mentioned above, Measure 26-119, which would have financed certain capital investments (and freed up operating money for other purposes) was soundly defeated. While some objected to the agency taking on more debt–this was debt that would have come with its own funding source, and could have helped the agency improve its operating base in several ways. (The money was limited to capital improvements, and could not directly have been used to restore service or fund pensions, but it could have freed up other general-fund dollars earmarked for capital expenditures).

One other piece of bad “news” which came over the summer–news is in quotes because a good argument can be made that it should not have come as a surprise to TriMet, and the agency failed to adequately prepare for the contingency–was the announcement that Uncle Sam would only be picking up (at most) 50% of the tab for Milwaukie MAX, not the 60% match which the New Starts program commonly does for smaller projects. This prompted the agency to go hit up its partners for more cash, which it has secured (subject to some popular objection in Milwaukie), and to trim the project’s scope a bit.

Union blues

And then there’s the matter of TriMet and its relations with the transit union (ATU local 757). In years past, the agency was frequently criticized for failing to bargain hard with the union (the 1994 contract negotiations spearheaded by then-GM TimTom Walsh have long been targets of criticism, under the grounds that Walsh “caved” to ATU). At any rate, the agency is playing hardball now–demanding, essentially, that workers now contribute to their own health insurance premiums (presently all costs are paid by the agency). Last summer, the two sides reached an impasse in their talks, forcing the matter to arbitration. In addition to that, a freeze on salary and benefits imposed by TriMet for next year has drawn a few unfair labor practice complaints from ATU, and the agency and the union have been engaging in heated war of words in the media.

This is a gambit, however, which may backfire. Arbitration cannot start until the ULP compaints are resolved, at which point each side submits a “last, best offer”–and the arbitrator(s) are required to choose one package or the other. The risk to the agency is that if they were to be too aggressive in their demands, ATU could “win” the arbitration, resulting in little or no concessions–a prospect which would both likely aggravate service cuts in the near term, and the pension crisis in the long term.

So what to do about all of this?

Much of the debate around the state around TriMet’s finances seems to resolve around the controversial Milwaukie Light Rail project. TriMet continues to support the project, but many critics have called for its postponement or outright cancellation–and a few have gone further, and have called for TriMet to shut down its capital projects division altogether (laying off the planning staff and putting a stopper in future projects coming down the pipe) and divert the division’s $20 million annual budget to helping plug the agency’s overall budget hole. An interesting question is whether the project can be “postponed” (and for how long) without jeopardizing the funding commitments or requiring that the recently-completed EIS be redone. I personally consider the project important and useful from a transit perspective, but share many of the concerns about its funding–particularly the bonding of operational dollars and the overuse of urban renewal districts.

However, and this is an important point–canceling MLR would not solve all of TriMet’s problems. Even if MLR were to be stopped, there’s still a worst case scenario that needs to be addressed: If TriMet loses in its arbitration with the union, if the economy continues to stagnate, if healthcare costs continue to rise–what happens? Could we end up in a situation where the bulk of operating dollars are used to pay the bills of the past rather than the bills of the present? Could we end in a situation where the service cuts necessary become so severe, that the future of the agency–or of public transit in the metro area–is threatened?

Discussion

Given all that, what should TriMet do to get on a sound(er) financial footing? Milwaukie MAX and relations with the union have already been extensively discussed here; feel free to comment on these but I’m also looking for other ideas beyond these two topics. Should the funding arrangements for TriMet be altered? Is a single regional transportation agency a bad idea? Where should TriMet focus the service dollars it has? And–what should TriMet’s overall mission be? Is trying to build a comprehensive transit system an unwise idea–or is failing to do so what is unwise, given concerns about peak oil and the environment?


100 responses to “TriMet and the Trust Gap Part 5: The perfect storm and the $800 million fruit salad”

  1. So much of this problem is driven by rapidly increasing health care costs. That’s not just Tri-Met’s problem; more expensive health care devils every local and state government, every federal agency, and every private business. It’s also the major reason for projected future increases in the national debt.

    The problem is, it’s a society-wide problem that will require a sustained effort by Congress (and by every state legislature in the country) to holistically address every factor contributing to rising health care costs on every front.

    The point is, this is a factor that is completely outside of Tri-Met’s control. The best Tri-Met can do — and it isn’t much — is to renegotiate with the union, probably to give drivers a higher base salary in exchange for steep cuts in present and future health benefits. And even that will be of very limited value since whatever Tri-Met does pay for will continue to get more expensive over time.

    If we were to trade in Tri-Met for a set of county and city transit agencies (for example), it wouldn’t make much of a difference; the health care problem would still be there. Same goes for canceling MLR; we save some capital money, but wind up paying salary and benefits for two or three times as many operators for decades to come. Over the long term, that’s a bad deal.

    Sadly, a big part of Tri-Met’s strategy here will be to cross their fingers and hope for effective response to health care costs from the private sector and higher levels of government.

  2. As for nickel-and-time fare hikes, that’s been my gripe for a long time. Nickel increases were fine when raising fares from 35 cents to 40 (and yes, I remember those days), but at this point, it’s ridiculous. Just raise fares every few years instead of annually, but do it in quarter increments.

    But that’s really a customer-convenience issue, and won’t do a thing for Tri-Met’s long-term financial problems.

  3. followed by the Great Recession.
    ~~~>Complete misnomer, the ‘great recession’ is actually affecting about 20% of the population who has gotten laid off, hence reducing tax revenues. 80% of American’s are not even touched by this.

    $800 million is not a small number–especially for an agency the size of TriMet. It’s in the same ballpark as TriMet’s overall annual budget, and twice what the agency spends on operations each year. So it is certainly a significant problem–one which, if not dealt with, could severely impact service levels in the future.

    ~~~>This is interesting issue here in Portland.
    Not a word is said about the PORTLAND POLICE AND FIRE liabilities which stand at $2.549 billion!!
    That’s ok, its just the transit workers who are under the microscope? Curious isn’t it?

    Furthermore the case of A/C TRANSIT shows a management over there that is willing to sacrifice, not so with TRIMET management, they take two week furloughs (aka vacations) but expect us to actually lose something tangible.
    They all come back from their vacations to the exact same exorbitant pay as before, with bonus’s to boot!

    Something is stinking up the house here, and its not just the employees unfunded liabilities.

  4. So much of this problem is driven by rapidly increasing health care costs. That’s not just Tri-Met’s problem; more expensive health care devils every local and state government, every federal agency, and every private business. It’s also the major reason for projected future increases in the national debt.

    So…..cover everyone in the US, and then what happens to the competition foreign hospitals have been providing through the “medical tourism” phenomenon? From dental clinics in Mexico, to plastic surgery in Venezuela, to orthopedic surgery in SE Asia, this has been one trend enabling people to save on major, out-of-pocket medical services. I have read that even corporations have joined in on the action, http://money.cnn.com/magazines/fsb/fsb_archive/2007/05/01/100003808/index.htm
    or shopping among domestic providers, although I am not sure how it integrates with US based health plans.
    http://www.healthjournalism.org/blog/2010/07/corporations-push-domestic-medical-tourism/

    So would medical tourism work for Tri-Met employees? Or Tri-Met retirees? Or other government employees? Maybe, Al M should weigh in on that one :)
    (Note: I would be hesitant on the $1200 heart valve replacement offered in India. Some things are just too good to be true.)

    I know this is disturbing the waters; just couldn’t resist asking, though.

  5. [Moderator: Numerous arguments which have been repeated by JK hundreds of time and disputed by many removed. Occasional dissent is welcome. Repetitive domination of discussion threads is not. You’ve had plenty of say on these issues JK, you’re our #1 outside commenter. Take a break. – Bob R.]

  6. Al: Complete misnomer, the ‘great recession’ is actually affecting about 20% of the population who has gotten laid off, hence reducing tax revenues. 80% of American’s are not even touched by this.

    I would heartily disagree. Many Americans have seen hours, pay, and benefit cuts (such as is being proposed for you, Al). Many Americans have seen their homes plummet in value, and many of these are underwater on their mortgages as a result. Many American business owners have seen their receipts dry up. Many Americans–even those with steady jobs and good borrowing histories–are finding it hard to get credit. And many Americans are seeing the services they depend on–such as transit–being slashed.

    If you change “80%” to about “2%”, I’ll agree with you–the wealthy have been doing fine. Recessions can be quite productive for those who have money, especially if deflation occurs. But beyond that, they negatively impact everyone.

    Al: Not a word is said about the PORTLAND POLICE AND FIRE liabilities which stand at $2.549 billion!! That’s ok, its just the transit workers who are under the microscope? Curious isn’t it?

    Well, this here is a transit blog–discussion of police and fire pensions is off-topic. That said, you may have a point–many people (unfortunately) consider police and fire protection “essential” services and transit a useless boondoggle; I’d wager few have the opposite view. One other difference, though, is that the police and fire pensions, while not “funded” (there isn’t a big pile of cash in the bank sufficient to pay out the expected value of future claims), have a dedicated revenue stream–the main concern is that the stream might not be sufficient in the future to pay out claims and thus might affect the City’s general fund. TriMet has no such funding mechanism for its pensions.

    Regarding forced vacations–many private companies (and public agencies) book accrued vacation as debt. Many employees of same, when permitted to, will accrue large amounts of it. Forcing employees to take time off is a common way of getting debt off of the books. Should non-ops staff be given real furloughs (i.e. forced time off w/o pay?) as a budget-saving measure? It’s certainly one option to consider.

  7. Ron,

    I’m not sure that preservation of the medical tourism industry abroad is a key concern of US policymakers. (Indeed, it may help bring costs down; unlike the “problem” of imported prescription drugs, it is entirely outside the jurisdiction of US law and thus not easily shut down).

    At any rate, detailed discussion of HCR (beyond noting that ridiculous medical costs are a Big Problem) is probably off topic here.

  8. Regarding forced vacations–many private companies (and public agencies) book accrued vacation as debt. Many employees of same, when permitted to, will accrue large amounts of it. Forcing employees to take time off is a common way of getting debt off of the books. Should non-ops staff be given real furloughs (i.e. forced time off w/o pay?) as a budget-saving measure? It’s certainly one option to consider.

    Executives are already taking true furloughs, not “vacations”; it is unpaid time off. And I strongly doubt that anyone is getting a bonus, something which has not been awarded for years. There have also been no COLAs for at least two years, and in the previous years it was usually a whopping 1-1.5%.

    The furloughs are not as obvious as those in State offices, because individuals schedule their own time off at TriMet and entire State facilities are closed (check out the DMV hours).

    All my comments are entirely my own opinion or observation and in no way are approved by my employer.

  9. OK, I know when I am ganged up on and know when to run for my life, BUT,

    One further comment just so people can really understand why there is labor trouble over here.

    Neil Macfarlane has unilaterally decided that he will not follow contractual law and established past practice at Trimet!

    ATU 757 president Jon Hunt explains:

    http://www.youtube.com/watch?v=xbONAy2QV8o

  10. “Just how bad is it, anyway?”

    I object to some of your spin, characterizations and omissions.

    Numbering the points hopefully will discourage avoidance.

    1. The recent audit with the large unfunded benefits liability is neither a surprise or a result of “unexpected” increases in health care costs.

    2. The prior audit numbers were severe and presented by critics to the tone deaf board. Even when the June 2010 meeting was passing the new budget the board yawned at the then $600 million liability even when Hansen reluctantly admitted that if it were funded it would take $50 million/year. The soaring liability has been known for years.

    3. The new audit says it would now take $75 million/year to fully fund with nothing currently set aside. But the auditors got the information form TriMet who already knew of the huge increase when Hansen spoke back in June. It was disingenuous for Hansen to use the old audit number just because the newer outside audit had not been officially presented yet.

    4. The current $27 million in budget cuts matches last year’s $27 million increase in cost of benefits. Management blamed the economy.

    5. Similar yearly increases are projected with no funding to pay them. That’s what an unfunded liability is. This means without additional revenue TriMet is unable to pay for operations and benefits obligations for years to come. That’s the result of a massive liability and no trust fund to pay it.

