I HEAR the confusion: How can Metro’s need to reduce bus service drop from 400,000 annual hours in the budget I announced last month to 151,000 today? While frustrating, the answer lies in a disagreement common to elected officials, business people and even families when planning finances: how much to set aside for lean times versus spending to meet immediate needs?
The reality is that periods of economic decline occur in cycles, typically lasting up to four years. We suffered two downturns in the 1970s, two in the 1980s, one in the 1990s and two in the 2000s. No one knows when the next recession will hit, but history shows it is inevitable.
Metro planners fell into the “irrational exuberance” trap twice in the 2000s, assuming an ever-expanding economy, then cutting promised service when bad times came. And they were roundly criticized for it. Indeed, sales taxes are extremely volatile. The 2001 dot-com bust deeply impacted the sales tax that replaced the repealed motor-vehicle tax. In the 2008 Great Recession, the economy contracted 3 percent, but sales tax revenues dropped 15 percent. That more than wiped out the 12.5 percent for new service voters approved just two years earlier, with a permanent loss to Metro of $1.2 billion.
This explains why the Metropolitan King County Council in 2011 decided no longer to plan for the fantasy scenario of an ever-expanding economy with no recessions, unanimously creating policies to steady the fiscal roller coaster. It directed Metro to save money in a “revenue stabilization reserve” to weather bad times, and to set aside specific amounts every year toward the unavoidable replacement of aging buses.
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Two weeks ago, I sent the council a budget reflecting these prudent policies. The rainy-day savings contemplate a tough recession like 2001, or two milder recessions during the next decade, but not the worst-case scenario of another Great Recession.
Faced with the understandably difficult decision of cutting bus service to match revenues, the council postponed action on February reductions until after re-examining the budget. It will also consider changing fiscal policies it created just three years ago. Altering these policies to spend reserves certainly could allow Metro to keep service on the road in the short term, but could also necessitate much deeper cuts later in the likely case of another significant economic downturn.
Returning to the “no recession” assumption puts Metro’s stability at risk. During times of economic growth, it’s natural to want to take a calculated long-term risk to preserve short-term service. Every customer who would lose mobility due to service cuts (my own mother included) has a personal story to tell.
I am a longtime transit advocate who wants nothing more than to preserve and increase transit service. I am also the county executive, responsible for the long-term health of Metro and the entire regional government for more than 2 million people. I do not want to leave future executives, councils, taxpayers and bus-riders stuck with the bill if we make the wrong decision.
Sadly, confusion surrounding this issue not only sends a mixed message to the public, but runs contrary to the exceptional collaboration between the executive and council over the past five years. Together, we have authored reforms that earned national recognition and restored the county to sound financial footing. Our reforms generated hundreds of millions of dollars, maintaining bus service through the Great Recession. And we will continue to drive innovation, including my initiative to integrate and optimize the planning and operations of Metro and Sound Transit.
Spending on service now at the risk of deeper cuts later is a significant policy choice that we should fully discuss. Given our record and spirit of collaboration, I am confident we can arrive at a solution that responsibly secures Metro’s present and future — so that when the economy changes, as we know it will, our riders won’t be left to wonder what’s going to happen to their bus.
Dow Constantine is King County executive.