Sustainable NEO Question Of The Day: May We Have Affordable Public Transportation in 2019?

Submitted by Norm Roulet on Mon, 08/31/2009 - 00:50.

I was astounded to read today, on Cleveland.com, "RTA increasing fares 25 cents on Tuesday to offset higher fuel costs". RTA is raising public transportation rates for the second time in less than a year, bringing our fare to $2.25. The PD casually reports: "The new cash fare of $2.25 is in line with other transit agencies nationwide"... and "The fare increases are tied to the price of diesel fuel and are set to expire next April 1. But the total 50-cent increase is expected to be made permanent in April by the Greater Cleveland Regional Transit Authority board, which is facing a $20 million deficit next year."

The chart above shows trends in such RTA rate increases, as reported on Cleveland.com and the RTA website, correlated to the price from refiners to retailers for diesel fuel, from 1983 to 2009, from the US Energy Information Administration. If this reflects the real foundations and drivers of the economics of our REGIONAL TRANSIT AUTHORITY, our public transportation is not sustainable into the forseeable future... in fact, rates appear to be increasing exponentionally.

The Plain Dealer writers and editors of Cleveland.com justify nearly 20% rate increases to "offset higher fuel costs", yet this data indicates diesel fuel costs have decreased significantly in the past year.

Cleveland.com reports many disturbing facts about the current RTA condition:

Regarding RTA revenues:

By this summer, it had become apparent that more money was required after the national economic downturn led to an unexpected decline in sales tax revenue, which provides close to 70 percent of RTA's budget.

Regarding what RTA and so customers are paying for fuel, it appears our price is higher than at any pump:

The fare increases last year and again Tuesday were approved by the board as fuel surcharges and were to remain in effect only as long as RTA paid more than $3 per gallon for fuel.

Even though fuel prices declined this year, RTA was locked in a contract to purchase fuel at $3.17 a gallon. The cost of fuel will go below that April 1, so the increase in 2008 and the increase Tuesday will end unless the board votes to keep them.

Board members have told RTA officials that the public's expectation was that the fare increases were to be a short-term solution to rising fuel prices, and they said they won't agree to make them permanent unless they are convinced the agency has done everything internally to cut costs.

"If not, we are really deceiving the public as to why they were put in place," said board member Dennis Clough, mayor of Westlake.

From reviewing the latest RTA Annual Report available online, for 2007, it appears that this article on Cleveland.com and the RTA leadership and board are already deceiving the public.

In 2007, fuel and utility costs (including electricity for the rapid transit, diesel and natural gas for buses, and even utilities for the organization, I believe) were only $25,919,960 - 10% of total operating expenses... and down 1.4% from 2006. Labor and fringe benefits were $ 173,796,848 - 68% of total operating expenses... which rose 3.6% over 2006. It will be interesting to see these numbers for 2008 (shouldn't they be out now?!?!)!!!

Considering diesel costs are a fraction of total RTA fuel and utility costs, which is only 10% of total operating expenses, even significant spikes in diesel prices - even a doubling of prices - should not justify system-wide rate increases for 20% over one year... at most, the related direct economic impact would be a few %. In fact, diesel prices and so fuel costs should have decreased since mid-2008.

From the RTA 2007 Annual Report, about performance in 2007:

Sales Tax Revenue was $1.2 million below projection. The weak performance continues a seven-year trend caused by slow economic growth in the region. Unfortunately, this trend is projected to continue in the near term.

Operating Revenues exceeded the budget in some categories while falling short in others. In total, revenue increased 2.7 percent, to $6.8 million. In spite of that, however, revenue fell short of budgeted estimates by more than $3.5 million by year end. Passenger Fares increased by 7.1 percent, but was under budget by about $2.1 million. Similarly, Sales Tax increased by 1.8 percent, but fell short of budget by $1.2 million. These two sources of revenue provide about 85 percent of the Authority's funds.

Operating Expenses, led by surging fuel costs, continued to cloud the financial picture last year. However, early proactive action taken by RTA to control operating costs helped to offset spikes in diesel fuel.

Based on all this information, and media misinformation, the questions for the day include where is the 2008 Annual Report, what are the latest financials for RTA, why are we paying $3.17 per gallon for diesel until April, 2010, are we paying that price for all our diesel fuel or just some contracts (is all our diesel currently costing over $3/gallon), what have we paid over the last 10 years, versus best market prices, and has RTA "done everything internally to cut costs", including addressing the 68% labor and fringe?

Most important, based on your observations, is RTA suustainable for the future, under current leadership, and in what condition?