    6. There has NOT been a “sudden appearance of this issue on TriMet’s books”. No more than the issue did when it appeared in the last audit. YOu’re mixing up the audit with Metro’s books. The unfunded liability does not appear on TriMet’s “Books” [financial statement] as you are inferring. And did not previously. The change in accounting requirements you are referring to was adopted in 2004 and TriMet had been tracking the growing liability for years. As pointed out numerous times by critics that are then called ideologues making up things. Nothing changed this year but for the mention by auditors that NEWER rules will require TriMet to include in their financial statements, part or all of the liabilities. TriMet accountants stated they will complete the addition of the required portion of the liability to their financial statements some time next year.

    7. The current fiscal crisis TriMet faces is NOT due to how you present it. There were no change between the last 08 audit and this 10 audit. Both detailed the unfunded liabilities.

    Your characterization is wrong: “now requires that the total liability be estimated and reported”.

    8. “And now, it appears that the bills are coming due.” Yes and last FY it caused an increase in payout of $27 million.

    9. I’m not sure how to cast your in explicable misrepresentation of when TriMet learned of the fed 60% to 50% reduction. I’s forced to conclude it is deliberate as you are

    fully aware, as reported in several newspapers, that TriMet knew at least 18 months earlier. The evidence has been posted here and discussed many times.

    Your linking to TriMet’s press release claiming they only found out in late July is pretty lame.

    10. “This prompted the agency to go hit up its partners for more cash” No such “cash” was found at all. Under tremendous objection by many the partners went out and agreed to borrow more against the other revenue streams they were already raiding.

    11. The so called trimming was an illusionary hatchet job to an already pared down project that did not include many station amenities.

    12. The labor dispute is tumultuous but regardless of it’s settlement it will have very little effect on the fiscal crisis and unfunded liabilities. It’s too late for that. Had TriMet listened to and acknowledged the red flags years ago they problem would be manageable. Now it is insurmountable with or without MLR.

    13. Given this reality of current levels of operations and future obligations far exceeding projected revenues the idea of bonding $40 or $60 million for MLR against future operations revenue pure fiscal madness. Made even worse by those who simply want it no matter what because they “personally consider the project important and useful from a transit perspective”.

    14. Of course there is no choice if TriMet faces reality and seeks to preserve current service . TriMet must shut down its capital projects division altogether (laying off the planning staff and putting a stopper in future projects coming down the pipe) and divert the division’s $20 million annual budget to helping plug the agency’s overall budget hole.

    But even this amount will not be sufficient, further underscoring the grave fiscal situation and madness in continuing MLR.

    15. The recently-completed EIS or the millions already wasted are painful but meaningless in the need to stop.

    16. Any discussion of TriMet’s shortages and the effect form bonding $60 for MLR, MUST be extended to the other shares which bond and raid other revenue streams desperately needed where they will otherwise flow. Metro’s share of near $200 million in flex funds are critical to many important infrastructure MSTP projects that will be left unfunded and in typical fashion deferred for years, just like TriMet’s benefits obligations. . Followed by demands for new funding with no mention of the reckless decisions to take countless millions years earlier.

    17. Yes things could get worse. Much worse. I raised that possibility with the board. They threw all caution to the wind.

    The reality is we are already at the situation where the service cuts are severe and the future of the agency–or of public transit in the metro area–is threatened.

    What do you need to see? We just saw a $27 million increase in costs and $27 million in cuts in one year.

    In stark contrast TM staff reported in June that they are fiscally sound yet 3 months later the audit exposes the truth and it’s still ignored.

    18. You are leaving something very severe out of your worst case scenario. The feds don’t come through. TriMet is rushing to spend spend spend our local match to push the project forward when the federal share will not be assured until June of 2012. There are any number of scenarios where that will be postponed or lost.

    Then what we have pilings to no where? And bonds to pay.

    19. How about the cities, county and state funds that are already short and desperately needed for current essential services? Should TriMet and JPACT partners not have considered today’s and tomorrow’s challenges before proceeding and raiding even more dollars?

    20. No matter how much anyone likes the idea of MLR, any genuine due diligence shows that it cannot be paid for without crippling nearly every other community need.

    Because Trimet has no answers they must cease and desist all activities and spending on MLR.

    21. For many stopping MLR is not enough. Many observers like myself view this proceeding with reckless abandon as severe malfeasance. Public officials involved should face equally severe consequences.

    My hope is they are held accountable before pushing us too much further down the track to ruin.

  11. Hey!
    I just figured this out!
    Steve S is Steve Schaap!
    I love watching you at Trimet board meetings!
    I even make videos of your presentations!

  12. Close enough. What took you so long?

    However, I prefer to remain Steve S. here.

    I had already found this video of the meeting and used it in my wide loop of distribution loop.

    http://vimeo.com/16724281

    I supected it was yours or Jason Huff’s rosecity transit work. I’ve used previous ones of his.

    Charles is at 59:00, I’m right after him.

    I stood at the back and talked to a number of your peers and your union pres.
    I asked about you, they said you were there somewhere.
    And one of your peers gave me your cell number.

  13. [Moderator: Italics and blockquotes added to for clarity – Bob R.]

    “Just how bad is it, anyway?”

    Steve wrote:

    SteveS: I object to some of your spin, characterizations and omissions.

    [Donning moderator hat]
    Careful with use of terms like “spin” when referring to other posters–focus on issues, please. I probably would have edited out that remark were it directed to another user here; since it’s directed to me, I’ll let it stand.
    [Doffing moderator hat]

    S: Numbering the points hopefully will discourage avoidance.

    Actually, I appreciate it. No offense–but your prior style is a bit difficult to read (at least for me); this presentation is clearer.

    1. The recent audit with the large unfunded benefits liability is neither a surprise or a result of “unexpected” increases in health care costs.

    2. The prior audit numbers were severe and presented by critics to the tone deaf board. Even when the June 2010 meeting was passing the new budget the board yawned at the then $600 million liability even when Hansen reluctantly admitted that if it were funded it would take $50 million/year. The soaring liability has been known for years.

    Part of the “surprise” I’m referring to is to the public at large–it’s only recently that the issue has been covered. And I would argue that the medical cost increases are somewhat unexpected, when one considers a longer-term planning picture.

    3. The new audit says it would now take $75 million/year to fully fund with nothing currently set aside. But the auditors got the information form TriMet who already knew of the huge increase when Hansen spoke back in June. It was disingenuous for Hansen to use the old audit number just because the newer outside audit had not been officially presented yet.

    $75 years to “fund”, or to pay off the benefits as they come due? My suspicions is that you mean the latter. Trying to fund near-term benefits doesn’t really make sense; given that TriMet has a guaranteed revenue stream which currently can cover the short-term benefits. Long term, better funding of the benefits (and better cash management in general, in order to more easily deal with economic cycles) would be a beneficial thing.

    4. The current $27 million in budget cuts matches last year’s $27 million increase in cost of benefits. Management blamed the economy.

    There were also significant drops in both tax revenue and especially ridership. The latter was partially made up with a fare increase. There’s a lot of things pro and con contributing to this, including the economy.

    5. Similar yearly increases are projected with no funding to pay them. That’s what an unfunded liability is. This means without additional revenue TriMet is unable to pay for operations and benefits obligations for years to come. That’s the result of a massive liability and no trust fund to pay it.

    Even a trust fund would run into issues if the actuarial assumptions being made in its funding schemes were violated. A fund would permit the blow to be cushioned, which is one reason to establish one; but a fund designed for a $50 mil/yr payout would need additional capital were the annual outlay to increase by 50%. This is one reason, of course, why establishing such a thing going forward is a Good Idea.

    6. There has NOT been a “sudden appearance of this issue on TriMet’s books”. No more than the issue did when it appeared in the last audit. YOu’re mixing up the audit with Metro’s books. The unfunded liability does not appear on TriMet’s “Books” [financial statement] as you are inferring. And did not previously. The change in accounting requirements you are referring to was adopted in 2004 and TriMet had been tracking the growing liability for years. As pointed out numerous times by critics that are then called ideologues making up things. Nothing changed this year but for the mention by auditors that NEWER rules will require TriMet to include in their financial statements, part or all of the liabilities. TriMet accountants stated they will complete the addition of the required portion of the liability to their financial statements some time next year.

    GASB 54 was phased in over time, IIRC. Not sure when TriMet was first affected by its requirements.

    7. The current fiscal crisis TriMet faces is NOT due to how you present it. There were no change between the last 08 audit and this 10 audit. Both detailed the unfunded liabilities.

    Your characterization is wrong: “now requires that the total liability be estimated and reported”.

    8. “And now, it appears that the bills are coming due.” Yes and last FY it caused an increase in payout of $27 million.

    Here’s the question for you. TriMet has been meeting its pension requirements on a pay-as-you-go basis–in retrospect, a questionable practice for the reasons discussed, but standard practice in public administration. The main issue, it seems, is a significant increase in the annual payout needed; with the additional prospect that the payout figure will continue to grow (particularly if healthcare costs continue to rise), consuming an increasingly large share of TriMet’s budget. Given that bankruptcy isn’t usually a concern for a public agency (thus maintenance of a trust fund capable of paying out all outstanding benefits, or a sound approximation thereof, isn’t needed to protect the interests of retirees), what size of reserves should TriMet try and fund?

    9. I’m not sure how to cast your in explicable misrepresentation of when TriMet learned of the fed 60% to 50% reduction. I’s forced to conclude it is deliberate as you are fully aware, as reported in several newspapers, that TriMet knew at least 18 months earlier. The evidence has been posted here and discussed many times.

    Again, please tone down the personal remarks.

    Your linking to TriMet’s press release claiming they only found out in late July is pretty lame.

    Feel free to supply alternate links. I did link, you’ll note, to Wendell Cox as well, so I’ll thank you not to cast aspersions on my motivations.

    10. “This prompted the agency to go hit up its partners for more cash” No such “cash” was found at all. Under tremendous objection by many the partners went out and agreed to borrow more against the other revenue streams they were already raiding.

    I use “cash” to mean money; not to imply anything about the source of funds. Again, you read far too much between the lines; it’s not necessary for the conversation.

    11. The so called trimming was an illusionary hatchet job to an already pared down project that did not include many station amenities.

    I’m not sure what your objection is here. Surely you’re not criticizing TriMet for spartan station design…

    12. The labor dispute is tumultuous but regardless of it’s settlement it will have very little effect on the fiscal crisis and unfunded liabilities. It’s too late for that. Had TriMet listened to and acknowledged the red flags years ago they problem would be manageable. Now it is insurmountable with or without MLR.

    The $27/year million gap between what TriMet was anticipating paying some years back, and what they actually have to pay, is significant but not “insurmountable”. And a significant reduction in current payroll costs could go a long way to making up the gap.

    The issue isn’t that TriMet didn’t know it had pension liabilities to pay each year; it’s that the figure is higher then they had expected when the deals were negotiated.

    13. Given this reality of current levels of operations and future obligations far exceeding projected revenues the idea of bonding $40 or $60 million for MLR against future operations revenue pure fiscal madness. Made even worse by those who simply want it no matter what because they “personally consider the project important and useful from a transit perspective”.

    14. Of course there is no choice if TriMet faces reality and seeks to preserve current service . TriMet must shut down its capital projects division altogether (laying off the planning staff and putting a stopper in future projects coming down the pipe) and divert the division’s $20 million annual budget to helping plug the agency’s overall budget hole. But even this amount will not be sufficient, further underscoring the grave fiscal situation and madness in continuing MLR.

    Somehow I thought you would be in support of that idea. :)

    15. The recently-completed EIS or the millions already wasted are painful but meaningless in the need to stop.

    16. Any discussion of TriMet’s shortages and the effect form bonding $60 for MLR, MUST be extended to the other shares which bond and raid other revenue streams desperately needed where they will otherwise flow. Metro’s share of near $200 million in flex funds are critical to many important infrastructure MSTP projects that will be left unfunded and in typical fashion deferred for years, just like TriMet’s benefits obligations. . Followed by demands for new funding with no mention of the reckless decisions to take countless millions years earlier.

    Which projects do you have in mind?

    17. Yes things could get worse. Much worse. I raised that possibility with the board. They threw all caution to the wind. The reality is we are already at the situation where the service cuts are severe and the future of the agency–or of public transit in the metro area–is threatened. What do you need to see? We just saw a $27 million increase in costs and $27 million in cuts in one year. In stark contrast TM staff reported in June that they are fiscally sound yet 3 months later the audit exposes the truth and it’s still ignored.

