Busted
Last July, Mark Huffer stood in the basement of the Metropolitan Missionary Baptist Church on Linwood Boulevard and tried to convince the large congregation of angry bus riders looking back at him that he felt their pain.
They weren’t buying it.
Huffer, director of the Kansas City Area Transportation Authority, was there to announce what most people in the audience already knew: Without an increase in the sales tax that fuels local transit, Kansas City’s crappy bus system would get downright shitty. For one thing, no more service on Saturday nights. For another, no service at all on Sundays. The attendees, crammed inside an urban church, most of them dependent on the bus, several of them blind, didn’t like the sound of that.
But they also didn’t like the idea of more taxes, and Huffer’s weak sales pitch for the tax increase (Huffer may be the least passionate speaker in local government) seemed to inspire only more contempt from his audience. If voters approved the tax, he said, the ATA “would be in position to make some modest improvements.”
Two months later, Huffer offered the same flaccid appeal to a panel of downtown impresarios for whom buses are primarily exhaust-blasting traffic obstacles. Leading the discussion was Tom McDonnell, chairman of the Greater Downtown Development Association and CEO of DST Systems, downtown’s biggest single developer. When Huffer finished his spiel, McDonnell reacted with skepticism. Eventually, the GDDA chose to endorse the proposal, but only after the downtown landlords asked why they should pay more for a transit system that had such a miserable record to show for past expenditures.
Huffer might have responded to that question with contempt.
At a time when the ATA faces a crippling budget crisis, documents show that millions of dollars intended for public transportation have instead been siphoned off for a wasteful welfare program for rich developers. Money earmarked for people of modest means who rely on bus service for their livelihoods instead is being sucked away for the benefit of a wealthy club of business insiders and, records show, squandered through neglect and lack of oversight. With only days left until the election, there’s been no public discussion of how cash incentives for the rich have helped decimate the ATA’s budget surplus and put the bus service on life support.
And regardless of what voters decide on November 4, they’re powerless to stop it.
On November 4, Kansas City voters will decide whether to approve a five-year, three-eighths-cent sales-tax increase that would pump an additional $22 million annually into the ATA. A no vote on Question 1, the bus service says, will mean layoffs, mass service cuts and, no doubt, an outbreak of broken hips as a result of all the little old ladies walking to church come busless Sundays.
A yes vote means more people get to keep their jobs and maybe not so much hip breaking. But besides that, the ATA promises “new” routes that aren’t so new and “improvements” along routes that currently suck. Ask the bus service to expound on those ideas, and the ever-enthusiastic ATA leadership shrugs and points you to their Web site. Pathetic? Embarrassing? Depressing? Yes, yes and yes. But remember: hips.
Predictably, the tax proposal has been met with widespread criticism of the ATA. Observers both rich and poor wonder why Huffer and company didn’t foresee the financial doomsday coming and plan accordingly. The ATA’s defense is part history lesson, part mercy plea.
Quickly, the history: In 1965, the state legislatures of Missouri and Kansas created the ATA as a means of buying out private transit companies and establishing a single transportation agency to serve the entire metro area (Cass, Clay, Jackson and Platte counties in Missouri; Johnson, Leavenworth and Wyandotte counties in Kansas). When it came time to fund the ATA, however, neither state gave it the authority to collect taxes from all those areas. Consequently, for more than three decades, local funding for the ATA has come entirely from a half-cent sales tax collected only in Kansas City, Missouri. In other words, buy a Buick in Olathe, and you pay nothing toward public transit. Buy burnt ends in midtown, and you do.
Naturally, as the economy blows, so blows the ATA. And in recent years, both have blown pretty hard. Seven years ago, the ATA had $16 million in reserves. Today, nothing. Less than nothing, really, because the ATA predicts a $12 million shortfall in 2004 alone.
Which brings us back to service cuts and fragile bones and worrisome drops in church attendance. To offset its budget woes and prevent such calamities, the ATA presents the sales tax du jour. Proponents promise that when the five-year tax expires, Kansas City will be on the brink of having a truly regional transit system: buses that run on time, buses that take you where you want to go, and buses that bring you back to where you started — a seemingly simple concept, yet one elusive to the city’s leadership.
But that rosy future prediction doesn’t change the hard-sell approach to the ATA’s current tax proposal, which is essentially the same as one The National Lampoon made when it ran its famous cover headline “If You Don’t Buy This Magazine, We’ll Kill This Dog.” Vote no, we’re told, and thousands of Kansas Citians who rely on bus service will suffer greatly. And according to Citizens for Public Transit, there will be a ripple effect far beyond the relatively small number of people who ride the bus. Those folks, denied mobility, may lose jobs, causing business to suffer and the local economy to fail; and pretty soon you’ll see animals walking in pairs toward a big boat.
