Council eyes fix for DATA deficit

Mar. 01, 2013 @ 06:23 PM

City Council members may raise property taxes and renege on a 2011 campaign promise so they can fill a projected deficit in future budgets of the Durham Area Transit Authority.

The deficit – about $1.5 million a year for fiscal 2013-14 and subsequent years – comes because the Republican-controlled N.C. General Assembly has reduced state transit subsidies, and because federal grants that have sustained DATA’s downtown Bull City Connector shuttle service are expiring.

City Transportation Director Mark Ahrendsen briefed council members on the problem Friday, during the council’s second winter budget retreat.

He laid out a menu of options for addressing it, the major possibilities being fare increases, service cutbacks, tapping money earmarked for service expansions and an increase of DATA’s property tax subsidy.

Council members were cool to the idea of a fare increase, which Ahrendsen said could be phased in over a couple years and by the start of 2015 boost DATA’s single-ride charge, now $1, to $1.50.

Members agreed higher fares would likely mean lower ridership, and hit low-income residents who depend on the bus service. “It will drive some people away, probably the people who need it the most,” Mayor Bill Bell said.

They were a bit more willing to consider service cutbacks, with Councilwoman Diane Catotti saying she wants numbers on how many people ride DATA after 9 p.m.

But John Tallmadge, director of commuter resources for system operator Triangle Transit, said his agency’s surveys of riders show that perhaps a quarter of DATA’s customers depend on nighttime service for work.

Bell made it clear he’d be willing to support a tax increase of about six-tenths of a cent per $100 of assessed value to narrow the gap. The city now devotes 3.23 cents on its tax rate to DATA.

“I believe firmly public transit is almost a mandate, to a certain extent, for local governments,” Bell said, adding that because fares can’t generate enough to cover costs, it “has to be subsidized.”

The question of tapping revenue sources earmarked for new service comes because county officials can raise annual vehicle-registration fees by $7 to fund public transit.

Legal authority for the levy comes from the same state law that authorized the local-option half-cent sales tax surcharge for transit that’s going into effect on April 1.

By law, local officials can use sales tax money only for new service, not existing service, so it can’t be used to address DATA’s deficit. But state legislators attached no such string to the vehicle-registration fee, which means it’s available.

Nonetheless, in campaigning in 2011 for the sales tax, Durham transit advocates told voters money from the package of revenue measures the state had authorized would go initially to support new and expanded bus service, and eventually to the development of a light-rail line between Durham and Chapel Hill.

One presentation still available Friday on the website of the Durham-Orange Friends of Transit even said, incorrectly, that state law limited the use of vehicle-registration only to new and expanded service.

Ahrendsen and Triangle Transit General Counsel Wib Gulley both cautioned members that using vehicle-registration money on existing DATA service would mean trading off some service expansion voters were promised.

Expansion “falls off the table” to the extent money for it is diverted into current operations, Gulley said.

But Catotti and Councilman Eugene Brown signaled willingness to use vehicle-registration money. Bell initially said he’d be opposed to that, but he reversed himself after a few minutes.

The council can’t raise vehicle fees itself. The $7 levy is controlled by County Commissioners. Catotti suggested raising the issue at an upcoming meeting of the Joint City/County Committee.

She also said she was “not completely there yet” on raising property taxes for transit, and Councilwoman Cora Cole-McFadden, normally the mayor’s closest council ally, said she likewise had doubts.

Brown suggested asking the General Assembly for additional vehicle-fee authority, but Gulley with understatement noted that such a move would be “a challenge” given the current make-up of the legislature.

GOP members in the House and Senate split in 2009 on whether to allow Triangle governments to hold transit-related sales-tax referenda and consider vehicle-fee hikes at all.

Catotti and Councilman Steve Schewel both said they assign a high priority to giving employees a 3 percent raise that’s embedded in the city’s fiscal planning. That’s despite federal figures showing that inflation is now running at about 2 percent a year.

Administrators said each percentage point on employee pay raises translates into about $1 million in new spending.