    18. You are leaving something very severe out of your worst case scenario. The feds don’t come through. TriMet is rushing to spend spend spend our local match to push the project forward when the federal share will not be assured until June of 2012. There are any number of scenarios where that will be postponed or lost. Then what we have pilings to no where? And bonds to pay.

    Under what circumstances would the Feds fail to fund a project which is approved for final design and for which initial funding commitments have been made? Is MLR particularly at risk for losing funding, and if so, why? It received a “medium-high” rating from the Feds, which typically assures funding won’t be lost due to reasons of technical merit. The unstable political situation in DC is a concern, but one which affects pretty much every federally-funded capital project out there.

    19. How about the cities, county and state funds that are already short and desperately needed for current essential services? Should TriMet and JPACT partners not have considered today’s and tomorrow’s challenges before proceeding and raiding even more dollars?

    It’s not as if the Milwaukie City Council and Clackamas County had guns pointed at their heads–this is where the decision to weigh transit vs other needs gets made (and where it should be made). And of course, the voters may get their say as well–Milwaukie may end up withdrawing its $5 million contribution; and you’ve hinted before that there might be a referendum of Clackamas County’s share as well. (Is there one in the works which you are aware of, or was that speculation on your part?)

    20. No matter how much anyone likes the idea of MLR, any genuine due diligence shows that it cannot be paid for without crippling nearly every other community need. Because Trimet has no answers they must cease and desist all activities and spending on MLR.

    21. For many stopping MLR is not enough. Many observers like myself view this proceeding with reckless abandon as severe malfeasance. Public officials involved should face equally severe consequences. My hope is they are held accountable before pushing us too much further down the track to ruin.

    In what way? Are you suggesting incompetence, or more serious issues?

  14. I’ll address others later, not much time right now but for one item.

    There is something strange here.

    9. I’m not sure how to cast your in explicable misrepresentation of when TriMet learned of the fed 60% to 50% reduction. I’s forced to conclude it is deliberate as you are fully aware, as reported in several newspapers, that TriMet knew at least 18 months earlier. The evidence has been posted here and discussed many times.

    Scotty responded:

    “Again, please tone down the personal remarks.

    >Your linking to TriMet’s press release claiming they only found out in late July is pretty lame.

    Feel free to supply alternate links. I did link, you’ll note, to Wendell Cox as well, so I’ll thank you not to cast aspersions on my motivations.”

    The reason you are perceiving something personal is due to your refusal to acknowledge and accept that TriMet knew all along.

    I’m simply speculating that it appears you are doing so deliberately.

    What is one to think about your persisting with a known and reported falsehood that has already been discussed w/links right here?

    If you can’t explain why you would persist in repeating a TriMet falsehood what do you expect?

    And you actually ask for the links to be regurgitated all over again? Honestly, Scotty I am sincerely perplexed as to your motivation.

    If you genuinely forgot the lengthy vetting of that topic along with the sources of the contradictions that’s a different kind of a problem.

    One more

    3. & 5 together

    The $75 million/year is the accountant’s required calculation of what it would take now that the liability is so severe.

    It is calculated not as a yearly payoff of benefits but an ammortorized payment/set aside to accommodate the OPEB obligations. This is not pensions. Those have their own unfunded liabilities.

    The OPEB is $75 million because there is currently ZERO trust fund.

    Hansen used the old audit and said in June it was $50 Million when he knew it was much larger. He said, after Clark repeatedly asked, that the “ammortorized requirement to fully fund it would now take $50 million per year if they were to begin fully funding it. He also quoted the requirement to tally the total liability and yearly requirement, but they were not required to fund it. Gee how responsible has that been?

    I get the impression that you cannot accept the fact that TriMet has known about this mounting problem for many years.

    It’s important to get it right in discussing the TriMet crisis and not obfuscate or muddy the fiscal mess like McFarlane did with his, “Apples and Oranges mixed together to create an unreasonable number”. His mischaracterized of TriMet’s own audit flies in the face of the praises staff gave the auditors for their work.

    So this is not your version of “Trying to fund near-term benefits doesn’t really make sense”

    It’s also should be abundantly clear to you that TriMet does not have a sufficient guaranteed revenue stream to cover the short-term benefits.

    What is more evidence of this than the $27 million increase in fringe benefits costs that preceded the $27 million in cuts?

    TriMet has no source of ADDITIONAL revenue or PLAN to avoid this pattern for years to come. Increased pay outs resulting in cuts to service.

    Instead they are about to bond $60 million against an already heavily insufficient revenue stream.

    This is madness that you must acknowledge if our discussions are to have any forward movement or reach any conclusions.

    Instead you are raising hypothetical scenarios where a trust fund, if it did exist, could also have problems?

    Here it is in cold blooded reality.

    There is a zero OPEB fund now, a $816 million liability and an auditor’s verified calculation that it needs $75 million per year to prevent it from getting bigger.

    That means that because there is no source of new or additional revenue the hole and yearly hit will worsen.

    There is no interpretation or gray area for TriMet to exploit and obscure.

    Bonding $60 million for MLR against this reality is certainly far worse than incompetence.

    What do you call it?
    Investing? :)

  15. I’m simply speculating that it appears you are doing so deliberately.

    I’m simply speculating that it appears that you are acting like a jerk, Steve. Scotty is engaging you on your topics in a sincere and direct manner. Lighten up.

  16. Steve,

    I wrote in the article:

    One other piece of bad “news” which came over the summer–news is in quotes because a good argument can be made that it should not have come as a surprise to TriMet, and the agency failed to adequately prepare for the contingency–was the announcement that Uncle Sam would only be picking up (at most) 50% of the tab for Milwaukie MAX, not the 60% match which the New Starts program commonly does for smaller projects.

    When I go back and read my own words, it seems that I was explicitly including the criticism that TriMet’s “surprise” is unwarranted. I was doing so in passive voice for editorial reasons–but your repeated suggestions that I’m being dis ingenious is a) ill-founded, and b) crossing the line. I don’t work for TriMet (or for any other players involved); I’ve no financial or professional stake in any of this. I’m a volunteer who works on this site on my own time, because I believe it’s a right thing to do.

    And, consistent with site policy, I avoid making any speculation on your motives, and I make the implicit assumption that you are here in good faith. I’ll plead guilty to not extending certain public figures the same courtesy, but I try to make it a point not to personally attack, or question the motivations of, participants in the forum.

    Please show other commenters here the same courtesy.

  17. Bob R.,

    I’m simply speculating that it appears that you are acting like a jerk, Steve.

    I’m generally an admirer of your work as a moderator and poster here, but feel that this remark is inappropriate and can (and probably will) lead to a degradation of the conversation here. Would you please consider removing it?

    [Moderator response: The point of that sentence is that its a 1:1 structural mirror of what Steve said to Scotty, to point out just how inappropriate the remark was. The fact that you took offense to it shows why Steve and others shouldn’t be using it. So it stays. – Bob R.]

  18. Easy fellas, I am as sincere as Scotty. I certainly wasn’t suggesting he worked for TriMet or had personal gain at interest. At worst I only suspect his enthusiasm for LRT may have him wearing those rose colored glasses. No attack or offense intended.

    I’m merely seeking some incremental conclusions versus the spinning circle.
    Why is it we can’t agree on some of these obvious pieces?
    TriMet’s “summer surprise” about the 50% was a flat out falsehood. We know this and it’s been reported several times in various publications. Duin et al.
    There’s no case still open.
    So why use TriMet’s false claim of surprise in evaluating the current calamity?
    It wasn’t true and has nothing to do with the mess.
    The gap resulting from it does but it was TriMet’s own making.
    They recklessly ignored or suppressed the real fed match and it caught up with them in the summer.
    It’s another demonstration of shady management.
    Not “news from the feds”.

    Same goes for the $27 million in cuts that followed the $27 million rise in the cost in benefits. McFarlane and Hansen did not tell the board about the $27 million increase when requesting approval of the cuts. That was buried in the audit.

    Similarly, McFarlane’s fruit remark was also a flat out falsehood.
    The “unreasonable number” claim was false.
    That is certain.
    We should all be able to agree on the auditors reality cat that McFarlane tried to put back in the bag.
    There is a zero OPEB trust fund now, a $816 million liability and an auditor’s verified calculation that it needs $75 million per year to prevent it from getting bigger.
    Anything less and the problem grows.
    The problem I’m seeing with you guys accepting this is you can’t accept the unavoidable conclusion it draws.
    That there is no way for TriMet to contribute to MLR.
    Sorry if I swerve into what you perceive as personal attacks but how about an explanation?
    How do you possibly recognize the audit and still imagine future excess revenue for TriMet to use for MLR debt service?
    You can’t. Unless you use McFarlane’s fruit salad approach of casting it aside as “unreasonable and pretend it will be there.

    And the $816 million is only OPEB. The pensions are another $250 million unfunded liability.
    It’s mathematically impossible by a long shot for TriMet to pay for MLR without enormous sacrifice to operations and benefits obligations.

    Equally false is TriMet’s and their partner’s pretense of local match funding being secured.
    No such accomplishment has occurred in the slightest. They’ve merely agreed to raid other funding sources without any assurances they will be successful.
    I can tell you with complete confidence Clackamas County and Milwaukie will not get their share anywhere.

    JPACT, Milwaukie City Council and Clackamas County NEVER “weighed transit vs other needs”. There’s been a total absence of such due diligence scales.

    There’s a pattern here. TriMet’s falsehoods used to raid funding from other needs that are already insufficient.

    I am as adamantly opposed to this as Chris once was to TriMet bonding against future operations revenue.
    But it seems that as the problem has gotten more severe his opposition has evaporated.

    I’m then stuck being percieved as too personal if I say that it appears as though proponents will accept anything to keep the MLR alive?

    [Moderator: Typo-induced boldface of the whole 2nd-half of the comment corrected. – Bob R.]

  19. I’m then stuck being percieved as too personal if I say that it appears as though proponents will accept anything to keep the MLR alive?

    I think you’re still missing/ignoring moderation among light rail proponents, Steve.

    I’ve said before that I support paring back or phasing of the project, or even delay, *if* it can be shown that it would not jeopardize the federal funding agreement or kick the conclusion of the project back for years and years. In short, I don’t want a reboot that delays this a decade or a generation.

    Given that you’ve previously advocated for complete cancellation multiple times (rather than just for delay), and have advocated for complete canning of the TriMet planning staff (which would prevent a short-term reboot of the project), please forgive me if I’d rather hear from other sources as well as you as to whether such a delay is even feasible.

  20. I supected it was yours or Jason Huff’s rosecity transit work. I’ve used previous ones of his.

    Actually it is a joint work. We have a production company, its called 2LonelyGuys productions.

    Actually I don’t know why it took me that long to figure it out.

    Your post previous to my “eureka” moment is what gave you away.

    I recognized it because I actually do enjoy watching you at the meetings.

    I got to say this about the right wing guys, they are kind of entertaining, really.

    Not all of what they preach is horse hockey, there is quite a bit that I agree on in there, like this:

    and have advocated for complete canning of the TriMet planning staff

    hehe….

  21. Bob R.:

    1) As a moderator you’re supposed to be more of an adult than the rest of us.

    2) I believe there’s areal difference between saying someone is being purposely obtuse and calling them a jerk. You have every right to leave the comment as it stands, but I’d argue that it doesn’t make you look good.

    This will be my last posting on the topic, I don’t intend to take away from what is otherwise an interesting conversation.

  22. I’d just like to note, saying someone is a jerk and saying someone is being a jerk to somebody/acting like a jerk are two completely different things.

  23. Bob,

    Nice try, but you can’t make up an impossible third option in order to distance yourself form the MLR madness without opposing it.

    You’re either with the madness or you’re agin it. Which is it?

    There is no “delaying” or “postponing” option that miraculously re-boot it in a little while. Unless you know of some enormous bailout to fix trimet and provide real funding for the local match.

    The reasons (madness) for stopping it are too severe.

    But the windfall to those services about to be raided will be very helpful.

    We all know TriMet simply cannot afford the MLR bonds. They will need many years to adapt their structure to sustain transit service and Al’s job and pension.

