BY RACHEL CHEESEMAN

PORTLAND- TriMet received word Monday that the federal government would fund half of the Portland-Milwaukie light rail project, providing TriMet with just under $736 million.

“With the help of our federal partners,” said TriMet General Manager Neil McFarlane, “this project will move forward and improve transit options for this corridor and throughout the region while also creating jobs.”

TriMet originally sought 60 percent of funding, about $850 million, for the project. While the Federal Transit Administration expressed strong support for the project, it could not provide more than 50 percent for projects greater than $1 billion.

The total cost of the line is estimated to be $1.4 billion for the 7.3-mile line, about $200 million per mile, which would extend from Portland State University Park Avenue to McLoughlin Boulevard in Milwaukie.

The rest of the financing is expected to come from various state and local sources.

The city of Milwaukie has promised $5 million, Clackamas County has promised an additional $25 million, and Metro approved about $145 million towards the project. TriMet has appropriated $40 million by issuing payroll tax-backed bonds. The city of Portland has pledged an additional $30 million from tax increment financing. Finally, the state of Oregon has put up $250 million in lottery-backed bonds.

The 10 percent reduction in expected federal contribution leaves the project with a calculated $140 million gap in the budget.

Mary Fetscher, TriMet’s public information officer, said that TriMet will talk with project partners to see if more funds are available, but it will also spend the next few weeks working to make the project fit within the new budget by finding other cost-reducing measures like simplifying station designs.

Fetscher said that while the construction of the rail would benefit those living along the rail, many others benefit from the expansion of the rail system.

“It’s not just where you build it where you see a benefit,” she said. “As we build out our system, more people can connect to more places. We see ridership increase throughout the region.”

BY JACOB SZETO

PORTLAND – TriMet and its employee union presented their final offers to each other on Wednesday after previous negotiations failed.

According to Jonathon Hunt, the Amalgamated Transit Union (ATU), division 757, President-Business Representative, contract negotiations have stalled because of disagreements on healthcare and pensions. Under the final offer proposed by TriMet, new employees hired after April 1, 2012 and all employees who retire after April 1, 2012 would have significantly reduced benefits.

Specifically, the new hires no longer would be eligible for the pension-style plan currently in place. Instead, they would be offered a defined contribution plan, similar to a 401k that many private sector employees receive.

Also reduced are retiree healthcare benefits for any employee who retires after April 1, 2012. Instead of receiving fully paid healthcare benefits during early retirement until Medicare, early retirees would be reduced to three years of benefits.

Hunt equated his union members’ jobs to those of firefighters and police, also stating:

“Our members are professionals in what they do. We are going to strive to make safety our number one issue. The last thing they should have to worry about is healthcare.”

TriMet has notoriously large healthcare benefits and is among the top in the nation for transit districts. These benefits have led to an unfunded liability of $632 million, at their last calculation more than two and a half years ago.

TriMet’s ATU pension plan is also underfunded by $31.5 million, or just 67.4 percent funded, the lowest it has been since 2007.

Calls to TriMet for comment went unreturned.

ATU’s final offer asked for the status quo. This would mean that the previous contract would continue as is, extending cost-of-living increases, wage increases and benefits into the coming contract term of three years.

The ATU collective bargaining agreement with TriMet expired at the end of November 2009. After the 150-day good faith bargaining failed to reach an agreement, the two parties entered mediation.

An impasse was declared July 13, which meant that all negotiation had failed and final offers had to be submitted by July 21. Final offers are required to be made public and are the first chance anyone outside the negotiations can see what is on the table.

Several steps must take place before the contract goes to binding arbitration, in which an arbitrator will choose one of the parties’ “last best offers,” which are different from the final offer.

A group gathered at a bus stop Friday, despite the heat, to celebrate the addition of four low-floor hybrid buses to the TriMet fleet that covers the Line 72-Killingsworth/82nd Ave. route.

TriMet was notified Thursday that it had received $2 million in funds from the Federal Transit Administration after submitting its application in early February to replace some of the oldest buses in its aging fleet.