About RTA: Organization
Board of Trustees


Board of Trustees - Click for larger view
  Board of Trustees
(Back row left to right) Jane Campbell; Nick �Sonny� Nardi; Edward J. Kelley
(Middle row left to right) Dennis M. Clough; Julian A. Rogers; Valarie J. McCall; Leo Serrano;George F. Dixon, III
(Front row) Jesse O. Anderson;
(Not pictured) Jerry N. Hruby, William W. Patmon Jr.
 


George F. Dixon, III
Board President
Restaurateur
Edward J. Kelley
Board Vice President
Mayor, City of Cleveland Heights
 
Jesse O. Anderson
President, Disabled Rights Task Force, Inc.
Bill Cervenik
Mayor, City of Euclid
 
Dennis M. Clough
Mayor, City of Westlake
Valarie J. McCall
Chief of Government Affairs, City of Cleveland
 
Nick "Sonny" Nardi
Veteran Labor Leader
William W. Patmon Jr.
political consultant & analyst
 
Julian A. Rogers
community activist
Leo Serrano
Executive Director, Office of Institutional Advancement
Cleveland Metropolitan School District

AttachmentSize
2009-05-12-FuelHedging.pdf69.44 KB
RTARates2.jpg49.48 KB

RTA Presentation on hedging fuel costs 2009-2011+

On further googling, I found an RTA presentation on their program to hedge fuel costs, bringing diesel equivalent costs to $1.80-$2.00 per gallon range.

This does not correspond to the numbers published on Cleveland.com of RTA paying over $3/gallon now.

If RTA has been hedging fuel costs for some time, what contracts are in place at what prices? Are some contracts over $3 and some under?

This may explain how we are locked into a rate of $3.17/gallon until April 2010, for some amount of fuel, but the attached presentation indicates RTA is currently buying fuel at lower rates, as well.

This makes me wonder, are we locked into some contracts at rates of over $3/gallon simply to justify the Board increasing and maintaining high fares, to avoid more serious cost-cutting?

To compare how another regional transit authority is impacted by diesel price changes this year, consider "Property tax decline puts dent in TARTA: Lower cost of fuel helps offset crunch" for Toledo.

Disrupt IT

re: Sustainable NEO Question Of The Day

A couple of comments ... 

1) Annual reports

RTA's 2008 annual report is also online: http://www.riderta.com/pdf/annual_reports/2008_RTA_annual_report.pdf The report lists 2008 fuel/utility costs of $33.0M, which is 12% of total operating expenses (p. 18 of report). Of the $33.0M, $19.3M was for diesel fuel (p. 16).

2) Fuel hedging

On further googling, I found an RTA presentation on their program to hedge fuel costs, bringing diesel equivalent costs to $1.80-$2.00 per gallon range. This does not correspond to the numbers published on Cleveland.com of RTA paying over $3/gallon now. If RTA has been hedging fuel costs for some time, what contracts are in place at what prices? Are some contracts over $3 and some under?

From my reading of the presentation, it seems to indicate that hedging began on January 16, 2009, for fuel to be used in fiscal 2010 and 2011 (pp. 3-4 of presentation). So, I would assume (I don't know) that fiscal 2009 contracts and fuel prices are unaffected by the hedging.

86.6% of fiscal 2010 diesel needs appear to have been hedged as of 4/1/09, while 23.5% of fiscal 2011 diesel needs had been hedged as of 4/30/09 (p. 3). The diesel price equivalent of the 2010 hedges was $1.86/gal (p. 6), while the price equivalent for the 2011 hedges was $2.05/gal (p. 9).

RTA inefficiency

  Norm--I am going to link to your article over on Cleveland.com.  There is obviously some major discrepancy over who pays to operate RTA and who benefits from those monies spent.  It's not about providing transportation for those who need it.  Instead, RTA has become another development tool for contractors salivating for the big federal construction monies that gave us the Health Line and soon the overkill Redline station at Cedar in University Circle.
 

I use the system on a weekly basis.  To ride the 20 bus is to suffer the indignity of being crammed into a cattle car with 40-50 people--armpits, butts, in everyone else's faces---disabled and elderly forced to stand because there is no room for them.  Then, you ride the Health Line with dispensed pass machines that don't work and you face further indignity, as boot jack RTA guards board the bus demanding to see "your papers please..."  I have watched these same guards kick people off the Health Line--usually the dark-complexioned men. 

The other day, I rode the Red Line with my bicycle--on a Saturday.  No attendant in the booth at the West 25th station, so no fare check--machines are wrapped in paper.  Boarded the train and no fare collected.  I rode the train with a young man from El Salvador going to work as a restaurant on the far East Side--He also had his bike and he got off to take the 32 and then to ride his bike to his employer miles away from the last stop.  As I walked through the urine soaked University Circle station, I saw another immigrant from Central America trying to work the pass machines, obviously distressed because he was going to miss the train and could not understand the text on the machines and did not know where to insert his money.  I gave him my pass.  