    The MLR flex funds from Metro amount to nearly $200 million and could easily help the Sellwood bridge funding and other needed infrastructure region wide.

    The Lottery profits are needed for many higher priorities.

    The Urban Renewal shares are thoroughly scandalous.

    Yes I have previously advocated for complete cancellation multiple times. The cost and affordability far outweighs the project’s usefulness. Simple enhanced bus service would prove it. And despite JPACT’s propaganda the people do not want MLR. It would get crushed in any vote today. I’ll bet it would even fail in Multnomah county.

    There is no reason to keep the associated TriMet planning staff at the expense of Al and bus service. Most of the lobbyists and public relations staff could go too.

    Get rid of the capital projects guy running the place and put in a fiscally conservative professional and see it turned around.

    I could find several in a couple days.

    While TriMet rushes to spend spend spend the public uprising grows.

    With all the Steves and Als joining forces TriMet can be beaten. :) Plus we can get all the jerks on our side.

  24. With all the Steves and Als joining forces TriMet can be beaten. :) Plus we can get all the jerks on our side.

    Hehe!
    See what I mean, these guys are really entertaining!

    But in all seriousness, when I watch Steve delivering his comments at the board meetings its hard to just dismiss it.

    Lots of his stuff has factual basis, I do think he makes sense on lots of levels.

    I really believe that the public does not want this to go forward, despite the kumbaya of the public officials. (quote from John Charles)

    I think the public has a right to have a say in all this.

  25. You’re either with the madness or you’re agin it.

    Sorry, Steve, that’s the kind of fallacious logic which was used to justify the Iraq war. I didn’t fall for it then, and I’m not falling for it now.

    There is no “delaying” or “postponing” option that miraculously re-boot it in a little while.

    Why are you reversing your position from a few months ago when you told me a delay was feasible? Do I have to go reproduce the reference?

    The reasons (madness) for stopping it are too severe.

    Translation: Agree 100% with Steve’s particular set of priorities or you’re a madman.

    The Lottery profits are needed for many higher priorities.

    You have that backwards. The fact that people have come to rely on the Lottery, which was originally supposed to be for “economic development” and optional projects, for what should be mainstream general fund items, is the problem.

    A regional transit bridge is a perfectly legitimate Lottery-funded discretionary project. School funding should not be.

    Either you believe that playing the lottery is 100% optional (in which case you can simply avoid expenditures you don’t like by not playing), or you believe the funds are fueled by addiction, in which case it is morally wrong to have a lottery in the first place.

    So which is it? Are you with us or against us?

    The Urban Renewal shares are thoroughly scandalous.

    That fact that you keep saying so (very loudly) does not make it so.

    And despite JPACT’s propaganda the people do not want MLR. It would get crushed in any vote today. I’ll bet it would even fail in Multnomah county.

    Put MLR and the CRC and the Sellwood all up in one tri-county vote in the same election, and I’m with you. Let’s see what happens.

    With all the Steves and Als joining forces TriMet can be beaten

    Gee, I thought you were about reform, not “beating”.

    To answer your question, given your complete disrespect for my position and people who don’t march in lock-step with your opinions, I guess I’m “against” you. But that need not be the case, given more genuine facts and less seething invective.

  26. Just for the record, I am NOT against light rail.
    It makes perfect sense in many situations.
    The blue line is very successful and could not be duplicated by bus service.
    Hard to argue against the red line to the airport, it is a great service for the most part.
    The yellow line will have value when it goes north, right now I would say bus service would serve that community better.
    The green line is questionable, so its a little quicker than taking the bus to get to downtown, I don’t see it as real value.
    I am sorry, I don’t see the value in the Milwaukie line either.
    A big boondoggle disrupting the lives of loads of citizens, forget it.
    But the real killer is expansion in the middle of a “recession”.
    No real business expands when they are short of money.

  27. But the real killer is expansion in the middle of a “recession”. No real business expands when they are short of money.

    But the government isn’t (nor is it supposed to be) a “real business”.

    The government is the one entity that can borrow during a recession and stimulate the economy.

    Now, Milwuakie Light Rail is perfectly worth debating on its own merits.

    But the concept of the government creating short-term jobs by debt-financing infrastructure projects during a recession is a completely separate topic. Don’t bash one idea just because you don’t like the other. They’re not the same thing.

  28. But the concept of the government creating short-term jobs by debt-financing infrastructure projects during a recession is a completely separate topic.

    ~~~>We keep hearing that Bob but I have never met even one unemployed person that has gotten a job from any of these stimulus projects, and I am in a position to interact with people that need jobs!

    The Oregon unemployment rate is still too high and all of the jobs that have been created are low end jobs, such as temp work.

    So where are the jobs with this PUTTING OREGON BACK TO WORK slogan I keep seeing.

    I am very suspicious about all the employment claims Bob.

  29. The stimulus was relatively small compared to the problem at hand, and a big chunk of it was tax cuts which by and large aren’t very stimulative on a short-term basis.

    However, there was a tax cut which you yourself received, you probably just never noticed because it was disguised as a change to withholding tables. The govt. wanted it to be maximally stimulative, meaning it wanted people to go right out and spend it. But the downside of that kind of stimulus (for the politicos who arrange it) is it isn’t widely promoted and therefore nobody gets politically rewarded for it.

    See:
    http://www.nytimes.com/2010/10/19/us/politics/19taxes.html

    I am very suspicious about all the employment claims Bob.

    Don’t take my word for it, there are teams of nonpartisan economists tallying it all up:

    http://cboblog.cbo.gov/?p=1326

    But we’re way off topic at this point.

  30. OK Bob, you can have the last word on this.
    Kinda a one size fits all I see.
    It’s not way off topic either because this is all related to Trimet and the trust gap,
    specifically, do we “trust” Trimet to do the right thing and give us accurate information.

    Their credibility is not to high at the moment.

    Good night Bob, Scotty, Steve, et al….

    %*@:-(

  31. Well, one more word on this… since we all seem to be in a cynical mood:

    “PUTTING OREGON BACK TO WORK”

    The real slogan is too long to print on a sign. It should read: “Putting Oregon somewhat back to work, except that we piddled away most of the stimulus trying to please a party that didn’t vote for it anyway and never agrees with us on anything, and we didn’t make it nearly as large as many economists said it should be, and we’re not really going to try anymore, so here you go. Vote for us.” But we all know how that turned out. :-)

    (That’s just my touchy-feely opinion, of course.)

  32. What Bob said (in response to Steve).

    The question “do you support the light rail madness” is a leading one. Ask it in court, and the opposing counsel will utter “objection”, at which point the judge will sustain.

    To answer some related questions:

    * Yes, I support light rail in general.
    * Yes, I support light rail in Portland. The system works–it’s the fourth most popular LRT system in the US, with the other three (LA, Boston, and SF) being in massively larger metropoli.
    * Yes, I support LRT in the corridor–and think that it ought to reach Oregon City. True BRT would be an acceptable alternative IMHO (and might permit easier phasing), but in either case I think that exclusive-ROW transit is warranted.
    * Like others here, I have serious concerns with the funding scheme for the present proposal, and about TriMet’s finances in general. Were this to require a delay in the project, that would be fine with me. I disagree with Steve that TriMet ought to be completely out of the capital projects business.
    * No, I don’t support every rail project that might be proposed. Were someone to suggest spending of hundreds of millions of dollars to rebuild the Council Crest Trolley, I would be highly skeptical of that. The LO Streetcar project as presently proposed? Ugh. Building a rail tunnel under Portland? Perhaps in the future it would make sense, but right now there are far bigger priorities and far more cost-effective projects to consider.

    Like Bob, I think the stimulus should have been larger–and note that the GOP has long advocated for “stimulus”–except that its preferred vehicle for such is tax cuts for the wealthy, under the trickle-down theory. This actually worked in the 1980s; when the money trickled down to American workers–but today it seems to be trickling down into China and India instead. The GOP problem with the 2009 stimulus package isn’t really that it expanded the deficit, or that it was “wasteful”–they just don’t like who got the money.

    And while I’m not a big fan of the Tea Parties, it’s interesting to watch the GOP power struggles going on in DC right now… many of the recently elected TPers have no intent whatsoever of submitting to the GOP establishment. Many conservatives know that they’re being screwed–the difference between them and liberals is that they haven’t quite figured out who’s doing the screwing. But… they’re starting to learn.

    Should be an interesting two years.

  33. Well much of my earler point have been taken adrift.
    The “madness” is the funding scheme with all of it’s mad local pieces.

    There is no getting around it with talk about the intent of the lottery or a delay that only delays the madness.

    Yes the capital projects should be entirley halted until such time as TriMet and their partners can find an alternative to the madness.

    As for the specific projects on the table they are horrible ina variety of ways.
    MLR, LO Streetcar, Barbur Max and CRC all have tremendous fatal flaws that have the public at large in strong oppostion to them.

    I can’t decide which is the worst. Doing to Barbur and 99 what was done to Interstate may be it. But all of these represent outrageously high cost and are being pushed by a narrow and ill conceived agenda.

    We’ve obiously arrived at a point where it takes voter avoidance and all sorts of shenannigans to move these forward. Many of them despicable as they threaten many essential servives including TriMet itself. Thus, the madness.

    Bob, the should a, would a, could a angle on the lottery is meaningless as the lottery has long become the funding source for many important services including schools. The larger reality is the State is maxed out and faces a 3.5 Billion hole.

    That disqualifies the “regional transit bridge & MLR as a perfectly legitimate Lottery-funded discretionary project”.

    Not to mention no prioritizing assessment was ever made.
    We are where we are and it aint pretty.

    Theorizing about where we should be is a distraction.

    That leaves us with stopping the MLR or proceeding against affordablility, against public sentiment, against other dire needs and with no plan to pay for it without tremendous harm to many other budgets that feed current programs, projects and payrols.

    There will be some votes upcoming that will serve as another referendum on MLR. Just as the Levy did. MLR will again go down in flames.

    TriMet’s race to spend millions ahead of the imminent public blockade is official malfeseance that will result in some hefty consequences for
    thoe in control.

    Frankly I don’t see how you’re not worried about yourselves being embarasssed for having at the minimum enabled this.

    Are you at least ready to accept this?

    There is a zero OPEB trust fund now, a $816 million liability and an auditor’s verified calculation that it needs $75 million per year to prevent it from getting bigger. That means there will be no excess future funds for MLR debt or operations.

  34. Every project TriMet has built over the last 25 years has been financially challenging. Its how things work…everyone wants projects, but wants someone else to pay. And its important to remember that Portland’s LRT network is the result of a broad policy concensus with many players, most of whom are elected. Indeed, WES was really the brainchild and baby of Washington County, not TriMet; TriMet just got stuck building and running it. And WES is a cautionary tale to those who think that commuter rail, not light rail will do the job over the Columbia. Clearly it will not.
    [Moderator: Personally directed remark removed. ES] I think we are close…just a few LRT projects away…what with the 25th largest market and ridership in the top 10. Shouldn’t TriMet and region get some credit?

  35. Nick: Can Trimet declare bankruptcy? Would it be legal to do so; that’s what I would like to know.

    Yes. Municipal bankruptcies are covered under Chapter 9 of the US Bankruptcy code. All sub-state government entities (such as counties, cities, and service districts such as TriMet) are eligible for protection under Chapter 9 should they be unable to pay off debts.

    See this article on Chapter 9 bankruptcies for more information. See also Wikipedia, and this article in the Wall Street Journal. Filing a Chapter 9 bankruptcy requires approval of the state; fewer than 600 have been filed in the history of the bankruptcy code. And see this editorial, published only yesterday, concerning talk of the City of San Diego declaring bankruptcy to abrogate its pension obligations (the editorial writer is opposed, for numerous reasons).

    Unlike private bankruptcies (Chapters 7, 11, and 13), municipal debtors cannot be liquidated in bankruptcy court. i.e. were TriMet to file bankruptcy at some time in the future, we would not be treated to the spectacle of busses and trainsets being sold off (and the corresponding services being shut down) in order to pay of retirees.

    Even if it were so inclined to try and use bankruptcy to screw over pensioners–and there’s no indication of that–TriMet cannot presently file bankruptcy because it is not insolvent. And as noted in the top; annual pension debt isn’t likely to exceed revenues any time soon.