But if voters are expected to get behind a bailout of the bus service, why aren’t we being told more about how the ATA got to this point in the first place?
The ATA, not surprisingly, is vastly underfunded considering its responsibility to provide a metrowide service. But it has been since its inception. So what changed? Well, the economy, for one.
Starting in 2000, when the economy tanked, the ATA began spending more than it was taking in, the result of shrinking sales-tax revenues, cuts in state funding and expired federal grants.
But the economy alone doesn’t explain how the ATA depleted $16 million in reserves in less than a decade. That’s because the agency has seen large chunks of public-transit money heading elsewhere.
In 2001, for example, $1.3 million went out the door. The following year, $2.2 million. This year, it’ll be about $1.5 million. Next year, close to $2 million.
Where does that money go? Straight into the pockets of area developers — specifically, developers with Tax-Increment Financing agreements with the Kansas City, Missouri, City Council. In recent years, TIF has become the city’s most popular economic-development tool. It uses public money to reimburse developers for some of their costs on projects that would not occur without such tax breaks.
Since 1996, approximately $8 million in transit money has bypassed the ATA on its way to pay off TIF projects throughout the city. In other words, the ATA’s budget, already weak, shrinks each year so the owners of the Country Club Plaza, Barry Towne and dozens of other developments can recoup part of their investments.
It’s not just transit money that’s effected. When Kansas City voters approved a sales-tax increase for the Fire Department in August 2001, they probably didn’t know that $1.2 million from that fund would go toward TIF in the first year alone. Same goes for the public-safety tax passed in April 2002. In fact, just about every program or agency aided by taxes pays a portion toward TIF projects that voters never approved.
It’s a practice unheard of in most cities around the country, but at City Hall, it’s a fact of life. And a recent report suggests that it’s like flushing money down the toilet, but, you know, who’s counting?
There’s nothing illegal going on,” City Auditor Mark Funkhouser tells the Pitch. “There’s maybe some bad public policy, but it’s not illegal.”
That policy, which reimburses TIF developers with money that citizens earmark for other purposes, looks even worse in light of a scathing study released in September by Funkhouser’s office. Chapter titles, which read like a month’s worth of newspaper headlines, say it all: “$3.3 Million in Payments Due to City and County Not Made”; “8.6 Million Improperly Certified for Reimbursement or Paid”; “Basic Budget Control Is Missing”; and, finally, at once humorous and horrifying, “It Is Not Clear What TIF Funds Have Purchased.”
In the past, TIF commissioners, appointed by Mayor Kay Barnes, herself a former TIF commissioner, have publicly stated that Funkhouser just doesn’t get it. But the abuses detailed in the auditor’s report are holy-shit unconscionable. Imagine for a moment a lax, hole-ridden, unverifiable expense-report system, then substitute multimillion-dollar development projects for $20 business lunches. In one case, auditors say, a developer submitted a letter asking reimbursement for $500,000 in project costs — no receipts, no documents showing $500,000 had been spent, just a letter. He got every penny.
“Of the approximately $31 million in developer reimbursements that the TIF Commission approved in fiscal year 2002, staff could not provide sufficient support for more than $7 million,” the report reads. “We identified payments for ineligible costs, reimbursements for costs not actually incurred, and one payment based on documentation used for a prior reimbursement.”
The trend is more TIF projects using more public money. With $74 million in public money redirected to TIF since 1982, the TIF Commission has already approved another $228 million in reimbursements yet to be paid, a good chunk of which will come from such dedicated sources as the public transportation fund.
As a result of Funkhouser’s audit, the Economic Development Corporation, a private agency that receives some city funding to administer TIF expenditures, has promised to tighten the screws and stop treating public money like a purse left open on the kitchen counter. But that would solve only the most obvious problem. There are others. For example, regardless of any improvements in accountability, there’s no surefire way to determine that a TIF project is working.
A TIF developer whose project involves a hardware store might point to the sale of 50 pounds of fertilizer in a given day as evidence that his store created economic activity from nothing. Had there been no store, there’d be no shit sold. Unfortunately, there’s no telling whether customers bought the fertilizer because of the store or whether they’d have bought fertilizer at an existing store a mile away. Pointy-headed types refer to this enigma as “the substitution effect.”