Mary Fetsch, communications officer for TriMet, said that their fleet of buses was one of the oldest in the industry.

“Hybrid electric buses are part of an important movement towards cleaner technology in our transit system,” said Therese McMillan of the FTA, calling the purchase a smart investment. She said that she hoped to see the FTA function as a partner for communities like Portland to produce on-the-ground results.

Congressman Earl Blumenauer, D-District 3, said that he appreciated this partnership with the Obama administration.

“People understand what we’re trying to do,” he said.

McFarlane said that these buses would help form a base line as TriMet starts to build its “fleet of the future.”

Fetsch said that TriMet has been working to add more low-floor buses that would allow those with disabilities to board more efficiently. The process of lowering and raising a ramp on a high-floor bus can take between two and four minutes with a high-floor bus compared to the one minute boarding process for a low-floor bus.

The ramps on low-floor buses, Fetsch added, are easier and cheaper to maintain because of a simpler design with fewer parts.

Replacing the buses is an expensive endeavor however, with low-floor diesel buses costing $400,000 and the hybrid model $560,000.

“Our hope is to replace aging buses with low floor buses,” she said. “The question is ‘Will they be hybrids or not?’ It’s a question of finances.”

Line 72 has the highest ridership of any of the TriMet routes, providing over 16,000 trips per day. It connects two Portland Community College Campuses, runs through several residential as well as commercial areas and connects with the MAX line in three locations according to TriMet’s general manager, Neil McFarlane.

In addition to a higher fuel economy, Fetsch said that the buses would be a beneficial addition because it would improve air quality by reducing emissions in the area,, and because the quieter hybrid vehicles would make the area along the route more livable.

“I’m looking forward to putting these buses in service as soon as they arrive here in Portland,” McFarlane said. The buses are expected to arrive in about 20 months.

Footage from the announcement is below.

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BY JACOB SZETO

PORTLAND – TriMet approved an $858 million budget for their 2011 fiscal year Wednesday morning.

The budget includes $417 million for operations and debt service and $114 million for rail construction. The total budget was reduced by $20 million from previous projections due to drops in anticipated revenue.

TriMet had a $27 million budget gap. Federal stimulus money filled $7.25 million of the gap and the rest came from administrative cuts, salary and hiring freezes with a reduction of 120 staff, service reductions and fare increases.

Board of director, Steve Clark asked if the current or future budget provided funding for unfunded labor liabilities. Fred Hansen, General Manager of TriMet, told the board that the pension plans were being funded, but that the larger of the two plans is a “bit over 50 percent funded.” He also stated that the $632 million postemployment benefit liability is completely unfunded.

Hansen’s statements on the unfunded liabilities were followed by a comment from board member Lynn Lehrbach that he was “very concerned about the condition that the pension fund is in.”

The board also passed a series of resolutions including authorizing an application to the Federal Transit Authority for funds for the SW Moody Street and streetcar reconstruction project and two intergovernmental agreements for the construction of the Milwaukie light rail project.

One motion proposed by Lehrbach to place a six month moratorium on the purchase of properties to make way for the Milwaukie light rail project out of concern that financing might not be secured for the project, did not pass.

Clackamas County Fire Chief, Ed Kirchhofer testified on the planned Milwaukie light rail stating that there was a “current lack of a regional strategy,” and an “overreliance” on the use of urban renewal districts and tax increment financing.

Clackamas County Sherriff, Craig Roberts followed Kirchhofer and stated that the creation of an urban renewal district to help pay for new rail will “deprive” them of additional deputies while simultaneously creating an increased need for service, and would be a “mistake” for public safety.

Activist Steve Schopp, testified that from experience in Tualatin, the Clackamas County urban renewal plan to finance the Milwaukie rail plan “will not happen.” He also spoke to job losses described as being 600 displaced by 60 businesses from the rail takeover.