  36. [Moderator: Steve’s comment criticizing Lenny and past moderator interventions, along with a restatement of objections to Milwaukie Light Rail removed. Steve hasn’t heeded advice about toning down the incredulity. – Bob R.]

  37. [Moderator: Lenny’s reply to Steve’s comment removed as it I think it was written during the time in which Steve’s comment was up — Merely in the interest of keeping this from spiraling further out of control. – Bob R.]

  38. Appeals to not get personal obviously apply to all posters here, not just Steve.

    Addressing Steve’s question directly (posed above, and repeated in the section Bob removed), it appears that the number to focus on is $27 million–the difference in what TriMet was expecting to pay per year for post-employment benefits, and what it actually has to pay. This is a large number, and one which can definite impact, but one which won’t break the bank.

    Discussion of Chapter 9 was merely in response to Nick’s question–we ain’t anywhere close to that point.

    Some of the rhetoric around the pensions and OPEB makes it sound as though the agency had forgotten completely about its retirement benefits, or hadn’t budgeted for them. It hasn’t FUNDED them–meaning set aside funds for them as incurred, as private organizations are required to do–but paying for them on a pay-as-you-go basis is perfectly permissible for a public agency. But it does budget for–and pay for–these things as they incur each year. The primary problem is the payout is growing faster than originally expected. Concerns about attempting to fund them now (which would take $800 million or so to do immediately) is of accounting interest; this is the size of the pile of cash that TriMet would need to have to pay out expected benefits due to its retirees should it cease operations.

    Should TriMet try and fund its currently-accrued retirement benefits? There’s probably not much of a point in doing so. Should they start setting aside funds for newly-accrued benefits going forward? In the long term, this would be a good idea–not just for TriMet but for all public agencies. But building up such a fund, which would better protect the interests of retirees, better discourage the agency from making extravagant promises now without paying for them now, and (once established) give TriMet a cushion to help soften short-term financial shocks, is a long term project–and perhaps one better commenced in the next boom cycle.

    And funding the retirement system is not a panacea. Even a properly-funded retirement system can get into trouble (think PERS) if the fund managers make unwise investements, or ridiculous promises such as a guaranteed 8% return). Conversely, there are many public agencies operation on pay-as-you-go which have no trouble meeting future expectations–while TriMet’s predicament is not unique, nor is it universal.

    In the spirit of making this debate more constructive, something I would like to see TriMet do–is open up its books more–particularly its long-range forecasts. Transit agencies have generally stable income streams, generally stable expenses, and manage systems and assets expected to endure for decades, given that, long-range planning and forecasting is an essential part of what they do.

    Either TriMet has some idea internally of how they intend to pay for their obligations going forward (one that passes the smell test), or they don’t; and publication and review of this information would be helpful to instill public confidence in the agency. TriMet may well have a good story about how this will all work out, but so far they have been loathe to tell it–permitting all sorts of speculation by those concerned about the agency (and innuendo by those hostile to it) to fester. “Trust us” doesn’t work, guys–many in the community don’t trust the agency, and the best cure for a lack of trust is transparency.

    TriMet is not a corporation with secrets to protect from competitors, it is not a black-ops agency dealing with hostile foreign governments. It’s a transit agency, and excluding sensitive things such as personnel files or information on bids and contracts being negotiated, there’s no real reason to keep the public in the dark about what the agency is up to.

    At this point, I would like to limit the thread to discussion of steps the transit agency can take going forward; not to backward-looking arguments about why and how the agency screwed up, or observations of just how screwed up it may be.

  39. Al M Says:
    Just for the record, I am NOT against light rail.
    It makes perfect sense in many situations.
    The blue line is very successful and could not be duplicated by bus service.
    Hard to argue against the red line to the airport, it is a great service for the most part.
    The yellow line will have value when it goes north, right now I would say bus service would serve that community better.
    The green line is questionable, so its a little quicker than taking the bus to get to downtown, I don’t see it as real value.
    I am sorry, I don’t see the value in the Milwaukie line either.
    A big boondoggle disrupting the lives of loads of citizens, forget it.
    But the real killer is expansion in the middle of a “recession”.
    No real business expands when they are short of money.

    I agree with this comment. The east side MAX was a great deal for the time, and the west side MAX, not too bad. But since Lake Oswego is going to be satisfied with the streetcar, instead of light rail, and there are plans for SC on the Tacoma St./Sellwood Bridge route, I think filling the eastside to Milwaukie with SC would be a lot cheaper than another MAX line. (Besides the Tacoma St. SC would REALLY help my property values!)

    Even good, workable plans and strategies should not be above being revisited as costs and conditions change. It happens in every other industry–at least those that want to remain viable. Why not the public transit industry? So, somewhere in that overall equation of what money goes to what need, there should be a ray of hope for Tri-Mets fiscal woes. I suppose if revenue-to-operating expenses (i.e ridership) remains the equation for resolving personnel costs, throwing in capital expenses seems a little off. But we end up paying for it all, ultimately.

    However, with the new Congress I think we can expect more obstacles to outlandish capital investment in public works. I would also downsize expectations of population growth as well. In fact I’m a little gloomy, looking ahead for the next several years, at least if I were to merely look at economic statistics. Yet I think we will emerge with a more livable society.

  40. Re: “Lake Oswego is going to be satisfied with streetcar”…

    An imperfect but very good predictor of how poorly a candidate did in this month’s LO city council election was how closely that person was identified with streetcar.

    Jeff Gudman, the challenger who publicly seemed to voice the most concern about the project, finished a very strong second out of seven for the three available seats. David Jorling, whose involvement in LO civic affairs seems to have been concentrated in his pro-streetcar activities and positions on the two related CACs finished dead last.

    Of the two incumbents, Roger Hennagin, a former railroad lawyer, volunteer for the historic trolley, and long time streetcar advocate finished fifth. The other, Donna Jordan, a JPACT member not quite as closely associated with streetcar as Councilor Hennagin, finished a weak third and retained her seat.

    It wasn’t a straight liberal to conservative shift as the candidate that some of us perceived as being the most conservative, Dan Williams, finished relatively closely behind Jordan and didn’t win a seat.

    I can’t say what was on voters’ minds, but much of the concern about streetcar voiced at meetings and in the letters-to-the-editor in the Lake Oswego Review seemed to be with the city’s cost liabilities, not just with the streetcar directly but also with the proposed Foothills redevelopment.

    The new Council will have four streetcar supporters in its seven members. One of the four does seem to have some tendencies toward fiscal prudence and may side with the minority if a good case is made against streetcar.

  41. Scotty, thanks for the info. on Chapter 9. Bankruptcy may be the only eventual course, as Trimet’s financial situation appears to be unsustainable.

  42. [Moderator: Complaints about moderator decisions removed–feel free to discuss via email. That said, a personally-directed remark in the post referenced in this space has been edited. –ES]

    And I prefer to keep my name on any posts to Steve S.
    Can you modify Al’s post?

    [Moderator: Done–ES]

    Scotty,
    You are are wrong and continue to mischaracterize Trimet’s fiscal problem.

    My particular rhetoric matches the facts in the audit. There is no question or debate that the agency knowingly and deliberatley neglected to set aside funding for the benefits they agreed to pay. They did so year after year after year. They also kept the soaring liability off of their financial statements. (Something will change in 2011)

    Somehow you think this is proper management because it is “perfectly permissable”?

    Funny that is what Hansen said when he revealed the severity at the June board meeting. “We are required to report the amount of the liabailty but we are not required to contribute to it.”

    You have a number of aspects flat out wrong.

    The $27 million, single year jump in fringe benefit payout was NOT and will NOT be a one time event. It is the entirely anticipated effect from not having a trust fund producing returns and the source of benefit revenue.
    Because of the lack of a trust fund and enormous unfunded liability TriMet will face many years oif similar increases.

    As mentioned above repeatedly, it is not the total $816 million that the audit says needs to be set aside now. But rather $75 million/yearly as calculated over an acceptable ammoritization period.

    That $75 million in additional revenue is what is needed to prevent the $27 million shortage from happening and growing every year.

    TriMet is far short of the projected revenue necessary to for any “pay-as-you-go basis” not matter how “perfectly permissible for a public agency” it is.

    If you can’t get this how is the debate ever going to be more constructive?

    And what good would would more open books at TriMet do when you won’t accept what the audit says?

    They do not have stable expenses, and are at severe risk of being unable to endure.

    TriMet has NO long-range planning for their out of control expenses. None.

    This has been mentioned and asked of management and the board repeatedly by Charles.

    No one should be denying either the severity of the fiscal mess or that TriMet has no plan for it. They don’t.

    TriMet has NO idea internally of how they intend to pay for their obligations going forward .

    The audit was the “publication and review of this information”.

    TriMet has no plan, no “good story about how this will all work out” and the audit is NOT speculation or innuendo.

    Instead we get “It’s apples and oranges put together to create an unreasonable number” and let’s go borrow $60 million for MLR.

    [Moderator: Personally-directed remark removed — ES]

  43. “They do not have stable expenses, and are at severe risk of being unable to endure.

    TriMet has NO long-range planning for their out of control expenses. None.”

    >>>> Steve, that’s where Chapter 9 would come in.

  44. Again, please keep in mind the site rules. In particular (and this is my paraphrasing):

    * No personally-directed remarks. This includes questioning the motives or sincerity of other posters. If you think someone is arguing here in bad faith, contact the moderators by email. Likewise, discussion of moderator decisions should be conducted by email. My email address is [my screen name] at gmail dot com; I’ll permit Chris and Bob to share theirs as they like.

    * That said, this is a pro-public-transit, pro-planning blog. Dissenting views are welcome, but the mission of this site is to discuss ways to improve the public transit system here in the Portland metropolitan area. If you think public transit itself is a large boondoggle, there are plenty of other websites in town which are happy to have that conversation. We’re interested in improving transit (and welcome criticism offered in that spirit); not getting rid of it altogether.

  45. Scotty,

    Oh please.
    Not a single word have I ever written suggested “public transit itself is a large boondoggle” that we should “get rid of altogether”.

    If you can’t accept the above circumstances that TriMet faces and what it means for current capital projects then you are not contributing to improving transit.

    You are clearly wrong in your various assessments of TriMet’s fiscal crisis, detailed in the audit, and you are not being either objective or helpful to any remedy.

    Instead you are harming local transit by helping to justify proceeding with MLR with all of it’s madness.

  46. SteveS wrote: Not a single word have I ever written suggested “public transit itself is a large boondoggle” that we should “get rid of altogether”.

    The words above weren’t intended as a backhanded reference to you–as far as I am aware, you have never articulated that position, and I’m not intending to imply otherwise–nor am I suggesting you ought not participate. (I can think of several current and former posters here who HAVE suggested as such). My only advice to you is, tone it down a bit–claiming someone is “not objective” is, again, out of line. I’ll let it stand since I’ve addressed it here, but there’s a difference between “you’re wrong” (which is acceptable) and “you’re nuts” (which is not).

    If I was truly interested in ignoring TriMet’s finances, I wouldn’t post lengthy articles on the subject and invite discussion on the issue.

    I’ll address the larger substance of your posts this evening.

  47. Bob, thanks for holding/deleting my comment…I reached for the “retract” button, but there was none. Thanks ES for your time, energy and patience in leading this discussion.
    Basic question: if TriMet is in the top 10 for ridership, despite serving the 25th largest market, isn’t the agency doing something right?
    Pensions are paid by law, so any cuts will be to service provided the public. Four MAX lines (actually one with three spurs) carries 1/3 of the system’s riders, 15 Frequent Bus lines carry the lion’s share of the bus riders; look for the elimination of many small, lower ridership bus lines…its what any business would do…to cut costs. Operators are the “cost center” of transit, so before we do drastic surgery, can’t the union folks agree to a contract that mirrors what most working folks deal with…co-pays! Time to share the pain with their customers.

  48. Operators are the “cost center” of transit, so before we do drastic surgery, can’t the union folks agree to a contract that mirrors what most working folks deal with…co-pays!

    ~~~> Absolutely, as long as the process complies with existing laws and agreements.

    And personally I want more give backs by our management.