The idea behind TIF is to reward developers for increasing the city’s tax base. With property taxes, that’s pretty clear-cut. An apartment building goes down, a condo pops up, the property value rises, the city smiles and gives the developer the difference between the original property value and the new property value. But with sales tax, the developer receives half (sometimes all) of the “economic activity” taxes generated by the TIF project. And that’s tricky to calculate, because no one really knows how to factor the substitution effect.
In Kansas City, budget staffers are working toward an answer. Unfortunately, they don’t have the option of looking to other, wiser cities for help. Most states limit TIF to property taxes alone. Even among states that throw sales tax into the mix, Missouri remains one of the more generous to developers.
For the time being, the City Council will continue to set aside a portion of the local sales tax for developers, despite having no clue whether it’s justified. Meanwhile, the ATA, desperate for cash, comes begging into the November election.
Transit leaders aren’t happy about TIF developers raiding their coffers, but it’s not exactly their topic of choice with the November 4 election coming up. Asked why voters should approve a tax increase that’ll send millions of dollars of “transit” money to developers in a process that city auditors find borderline scandalous, the ATA’s Huffer sticks to his talking points. “I think it’s important that you realize that out of that public mass-transit fund, by far most of that comes to the ATA,” he says. “But if you’re worried about this particular [tax increase], I think it has the ultimate in accountability, and that’s a five-year sunset. There’s no secret that we’re trying to pursue a regional funding mechanism. If, at the end of the five years, people aren’t happy with the way the money has been spent, then they’ve got the recourse of not voting for a regional funding source.”
On the other hand, of course, voters could make the ultimate statement of accountability right now.
The greatest challenge the ATA and its supporters face is convincing car drivers to vote for something that they assume will make no difference in their lives. The running joke in Kansas City is that if you look at a bus in traffic, it’s probably empty.
But there’s little the ATA can do to sex up its proposal. Of the $22 million to be created annually from the new tax, ATA officials say $7 million will go toward adding or improving 25 routes. One of the “new” routes, an express bus to Kansas City International Airport, already exists on weekdays. With more money, it will run weekends, too.
ATA backers know that this election isn’t about exciting and novel public transportation options for Kansas City, so their campaign instead focuses on workers who depend on the bus to get to their jobs. Earlier this month, they went so far as to drag real-life bus riders to a press conference.
But earlier this summer, there was no such solidarity when Huffer held forums throughout the city to announce potential service cuts.
One by one, upset bus riders stepped to microphones, attacked the current bus system and demanded to know exactly how the new sales-tax money would be used. From the first meeting at the Gem Theatre to the last meeting in the basement of Metropolitan Missionary, the issue wasn’t so much that the bus might be cut off on Sundays but that nothing had been done to prevent such a pathetic threat from being made. “Who is actually minding the store?” one man asked. “Because this did not happen overnight.”
If they were going to pay more taxes, people wanted to know precisely what they would get in return. They’re still waiting. Even now, Huffer hesitates to outline how and when improvements would take place over the five-year tax period. “Remember, even if the tax passes in November, we don’t receive any of it until May 2004,” he says. “So that gives us that time through November and early spring to prioritize this 25-point plan and set the implementation schedule out over the next couple years.”
In other words, We kind of know what we’re going to do, we sort of know when we’re going to do it, but nothing’s nailed down quite yet. By the way, would you mind voting yes next month? Thanks.
That kind of vagueness only whets the appetites of the ATA’s critics. And there are plenty. But it’s hard to take some of them seriously — most of the groups that oppose the measure oppose any new attempt to raise taxes. The Jackson County Taxpayers Association, for example, has simply transferred its predictable resistance (remember the August COMBAT vote?) to next month’s transit ballot. And former City Councilman Richard Tolbert, who leads an anti-tax group called Organized Opposition, is equally knee-jerk.
At least Tolbert claims to offer an alternative plan, dubious as it is. If voters will turn down the tax, he promises to create a “jitney service,” using idle church vans on bus routes that the ATA cuts. Tolbert has no vans, no drivers and no funds lined up, but he insists that the service could run 24 hours a day and even turn a profit. Surprisingly, entrepreneurs haven’t already seized on Tolbert’s scheme.
Certainly the most colorful critic of the ATA’s tax proposal is the man promoting a competing transit ballot initiative. Clay Chastain proposes a twelve-year, half-cent sales tax for light rail, street cars, and electric buses as well as a transit hub at Union Station. Chastain calls the ATA plan a “piece of crap,” and “a dysfunctional plan for a dysfunctional system that serves only 1 percent of the people.”