John Charles, President of Cascade Policy Institute, OP’s parent organization, called for an independent third-party review board for the Milwaukie light rail project similar to the one for the Columbia River Crossing. John Charles also noted TriMet’s “unsustainable” fringe benefits calling it “institutional suicide” to continue operating in such a manner noting that at least a billion dollars of liabilities are off book in their 10 year financial forecast.

BY JACOB SZETO

PORTLAND - At a Metro work group session last week, TriMet representatives outlined their current and future budget situation, telling the Metro Council that their budget picture is “bleak” and that near-term restoration of transportation cuts is unlikely.

TriMet has continued to cut services over the last two budget cycles due to budget shortfalls. Last year’s shortfall was $31 million. This year $27 million will need to be cut from the budget.

To balance the budget, TriMet plans a five-percent administrative cut, salary and hiring freezes with a reduction of 120 staff, service reductions, fare increases and a $7.25 million federal stimulus backfill.

Over the last few years, total TriMet services have been cut about 15 percent, primarily in bus services. During the same period TriMet’s revenues have continued to grow, with 2008 operating revenues of $395 million and budgeted operating revenues for 2010 reaching $454 million, a 15 percent increase.

TriMet employee compensation has increased along with revenue. In 2008, total employee compensation was $221 million. The $244 million budgeted for this year is an 11 percent increase.

In the meeting, TriMet’s executive director of communications, Carolyn Young, described TriMet’s healthcare benefits package as “generous.” When questioned by Robert Liberty, Metro Council District 6, Young stated that they had a plan to meet the obligations created by the healthcare benefits.

However, an examination of TriMet’s latest financial forecast by Oregon Politico shows that these debts will continue to build at a rapid pace for the next decade. Oregon Politico’s analysis showed that TriMet will accumulate approximately $45 million in retiree healthcare debt annually, creating an unbalanced and unsustainable budget for at least the next ten years.

By 2019, TriMet will have accumulated $427 million in healthcare debt in addition to the $632 million already accumulated, bringing the total unpaid healthcare expenses to $1.6 billion.

Currently TriMet is involved in labor negotiations with its transit union. This contract will determine salary increases, cost of living adjustments, healthcare benefits and retirement benefits.

BY JACOB SZETO
PORTLAND – Buried in the back of TriMet’s latest approved budget summary is a one-page document entitled “Financial Forecast Summary,” which portrays a stable financial future but fails to tell the whole story.

The forecast depicts a growing future for TriMet. Revenues climb 58 percent in 10 years, while expenditures grow by a lesser 50 percent. All the while, TriMet will be mostly running budget surpluses, adding to its coffers an average of $12 million a year.

Markedly missing from the forecast are payments to TriMet’s retiree healthcare system. These payments are short on average by $45 million a year, resulting in an accumulation of an additional $427 million in off-account debt by the end of the 10-year forecast.

Due to a lack of accounting and budgeting rules, these payments, which represent the payments needed to stay current on the agency’s past and current expenses, do not have to be budgeted. Instead, they are kept off the books and relegated to the “notes” section of the annual report, providing an option to avoid paying today’s bills.

The “notes” section provides a disclosure of what TriMet owes and a window into the consequences of not budgeting and paying for its current costs. As of 2009, TriMet has accumulated $632 million of unfunded healthcare liabilities. These liabilities increase by $45 million every year and represent a $45 million budget shortfall.

TriMet’s pension system follows a similar, although less abusive story. The financial forecast shows TriMet will continue underfunding its pension system for 8 out of 9 years when compared to its annual required contribution. Consistent underfunding has led to a total accumulation of $275 million in unfunded liabilities as of 2009, a 225 percent increase from 2001. The forecasted decade will add another $35 million.

Combining past and future shortfalls for both the retiree healthcare and pension systems, TriMet will have accumulated almost $1.4 billion in debts that are held off-account by 2019.

These delayed payments for current and past expenses will have to be paid someday and inevitably will fall on the backs of future taxpayers, essentially transferring the cost of today’s services to tomorrow’s taxpayers because they can.