    They have lost nothing, only the riders and now the operations staff is losing, time for them to lose something!

    (if only our union was as strong as the police union we wouldn’t be having this discussion)

  49. I’ll address the larger substance of your posts this evening.

    …or maybe tomorrow. Been reading up on GASB 45 and such, so I can better understand the implications of all of this for TriMet.

    But I will have more to say… promise. :) This is an important issue to discuss.

  50. And here is good outline for anyone interested.

    Great FAQ covering the topic

    http://www.osc.state.ny.us/localgov/pubs/opeb45faqs.htm#actval
    “Under GASB 45, public entities must account for, and report on their entity-wide financial statements”

    TiMet has accounted for the OPEB liability over a couple cycles now, but
    has not contributed anything to a trust fund,
    and they have yet to report it on their entity wide financial statements.

    In the TriMet board meeting TriMet auditors and staff said the addition of the OPEB liability to TriMet’s financial statements would be completed some time next year.

    It has been my suspicion that they are delaying this entry to avoid problems selling MLR bonds and at a preferable rate.

    It is my understanding thet TriMet will be attempting to sell bonds in December.

    However, in a recent work session TriMet staff revealed there is an opportunity for these bond sales to be challenged.

    Given that critics are aware of this opportunity I expect that such a challenge will occur.

  51. TriMet’s ARC (annual required contribution) is $75 million and they are currently paying nothing towards it.

    That means their liability and yearly drain on operations revenue will soar.

    This is what I have been trying to get across and why I have referred to the TriMet’s intentions to bond against future operations revenue for MLR as “Madness”.

    http://www.osc.state.ny.us/localgov/pubs/opeb45faqs.htm#actval

    “According to GASB, the annual required contribution (ARC) is the amount the employer would be required to contribute for the year, calculated in accordance with certain parameters in order to fund the liability over time.

    The ARC is the sum of the “normal cost” (the portion of the present value of estimated total benefits that is attributed to services received in the current year) and the amortized unfunded actuarial accrued liability (UAAL—the cost of those same employees for past, unfunded years of service). The ARC, in effect, recognizes that retiree health benefits are “earned” and are financial obligations accrued during an employee’s entire period of service. The ARC is the annual amount a government would have to pay to fund its liabilities over time. This liability can be amortized up to 30 years.”

  52. As a comparison, we now have Seattle’s Metro drivers voting on a new contract,only 18 days after expiration of the old one!

    All they are losing up there is a pay increase this year, one time only!

    Top pay for Seattle drivers is $28.47 while ours is $25.13!

    So how can they do what TRIMESS can’t do?

    Answer is simple:
    LIGHT RAIL!

    Story here!

  53. And before you start giving me the “cost of living” shtick, the price of gas is the same and the price of rentals is the same as here!

  54. Al,

    Seattle has light rail, too, now–and they are planning on building much more of it. The next project in the queue, the University Link, has a price tag that makes Milwaukie MAX look like a new bus shelter. :)

    Whether or not it’s a good or cost-effective project, I don’t have an opinion on–I’m insufficiently familiar with the Seattle area to comment.

    Of course, King County Metro (the agency which provides bus service to the city of Seattle) doesn’t run Link LRT–a separate agency, Sound Transit does. Many of Seattle’s suburbs, especially beyond the first rink, aren’t served by KC Metro–other transit agencies (Pierce Transit, Community Transit (of Snohomish County) provide this service. And the city of Seattle, hemmed as it as it is by geography, is far denser than Portland and easier to provide quality service to.

    KC Metro is a good agency, and I don’t mean to belittle their success–but if you think that “light rail” is primary difference between the two cities, you would be rather incorrect.

  55. Metro Transit is in big trouble.

    http://metro.kingcounty.gov/am/budget.html#recent

    “Current expectations are that sales tax collections will not rebound to the 2007 levels for at least five years. During this same time, costs of providing transit service continue to rise.
    As a result, Metro’s budget gap will continue to grow over the next few years.
    Even if revenues return to their former rate of growth, Metro’s budget deficit will continue to get progressively worse, [&],revenue would remain significantly below the level needed to sustain current bus service (see chart above).
    , Metro will not be able to maintain its current service or grow services “

  56. Thanks, Steve, to the GASB 45 links.

    Essentially what is going on is this:

    * GASB 45, which has been in effect for several years, requires agencies to either fund the OPEB (other postemployment benefits) obligations, or report the outstanding actuarial value of OPEB as a long-term liability on the balance sheet. However, it carries with it a “phase-in” period, lasting several decades, in which only a fraction of the the outstanding AV must be reported. (FWIW, I fully support the OPEB requirements).

    * TriMet last year established a fund for OPEB; but so far hasn’t contributed any money to it–as a result, TriMet’s oustanding OPEB liability is growing. The current total Actuarial Accrued Liability is the $816.5M figure; the amount TriMet is requried to actually report (the “Net OPEB Obligation”) is, as of FY10, is $152.6M. As Steve notes, this has not been added as a long-term liability on the balance sheet, though TriMet indicates it will be added to the balance sheet the coming year. The liability is fully documented in the notes of the financial statements, however. Given that bond rating agencies do read the notes of financial reports (or ought to), I’d be surprised if this bookkeeping issue makes a difference in the agency’s credit rating.

    * The other issue is the rising healthcare costs–which have caused benefits contributions (both for retirees and for current employees) to jump significantly in the past year; this is the bulk of the reason why TriMet’s OPEB AAL jumped from $632.2M in FY08 to $816.5 million this year. (The liability, which is re-evaluated every two years; generally goes up over time as additional benefits are accrued by the workforce, and decreases whenever a covered beneficiary and/or their survivors die). Quoting the Citizens Advisory Committee on the Budguet Spring 2010 report (another document those interested in TriMet’s finances ought to read):

    Active and retiree medical expense, as a percent of underlying employer payroll taxes (not
    including revenues from the rate increases), was 10% in FY99, 26% in FY09 and is projected to
    be 29% in FY10. If TriMet allows cost trends to continue, retiree and active medical expenses as
    a percent of underlying employer payroll taxes are projected to be 44% by FY15 and 59% by
    FY20. Retiree and active medical costs are projected to be 24% of expenditures by FY20,
    compared to 13% in FY10.

    Note that the above quote references both active and retired benefits–In FY08, TriMet $163.6M for fringe benefits, of which $11.1M went to pay for current obligations to retirees. In FY10, TriMet paid $191.2 for fringe benefits, of which $14.2M went to retirees. The bulk of fringe benefit contributions, however, are going to TriMet’s current staff, not to its retirees.

    The good news for TriMet (though not necessarily the union) is that current fringe benefits can be re-negotiated downwards, which is what TriMet is trying to do. (The union, of course, alleges that TriMet is not doing so in good faith). Retiree benefits are considered “untouchable”, but keeping up with current obligations for retirees is less than 10% of the total fringe benefit expense.

    One figure I don’t have, unfortunately, is an estimate of how TriMet’s fringe benefit calculations might go down were TriMet to win at arbitration. As arbitration has not yet begun, and the number depends on the offer(s) submitted to the arbitrator; such a figure is probably not available–but even a reduction of fringe benefit expenses by 25% would have a significant impact on TriMet’s finances, saving nearly $50M/year which could go to fund the OPEB benefits, or restore service. (And it would also likely produce a drop in the $816.5M figure when it is recalculated in FY12–as much of the figure is accrued benefits for current employees which are subject to renegotiation.)

    This is why TriMet is playing hardball with the union.

    One other useful summary of TriMet’s finances is PortlandAfoot’s coverage.

    paid for benefits; of which

  57. Thank you for continuing to try to understand what is obviously a very complicated topic (I don’t claim to understand it either).

    We are still left with many questions. Here are two to start with:

    1. Why is this increase in costs happening? How much is caused by the cost of health care, and how much is caused by TriMet hiring practices? And related to this, what effect can/will health care reform have on these numbers?

    2. Why are libertarians in favor of funding a benefit that is not vested? (Contrary to your claim that retiree benefits are “untouchable” this year TriMet retirees were sent a letter requiring them to pay additional for their health coverage.) According to libertarian economic theory, money should not be taken from taxpayers now, and invested by bureaucrats, when it could be left with taxpayers for them to invest as they choose. Taxpayers will inherently choose to spend the money in ways that provide a greater return to them than will the government. When the money is needed for the actual benefits, taxpayers can pay then. If the benefits cost too much at that time, then reduce them appropriately then. I don’t find this argument totally persuasive, but it is logical and follows libertarian principles. It is also what TriMet and most other government agencies have done with health care benefits for many years. Until the recent increases in costs, this was considered an acceptable practice.

  58. Thanks, Doug.

    How much is caused by the cost of health care, and how much is caused by TriMet hiring practices? And related to this, what effect can/will health care reform have on these numbers?

    According to TriMet, healthcare costs are a big factor–and that justification is consistent with what other sectors of the US economy report. As far as “hiring practices”, much of this is negoatiated between TriMet and ATU.

    How does the Affordable Care Act affect things? Probably not a heck of a lot–were the ACA a single-payer system that replaced employee-provided (and other private-sector) health insurance, or something either further to the left, it would solve the problem–though one side-effect of that is that many workers (union or otherwise) would demand pay-raises to preserve the same net compensation, and/or to offset taxes needed to fund such a scheme. However, the ACA as passed was designed to be unobtrusive to employer-provided healthcare–instead, it’s a safety net for those who don’t have group insurance. In the short term, ACA provisions may increase costs; though in the long term overall healthcare costs are expected to come down (when the exchanges come online in 2014). But ACA does not directly impact TriMet’s employee benefits.

    Why are libertarians in favor of funding a benefit that is not vested? (Contrary to your claim that retiree benefits are “untouchable” this year TriMet retirees were sent a letter requiring them to pay additional for their health coverage.)

    I’m not a libertarian–so I can’t speak for Libertarians, other than to note that universally reneging on promised benefits is generally not considered kosher among libs (sanctity of contract and all that). OTOH, some libertarians seem more than happy to make exceptions for public employee unions, on the grounds that such arrangements weren’t negotiated at arms length and in good faith to begin with. (I’m not agreeing with the position, BTW).

    There are several advantages to funding benefits as opposed to pay-as-you-go operation.

    1. For the employees, funded benefits are more secure. This is a bigger issue in the private sector, where bankruptcies are common; but having a dedicated pot of money which can only be used for benefits is desirable.

    2. For the agency, the fund acts as a “shock absorber”. If TriMet had a separate retirement fund which was paying out benefits to retirees, and TriMet was paying into the fund instead of directly paying benefits due; TriMet could manage lean times by reducing payments into the fund (accumulating a small amount of debt), and then “restocking” it during the next boom–thus avoiding service cuts.

    3. The Oregon Constitution limits where the State and its municipal entities may invest money (at a high level, investing in stocks, other equities, or funds containing equities, is prohibited). A broad exception in the law exists for retirement funds, however, which CAN invest in the markets and get higher returns then TriMet can earn on its cash-on-hand. Obviously, there’s a downside to this, as overly-aggressive investment strategies can produce catastrophic results.

    4. And finally, now that GASB45 is now in force; it looks a lot better on the balance sheet to have promised benefits funded, as opposed to a whopping long-term liability. Whether this is a “real” reason, or simply a reflection of prevailing orthodoxy in accounting, I’ll let others decide.

  59. To add to the discussion on the Affordable Care Act (ACA), I too believe that at least until the exchanges have had a chance to work for a few years, there will be only minor containment of costs of service.

    It is important when talking about health care “cost” to provide a context for that word. There is the employer/employee “cost” of paying for an insurance plan, co-pays, etc., but then there is the “cost” to the insurance company of paying a provider for performed services, then there is the “cost” to the provider of maintaining staff, medical training, licenses, liability, etc.

    I don’t think there’s going to be much innovation in the near term in reducing either the payouts from insurers to providers or the costs of doing business for providers.

    *However*, one reason (not the only reason, but an important one) that insurance policies cost so much (this is the employer/employee or individual cost of getting insurance) is that many people have dropped out of the market.

    There’s a group of people who does not believe in the near-term that they will need insurance, so they’ve dropped out. There’s the unemployed or those who have been shifted to part-time without benefits, etc., who do not have insurance.