The problem is, Chastain’s plan does not account for the ATA’s $12 million shortfall next year — or any year after that. Those costs, he says, should be covered by Kansas City and the state of Missouri — an argument that has obviously failed for the ATA. After all, Kansas City and the state of Missouri are among the reasons there’s a shortfall in the first place. (For more of Chastain’s wisdom, see Janovy)
Other critics are more credible. Anthony Saper, an ATA bus driver since 1999, says, “We’re moving in the wrong direction by passing this sales tax. All you’re doing is perpetuating the same system.”
How bad is that system? Saper offers this surprising revelation: The ATA brags in its internal newsletter that it will net $1.8 million a year in savings, in part by “inspecting every Metro bus every 6,000 miles.” That new policy means that “a frayed belt will be spotted and promptly replaced, rather than going undiscovered until it snaps when the bus is on the street.”
Of course, most people change the oil in their cars every 3,000 miles, rotate their tires every 10,000 miles and peek under the hood periodically to make sure nothing’s dangling menacingly. The ATA’s maintenance department adopts a similar policy regarding buses, and suddenly it’s cause for celebration? That’s exactly the type of thinking that has Saper calling for a regime change at the ATA.
At first, Saper seems like just another anti-everything Scrooge who claims to support transit, “just not this tax.” But then he asks a few fundamental questions about the ATA. Why aren’t commissioners voted into office and therefore held accountable by the public? Why hasn’t the ATA’s leadership lobbied harder for regionwide funding for public transportation? Why, after forty years, are we no closer to a truly metropolitan system?
“The ATA and Mid-America Regional Council [MARC] are the biggest obstacles to a 21st-century transit system in Kansas City,” Saper says. “They were the biggest obstacles to the twentieth century, and they’re the biggest obstacles now.”
But the two organizations are slowly trying to find that regionally supported solution.
Several months ago, the groups unveiled “Smart Moves,” a strategy toward metrowide transit. Skeptics dismiss it as “lines on paper,” but supporters recognize it as the best chance finally to give Kansas Citians a dependable transit system. Now it’s a matter of negotiating with communities throughout the metro on how to pay for it.
The ATA’s money problems don’t make its case for Smart Moves any easier. But the ATA’s budget woes are nothing new. In November 1996, the Federal Transit Administration practically mocked a Kansas City proposal for light rail with the middling grade of “low-medium.” Why? Because the ATA’s largest funding source — the local sales tax — couldn’t even maintain the city’s sketchy bus system. “This source is keeping pace with inflation,” the FTA concluded, “but KCATA has found it necessary to reduce service levels.”
Today, the economy is in worse shape, and the ATA still clings to that sales tax as its lone source of local funding. “We need a multimodal regional transit system, regionally supported,” says Funkhouser, whose office completed audits of the ATA in 1997 and 2002. “And that’s going to cost a lot more money than we’ve got now.”
Even if someone convinced TIF developers to spare the public-transit fund (legally possible, if unlikely), the ATA would still be stuck with a hefty shortfall next year. For now, the agency insists it just needs a little something to bide time while officials figure out how to fund the metrowide overhaul. That’s when the real fireworks will come, they say. Unless, of course, you vote no this time and send the ATA spiraling into transit purgatory.
“If we would be forced to make service reductions, so much of the system would be reduced or eliminated that it would make it that much more difficult to build a regional network in the future,” Huffer says. “Any regional plan assumes there’s going to be a strong core bus system in the center of the region, and if we have to reduce that core, building out on a regional basis will be that much more difficult.”
If the city’s leaders fail in their efforts to sell this proposal, they have only themselves to blame. For all the anger on display three months ago at the Metropolitan Missionary Baptist Church, a few attendees gave some credit to ATA officials for talking to them face to face. By contrast, no City Council members showed up for the meeting. The comments of a mayor’s assistant supporting the tax proposal, recorded during a telephone call, were played to the audience.
“Somebody should be here other than a tape recorder,” one man complained, eliciting a round of applause.
Still, the highlight came when a sassy, elderly woman took over the microphone and addressed Huffer directly. By explaining how she had to walk several blocks to get to the bus that took her to work, and then even farther when the bus brought her back home, the woman summed up the frustration so palpable in the room.
“I have to be going in a minute,” she announced suddenly, “because I ride the bus.” With that, she relinquished the microphone and walked out, and for a long moment frustration gave way to knowing laughter.
“I was waiting for that,” Huffer said.