In the same budget document, TriMet acknowledges the need to incorporate the costs of retiree healthcare and pension systems into its budget, stating, “Over time, TriMet will need to increase annual pension fund contributions in order to achieve 75% or higher funding….TriMet needs to take steps to partially fund a retiree-medical trust….”

But even though TriMet has acknowledged these facts, it has yet to make plans for them, much less follow through on any. It could have to do with the fact that not funding them allows TriMet to spend approximately $50 million more than it has on a yearly basis. To do otherwise would require additional budget cuts of the same magnitude.

If TriMet budgeted for these costs, it would run out of cash reserves (restricted and unrestricted) by 2011. This means that if TriMet were to pay the true cost of its current services, its forecasted expenditures would have to be reduced by just under $270 million for the next decade.

The costs of the retiree healthcare and pension systems are a direct result of labor contracts with unions. TriMet is in the midst of renegotiating its contract with Amalgamated Transit Union, of which all details have been blocked from the public view by TriMet and the Multnomah County District Attorney. Read more about the DA and TriMet blocking contract details.

TriMet’s budget is subject to the scrutiny of the Tax Supervising Conservation Commission (TSCC) on Wednesday at 8:00 am. After the TSCC meeting TriMet’s budget will be subject to another round of public scrutiny at the TriMet board meeting at 9:00 am at the same location.

See TriMet Financial Forecast

See Adjusted Forecast to see TriMet’s financial future, including its estimate including all projected costs.

BY JACOB SZETO

PORTLAND- TriMet and the Multnomah County District Attorney have denied the public access to key documents that will determine the outcome of current labor negotiations at the public transit agency.

These labor negotiations will determine such things as salary, wages and fringe benefits. In a single year these items cost around $250 million. Multiplied by three for the length of the contract and discounted for non-union employees, the new contract is easily worth much more than half a billion dollars. These negotiations are also occurring concurrent to budget cuts that are slashing into bus and other transit services due to a budget shortfall at the agency.

Related Article: TriMet’s $632 million unfunded retiree healthcare liability and the previously contracted 100% coverage of retiree medical, dental and vision insurance premiums.

The key documents that were denied public access were the initial proposals. TriMet and the DA stated that is not in the public’s best interest to see them and that it would hurt frank communication if the public were to examine them. Initial proposals are the offers TriMet and employee union (ATU) present to each other. These documents are a key to the outcome of the labor negotiations because they generally set the parameters of the final contract.

The law used to deny the public records request exempts records allowed for public viewing if they are of an advisory nature and are preliminary to a final decision only if “the public body shows that in the particular instance the public interest in encouraging frank communication between officials and employees of public bodies clearly outweighs the public interest in disclosure.”

TriMet argued that the initial proposals are of an advisory nature because they are used to show the relative position of the two parties. They also argued that the release of the documents would hinder their negotiations, thus they were exempt from releasing them. TriMet offered no explanation beyond that “disclosure would interfere with the free flow of information and concepts that TriMet needs for its efficient operation.”

The Multnomah County DA agreed with TriMet’s decision during the appeal process and offered no more explanation as to why the release of the document would hinder frank communications. The DA stated that “the release of initial proposals during PECBA mandated negotiation sessions is premature and not in the public interest.”

After the initial proposals the negotiations can follow one of two paths. The first path is that of agreement. If both sides come to a tentative agreement, the tentative contract is sent to the union for ratification and then to the TriMet board for approval. The contract will not be seen by the public until the TriMet board meets to approve it, leaving no practical time for public scrutiny. This means a complicated lengthy public employee contract worth north of half a billion dollars will have only minutes to be reviewed by the public.

The second path offers little more in transparency. If, after the initial proposals, the two sides cannot come to an agreement, final offers will be submitted which then will be released to the public upon written request. But this path still does not allow for the public to see the entire contract; only the parts of which the two parties cannot agree will be released.

Until either the DA or TriMet decide it is in the public’s best interest to see these contracts worth hundreds of millions of dollars before they are approved, labor contracts will continue to go unchecked by those who ultimately pay for them.

Public Records Request

Request Denial

Appeal Letter

TriMet Appeal Response

DA Decision