    People who believe that they’re likely to face a big medical bill, or who are currently sick, are more likely to find any means they can to hang on to what insurance they have.

    So what happens is that as healthy (by and large) people drop out of the market (for whatever reason), the people who stay insured are more expensive on average in terms of benefits received. That drives up the price tag of insurance.

    Again, there are many other factors, but that is one.

    Back to the ACA, the much-maligned “individual mandate” seeks to bring as many people back into the market as possible. This will increase the ratio of healthy, “low-cost” insurees in the system, spreading the risk and bringing the per-person cost of a policy down. (At least that is the aim of the policy.)

    So, I don’t think we’ll see “cost” containment immediately in terms of providers, but we will see some “cost” containment for those insured. (Except, of course, for those very few people who just never wanted to be insured in the first place and now are rather clumsily encouraged to get one.)

    Speaking for myself, I’ve been paying for my own policy as part of my business for about 8 years now in the paradise of the individual market. In the past 2 years my policy cost went up 83% and benefits were significantly cut and co-pays and deductibles doubled. I don’t have the leverage of a group plan like TriMet has, but I don’t doubt that policy costs have gone up significantly for them, too, for reasons they don’t directly control.

  60. Steve you can “spin” the Metro contract any way you want to, I would expect you to.

    Seattle’s Metro DID NOT throw their employees under the bus, as Trimet is doing.

    Seattle, in their wisdom, DOES NOT HAVE LIGHT RAIL AND BUS UNDER ONE ADMINISTRATION!

    The Portland Metro region would be wise to consider SPLITTING UP TRIMET!

    Obviously this one administration for everything is not EQUITABLE leaving out various segments of the transit riding population.

    This agency has been hijacked from a transit agency to a land use agency.

    As far as the criminal health insurance industry, read THIS!

    We are being used as the whipping boy so these SOB’s can live in luxury!

    MAC(the knife)FARLAND will never have credibility with the staff after this!

  61. All this service area is seeing is a intentional and deliberate shift from bus service to rail service!

    And that includes the streetcar construction projects.

    Every one of these recent rail projects are area’s that were already being serviced by buses.

    The Trimet metro region has less geographic coverage today than it did 15 years ago.

    You can get to less places on Trimet now than 15 years ago.

    Many places have NO WEEKEND OR SUNDAY service today as they did before Hansen got here and started this insanity.

    The question is why?
    Why is the local government fixated on rail?
    We know the mayor of Milwaukie also works at Trimet so he obviously would support it, I guess.

    From what I understand there is a tangled web of interconnections between various local politicians and Trimet that propels all this, but for what end?

    Somebody somewhere in all this boondoggle mess must be getting some awfully big kickbacks, that’s my guess.

    Because there is no other explanation!

    And now that they have got themselves boxed in, lets take it out on the employees, wonderful, just great, thanks a lot Trimet for caring!

  62. Al,

    I didn’t spin any of the Metro transit situation. That was all cut and pasted from their site.

    It’s their own “spin”? :) come on that was funny

    Scotty,
    It is unfathomable that $50M/year could be cut from fringe benefits.
    That made my head spin.

    If that was possible it would mean they just needlessly cut service when they could have reduced fringe benefits by $27 million.

    I’m not suggestig it Al, just making a point.

    Since the current yearly deficit is north of the OPEB $75 million/year (because of other rising costs) there is no scenario that provides an escape from the predicament.

    There is no scenario where TriMet does not still face an enormous and growing shortage for many years to come.

    Which brings us all the way back to the madness of tryting to bond the MLR $60 million against future revenue that is forecast to be far short of obligations and operations.

    It simply cannot be done with any fiduciary responsibility.

    And that is just the TriMet portion of the MLR financing madness. Other pieces are equally without sanity.

    Al may be right. Perhaps in the break up the bus side gest it’s own operation and taxing district.

    With new manmagement :)

  63. If Engineer Scotty could find out what the actuarial or auditor’s assumptions are in computing the OPEB costs, that could help in assessing whether they bear any relationship to reality.

    This whole subject is not as straightforward as many people assume. For example, consider what the yearly cost would be to fund benefits for an employee who works 30 years, versus one who only works 10 years for TriMet. Unlike pension benefits, which grow with length of service, health care cost in retirement depends on age and lifespan at retirement, as well as whether the retiree is eligible for Medicare.

    Assuming that over the long run, one can invest with a rate of return that equals the rate of increase in health care costs, the yearly cost of the 30-year employee will be less than 1/3 the cost of the 10-year employee. The employee who retires at 55 will cost much more than one who retires at 65, and is placed on a “Medicare Advantage” plan.

    Scotty is right that the terms of employment are negotiated, but the one management proposal that I have seen paid no attention to years of service.

    Is it possible that the current requirement that all drivers be hired as part-timers, who must pay a significant portion of any family health benefits, has resulted in hiring many more older employees who will retire earlier, than if new hires were paid a family wage to work a full 40 hour week?

    If the public is going to evaluate public employee labor agreements, which I think is a positive thing to do, the public must have much more information than raw numbers that were ginned up for the purpose of meeting a specific accounting requirement.

    As anyone who has studied engineering knows, financial accounting often bears very little relationship to cost-accounting. However, it is the latter that eventually determines whether the boat will sink or not.

  64. $50 million/yr in benefit cuts was an example number–arbitrarily picked to match payroll expense. However, the point is that there is a great deal of leverage here–if TriMet drops their labor expenses significantly (whether through renegotiation with the union, or with service cuts and layoffs), that $816 million figure, and all derived from it, ought to go down. How much, I don’t know–this is outside my area of expertise. (After all, I’m not BeanCounterScotty…)

    As Doug points out, the accounting is complex. The estimate of accrued actuarial liability required by GASB 45 is a complicated and expensive undertaking (for much of the reasons stated), which is one reason it is only done every two years.

  65. “There is no scenario where TriMet does not still face an enormous and growing shortage for many years to come.”

    >>>> Which is why Trimet is going to become insolvent sooner or later. Chapter 9 may be the only solution to all this.

  66. This whole “BENEFITS ARE KILLING THE COUNTRY” b.s. would have some credibility it it wasn’t part of a world wide movement to take down the working class.

    I take the global, not the local view on this whole mess.

    One of my most favorite reads,a free market publication btw, THE DAILY BELL has been doing an excellent job covering the world chaos, of which now Trimet employees have been dragged into.

    We are being manipulated, that’s right Steve, you are being manipulated and I am being manipulated.

    When people wake up to the truth of why what is happening is happening them maybe there will be hope for individual freedom.

    If things keep going on as they are, the future is dim, FOR ALL OF US.

    As far as the Metro contract is concerned, forget the reports, the rhetoric, the B.S.

    The only thing that matters is the actions, and up there in Seattle, the drivers are doing just fine, getting higher pay than us, and keeping their benefits in intact, run by an administrator who does not have a Caesar complex.

  67. Al there is some cold blooded local math here that cannot be ignored or remedied by a global look see.

    And BTW you do realize that if the country were to adopt tomorrow a single payer/universal healthcare system that everyone, including your union, was covered under it would mean an enormous reduction from your current coverage/benefits?
    How do you reconcile your call for national health care with your oppostion to giving up any of your current coverage?

    You’re not suggesting you keep yours and everyone else gets crumbs are you?
    Or are you advocating that everyone get your benefits?

    As for Metro Transit, there employees getting higher pay and keeping their benefits intact says nothing about the fact that the agency hasn’t the revenue to fund the rising costs of providing transit service.

    The remedy is to “forget the reports, the rhetoric, the B.S”?

    “Metro’s budget gap will continue to grow over the next few years. Metro’s budget deficit will continue to get progressively worse. Metro will not be able to maintain its current service or grow services”

    Some things up there have to give just like here.

    They may have to reorganize their rail and bus operation to concentrate more on preserving generic bus service. That will probably take at least some union concessions as well.

    I’m with ya on TriMet management and they are about to deliberately plunge into fiscal abyss.

    So I don’t blame you for wanting to sever their grip and avoid being taken down with them.

  68. Al there is some cold blooded local math here that cannot be ignored or remedied by a global look see.

    And BTW you do realize that if the country were to adopt tomorrow a single payer/universal healthcare system that everyone, including your union, was covered under it would mean an enormous reduction from your current coverage/benefits?
    How do you reconcile your call for national health care with your opposition to giving up any of your current coverage?

    You’re not suggesting you keep yours and everyone else gets crumbs are you?
    Or are you advocating that everyone get your benefits?

    As for Metro Transit, there employees getting higher pay and keeping their benefits intact says nothing about the fact that the agency hasn’t the revenue to fund the rising costs of providing transit service.

    The remedy is to “forget the reports, the rhetoric, the B.S”?

    “Metro’s budget gap will continue to grow over the next few years. Metro’s budget deficit will continue to get progressively worse. Metro will not be able to maintain its current service or grow services”

    Some things up there have to give just like here.

    They may have to reorganize their rail and bus operation to concentrate more on preserving generic bus service. That will probably take at least some union concessions as well.

    I’m with ya on TriMet management and they are about to deliberately plunge into fiscal abyss.

    So I don’t blame you for wanting to sever their grip and avoid being taken down with them.

  69. This whole “BENEFITS ARE KILLING THE COUNTRY” b.s. would have some credibility it it wasn’t part of a world wide movement to take down the working class.

    I’m a union member, too. But I’m not sure why I should be concerned with labor issues in all 200 countries of the world? It’s enough to make one’s head hurt. The US and Canada–traditional bounds of the AFL-CIO—is enough for me. Now, if I were getting all the benefits from my union membership that similar members in my union were getting, you would have another ally for your pleading for benefits to US MEMBERS not being reduced.

    I guess another way to look at it, is that all public expenditures are being examined right now, by the popular will, so those who are receiving employment from that system better get on their toes and decide what is really important. Something is going to get chopped.

    It’s not just Republican Congressmen who are questioning how are public funds are being spent. There are lots of fiscally conservative Democrats doing that as well. Simply because you and I live in a so called “progressive state” doesn’t mean that that outlook is normal.

    Let’s not go on a rant about “world wide movements” etc. This is a Portland transportation blog.

  70. The global view is important–part of the reason that US workers are seeing their standards of living diminish is the prevalence of outsourcing. One reason that public employees have been doing better than many in the private sector (and have strong unions, whereas many industrial unions were busted long ago) is that the work that is done cannot be outsourced.

    That said, there are fast food restaurants where the drive through line is connected to a call center in India–when you drive through to order a burger; the guy taking your order lives halfway around the world. The guy cooking your burger still is right there in the kitchen, but that’s because this task requires physical proximity at the current state of the technical art. But the job outsourced in this example–a fast-food employee–is a minimum wage job, which ought to tell you something.

    If there were a way for busses to be safely driven by overseas workers in India (much like Predator drones are flown by airmen sitting safely at a military base), I’m sure transit agencies all over the country would be lining up to buy that system.

    And of course, Ron is right–this is an issue that transcends this blog. Minor off-topic excursions are OK (nothing posted so far is out of line), but major ones are probably dealt with elsewhere.

    Steve–KC Metro has no rail operations to (re)organize; they’re a bus-only agency. Whether TriMet ought to split apart into multiple agencies, running different types of service (and or serving different geographical areas; much as SMART left back in the 1980s) is an interesting question. I generally like the large agency–it makes for a more seamless system–but a set of small agencies can work well too with adequate levels of cooperation. (The problem, from a user’s standpoint, is when agencies in the same area start competing with each other–not for riders, necessarily, but for other resources–and start trying to undermine each other).

  71. And BTW you do realize that if the country were to adopt tomorrow a single payer/universal healthcare system that everyone, including your union, was covered under it would mean an enormous reduction from your current coverage/benefits?

    ~~~> I would be perfectly happy to see a universal health care system put into place in this country. That would be worth my sacrifice indeed!

    Or are you advocating that everyone get your benefits?

    ~~~>OK With that too Steve!

    I guess another way to look at it, is that all public expenditures are being examined right now, by the popular will, so those who are receiving employment from that system better get on their toes and decide what is really important.

    ~~~> I understand the angst among the people and anger of our beloved and corrupt government. It needs to be dismantled, I AGREE, but from the top down, not the bottom up!

    Let’s not go on a rant about “world wide movements” etc. This is a Portland transportation blog.

    ~~~>I’m sorry Ron, but there is interconnectedness here, Portland doesn’t exist without Oregon, and Oregon doesn’t exist without the USA and the USA does not exist without the rest of the world.

    The global view is important–part of the reason that US workers are seeing their standards of living diminish is the prevalence of outsourcing. One reason that public employees have been doing better than many in the private sector (and have strong unions, whereas many industrial unions were busted long ago) is that the work that is done cannot be outsourced.

    ~~~>Thank you MR Moderator!

    And there is a problem, yes, government is losing tax revenue. Meanwhile, back at the ranch, the billionaires are getting richer?

    Is the problem really the government, or is the government just a piece of a larger “unseen” problem?

    I say its the latter.

  72. I know….my own union’s upper echelon keep beating the “worldwide labor movement” drum, too. I’m not going to buy it. That’s only their vision of what’s important, and the tradition of the US labor movement is only bi-national. Stare decisis, baby. “The thing has been decided.” And said “upper echelon” don’t seem to give a d— about displacing their own members by insourcing new people, as long as they are still receiving dues from them.

    I am not a supporter of the progressive, US “Super Society” vision, “Growth Agenda,” “social justice movement” etc. Back to what I said; Public expenditures are going up on the chopping block. Public employees better decide what is worth keeping and fighting for, because there is going to be a lot getting cut. Since for your sake, I hope it isn’t the money you need to live, it would be better for you to advocate cutting other expenses—like unneeded capital investment. Which is what I think you have been doing.

    By the same token, the Deficit Commission and rising conservative Rep. Paul Ryan are considering cutting some things out, that I don’t think they should. And I am trying to alert people I know to make their voice heard about what really should be cut. (As in NOT cutting Social Security, but looking at other entitlement programs that could be cut instead.)

  73. 3 comments I’d like to add to the discussion.

    – Trimet’s short term revenue is not stable, as the current recession demonstrates. They like the state should consider establishing a sizable reserve to smooth their budget. Obviously not feasible now, but it ought to be part of a long range look.

    – How you look at current liabilities is at least somewhat influenced by how you see population growth. Every 100,000 new people earning average income is an additional 27M of annual revenue. I suspect Trimet’s long term budgeting (assuming such exists) leans heavily on the metro projections of significant population growth.

    – Inflation matters. Health care gets a lot of attention for it’s role in busting municipal budgets, but the fact that we’ve been in an extended period of low or no inflation gets little notice. Inflation reduces the present value of future obligations, and if you think we’re in for long term inflation current liabilities don’t look as scary.

  74. Al,

    It’s my understanding that your union is opposed to an reduction in benefits. I suspect there may be an eventual concession made since there will not be any other choice.

    But what ever reduction in benefits you ultimately have to swallow it will be a tiny traction of what you would have to give up with converting to any national health care coverage for workers and retirees.

    Are you telling us that the union sees any cuts to help TriMet’s mess horrific and unacceptable, but ya’ll would accept deep cuts if for the greater good of national health care?
    Then why haven’t the public employee unions advocated conversion to the Oregon Health Plan?

    The answer is as plain as the nose on my face.
    They don’t want that low leverage of coverage for themselves. Only everyone else, for their own good while being forced to pay for better benefits for public employees.

    Imagine how the Oregon Health Plan would have been more successful of all of the public employees were under it?

    Scotty, I understood rail bus separation in Seattle when it was first raised. By “reorganizing” I was not inferring they were one and should be disconnected.
    I was suggesting that as a region they have to reorganize transit in some way. In more pieces or less. It may be they have to cut back on rail to preserve transit service and cross over the revenue to do so. Something.

    bjcefola,
    TriMet should established a sizable reserve and adequate trust fund for benefits decades ago, a dozen years ago, 7 years ago, 4 years ago or this last budget cycle.

    Ate each and every juncture with full recognition of the need TriMet chose to defer their responsibilities.

    So yes it is of course not feasible now, but it is not part of a long range look.
    Instead they are adding to their long range calamity by proceeding with bonding for MLR.

    You may suspect TriMet has some long term budgeting but you would be wrong.
    All they have is a long term projection showing severe & growing shortages and an inability to meets it’s obligations.

    Of course they shrug their shoulders and hope for the best as the hide behind the rose colored rhetoric as they proceed with their madness.

    Consider the OHSU connection. In exchange for an OHSU donation of land for MLR at SoWa, TriMet commits to give OHSU $10 million for their new Life Sciences Complex there.
    TriMet plans to use the land donation as a $15 million in-kind contribution to puff up the local match for the fed match requirement even though they are planning on handing back $ 10 million to OHSU.

    This shady deal is then glowingly described by OHSU’s Brian Newman as the MLR line being essential and leveraging for their expansion.

    The similarities to the Tram pitch are amazing. He just left out “linchpin”.

    I one looks at ALL of the millions planned to be taken from various sources and spent on these new adventures it’s crystal clear the charlatans are not only risking their own operations but are inflicting great harm to many other essential services.

    Notice how there is no one even making any attempt to show how TriMet et al can actually afford this?
    This is how dysfunctional things have become.
    The participants don’t feel any obligation to provide any plan or description of how this works. Instead they gin up a shady and reckless financing agreement and pretend it’s the same thing.

    They’ve long ago replaced due diligence with deliberate negligence mascarading as planning.

  75. Apples and Oranges, Steve. There’s no reason a national public plan would have to be as cash-starved and selective as the Oregon Health Plan. We don’t have to reinvent the wheel here, there’s plenty of other nations with successful public health schemes, and a variety of public/private blends.

    The other thing missing, if we’re going to talk hypotheticals about health care reform, is that if a national plan relieves employers of the most expensive obligations, there’s no reason whatsoever that supplemental coverage, “gap” coverage, etc., can’t continue to be provided as a perk by an employer, but still at a much much lower cost.

    It’s just not an “Either/Or” kind of thing.

  76. I realize all of that Bob.
    My point was the tremendous gap between any Nationalized Health plan we would ever get and the Health care benefits Al now gets.

    My extended point was, do public employees favor a natinal health plan as long as they get the + version with limo-gap coverage?

    Let’s face it public empoloyee unions support politicians who would adopt national health care.
    But I don’t believe they want it for themselves.

  77. Steve,

    This is one reason, I suspect, that the Affordable Care Act is the way it is, rather than a single-payer system: too many constituencies who have better-than-average coverage via other arrangements unwilling to go for a system that provides similar coverage for all (even if one could supplement it). Not just unions, of course–one of the key objections to ACA came from retired people worried it might impact their Medicare benefits (“keep the government out of my Medicare!”). It is, of course, amusing (albeit sad) that the demographic cohort that had single-payer coverage (which is what Medicare is) were unwilling to extend it to others.

    But the bulk of the opposition to HCR did not come from labor, who generally supported the ACA. (It did contain one carve-out for labor; an exception to the “cadillac tax” for union health care plans). The opposition came from other quarters, not unions. And while certain locals tend to fixate on their own members’ compensation and working conditions, not the plight of the working class a whole, the current leadership of the AFL-CIO seems to have figured out that advancing a generally progressive agenda is better for labor than shortsightedly seeking union pork.

    And as Bob notes, the OHP is a last-resort plan for the poor (those who can’t qualify for Medicaid, at least); not a comprehensive plan available to anyone. A health care plan which applies to all should be able to provide a level of care above and beyond the poverty programs.

    At any rate–while I can’t speak for organized labor; I’d happily trade my 90/10 plan at work for single-payer for all. Even if it means my individual contribution (whether through a payroll deduction from my employer, or a tax) goes up somewhat.

  78. Well, as long as you ARE going to talk about HCR:
    1. How would a single-payer system promote cost curbing competition? I’m assuming that US beneficiaries of a SPS would be using US facilities.
    2. Why is the “Medicare demographic cohort” an inconsistency? We are all going to end up in the category–just takes time. Since we have Social Security for retirees does that mean every person should also be entitled to it?
    3.If the current leadership of the AFL-CIO believes in advancing a “progressive agenda” (meaning what, I am not exactly sure) has anyone taken a poll of the membership for their views?

    Just asking, guys….Since entitlements are going to become a big issue I need to be better informed.

  79. (If this post repeats please delete one. I am getting the 504 Gateway time-out error message)

    [Moderator: Done. — ES]

  80. Discussion of HCR is getting a bit off-topic, but…

    1) Single-payer systems can drive down prices by virtue of acting as a monopoly. I know many doctors who won’t accept Medicare because it only pays a fraction of the “cash fee”; but if everyone had Medicare (or similar) then costs could be driven down via bargaining.

    2) Not all of us will end up receiving Medicare–some of us will die first. Social Security (or social insurance in general) makes sense as a benefit for the aged–it’s designed to keep people who are too old to work out of poverty. Healthcare, on the other hand, is something that we all need. Seniors may have age-specific needs, of course, but there really isn’t a reason to have a health program reserved only for the retired. If anything, the need for senior-specific healthcare programs is due to the longstanding coupling of health insurance with employment–an arrangement which I think is dysfunctional.

    3) The AFL-CIO has been supporting the Administration on a wide variety of Democratic agenda items–despite the fact that Obama has gone against union interests in at least two areas (lukewarm-to-nonexistent support for card-check, and support for educational reform policies beyond “pay teachers more money”, including some policies which the NEA/AFT are known to oppose). What union members think about this, I don’t know–that said, one of the Democratic constituencies that DID show up on November 2 was labor.

  81. Since for your sake, I hope it isn’t the money you need to live, it would be better for you to advocate cutting other expenses—like unneeded capital investment. Which is what I think you have been doing.

    ~~~>That is EXACTLY what I have been doing Ron! Don’t get me wrong, there is plenty of waste, and sure, if the cuts are equitable I am happy to pay my FAIR share. But the bloated management gets off scott free here? I don’t think so!

    It’s my understanding that your union is opposed to an reduction in benefits. I suspect there may be an eventual concession made since there will not be any other choice.

    ~~~>Actually Steve at the moment we are opposed to Der Fuhrer’s dictatorial style. And we did give up pay raises for these benefits. Equalize our pay with ‘Seattle and I think we can move forward!

    I one looks at ALL of the millions planned to be taken from various sources and spent on these new adventures it’s crystal clear the charlatans are not only risking their own operations but are inflicting great harm to many other essential services.

    ~~~>BINGO!!!

    And just for the record, I support single payer, I don’t give a damn what it does to my current benefits, which I will now be paying $365 a month for on a before tax salary of $35k. (nope, not all of us Trimet drivers make outrageous overtime pay).

    I’m going to be paying 10% of my before tax wages to the criminal health insurance industry, and that is what I object to most of all!

  82. at the moment we are opposed to Der Fuhrer’s dictatorial style.

    Take it easy, Al. Oppose style and policies all you like but let’s not go into Godwin’s Law territory.

  83. Al said “Der Fuhrer’s dictatorial style. And we did give up pay raises for these benefits. Equalize our pay with ‘Seattle and I think we can move forward!”
    I disagree. Mr. McFarlane is an Engineer by trade and therefore very logical (much like my father–a mechanical engineer). He sees the world as a series of straight lines connecting points A and B. If perchance a mountain is in between A and B he will find a way through it…even if that means cutting the mountain in half. Currently, he is looking at Trimet’s budget…point A is now and B is the future…and he sees the ATU as right in the middle.
    His predecessor– “the Liar” Freddie J.–for all his faults was a consensus builder…(think “can’t we all get along”). He was very good at “the talk” and getting people enthusiastic about Trimet and Trimet’s plans…i.e. Max, Wes, etc…
    Finally, I personally am still not ready to bend over for Trimet…they won’t even promise to kiss me when they are done!

  84. Hey al,

    “According to TriMet, as of October of 2009, the highest hourly rate for a bus drivers was $24.36.”

    So if you are working just a regular 40 hour week, sans OT, that would equate to almost 1K a week, which is way more than 35K a year.

    I am assuming that you have good seniority and get the high hourly wage.

    Just how many hours a week do you average, anyway?

  85. I’m sure Nick’s question was well intentioned and Al has already shared his annual earnings, but please remember that this gets into rather personal territory and if Al doesn’t want to answer there’s no need to read anything into that.

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