This is the REAL RTA, folks. 

Fare Machines

I saw another immigrant from Central America trying to work the pass machines, obviously distressed because he was going to miss the train and could not understand the text on the mahcines and did not know where to insert the money.

This comment is slightly off-topic, but I'll make it anyway. I think whoever designed the user interface for the RTA fare machines did a terrible job. I would guess the machines are largely unusable by those with poor eyesight, limited literacy, poor English skills or limited familiarity with computers. (In other words, a fair number of people.) Tiny type, unexplained flashing cursors, cryptic virtual buttons labeled "Increment+" and "Decrement-," and long sequences of button-pressing to do simple things all scream, "Incompetent design."

Diff Point Vue - why did the RTA purchase incompetent fare syst?

Very good observation DPV.

I have done zero research on the GCRTA fair system, but I will walk out into the fire nonetheless:   I will pay for dinner at your choice in Cleveland, if anyone can demonstrate that the bidding (was there any bidding) and the awarding of the contract to supply the fare system was done in a open, fair, and competitive manner.
 
We all know that the wheel wasn’t just invented in Cleveland with regard to computerized fare cards, etc.  
 
All one has to do is travel to Europe, to Germany, etc., and you will find a fare system with instructions in 6 languages, and which has had all it’s glitches worked out over the last two decades.
 
The fact that Cleveland’s RTA has an incompetent system, means that the incompetence is intentional.
 
Buying a fare system which is intentionally incompetent means that the purchase wasn’t done to benefit the systems’ riders, the purchase was made to benefit the vendor.  It doesn’t matter if the vendor is incompetent or not, their bank will still clear their check.
 
Please show me I am wrong.
 
Who is the vendor for the fare system?  
 
Joe Masek, can you help out here?
 
best, jeffb

 

re: why did the RTA purchase incompetent fare sys?

Who is the vendor for the fare system?

Using the PD database on the Cleveland Public Library web site, I did a quick search re RTA fare machines. Dates/relevant facts from articles I found in the PD: 

Oct. 28, 2008: RTA HealthLine opened Oct. 27, 2008; fare machines not working

Jan. 17, 2009: RTA has a $10 million contract with Affiliated Computer Services of Dallas for fare machines; machines still not working on the HealthLine; ACS has installed similar systems in NJ, CA and Houston; ACS turned over machines to RTA on Dec. 20, 2008, but RTA canceled testing because of problems with fare card validation

Aug. 7, 2009: Customers on the HealthLine have used the fare machines since Feb., 2009

The fact that Cleveland’s RTA has an incompetent system, means that the incompetence is intentional

Possibly. However, Hanlon's Razor may apply: "Never attribute to malice that which can be adequately explained by stupidity."

In any event, I will speculate that the "design" of the interface was assigned to one or more programmers without human factors expertise. (I say that in part because normal people say "add one" or "subtract one;" programmers say "increment" or "decrement.") I will also speculate that RTA didn't give much thought to specifying or testing the user interface.

BTW, it might be an interesting project for CIA (or other) students to design and test a fare machine interface that is actually friendly to users.
 

A drivers license that serves as transportation debit card.

Then all you have to do is transfer money onto it or add some cash at a machine, bank could do that, and ATM can do that

RTA makes attempt to offer transportation to every area, think about that.

Rather than saying if you do not drive or want to live on public transport then live here.

Something about Mohamed and the mountain.

The solution is about stratification and clustering and efficiency.

Bottom line the current methods are not affordable and will be less and less as time goes on.

As for the costs of fuel:

Is there a burp in the actual line? What caused the spike in diesel fuel? August of 2005?

The refineries lost production, then brought it back, the high prices have a lag on events, everything has a lag and policy can also affect that.

Increased demand and change in behavior. In the fall of 2006 the fuel production came back with cleaner low sulfur and with increased consumption in Europe.

Then there is the potential for bio-diesel, which could alter the forecast or not?

                                                              

An introduction of higher efficiency engines will have an affect on prices. Light trucks in particular will shift from gasoline to diesel. That’s because the have greater power and use less fuel.

The production is know set to supply the market, which is moving towards diesel and consuming less of it.

What interests me is the conversion or correlation of electricity with plug in hybrids, the Chevy volt is rate at 130 MPG on a tank of fuel, but how many kilowatts does it consume?

What about the 220 or 110 outlet and it taking either 8 or 16 hrs? What does that covert to in actual electricity consumption? The cost, then the obvious how much coal will that take to burn and how much C02 will be generated?

The hybrids are the real solution, and diesel hybrid have a big place in commercial use. All of our commercial rail are diesel electric, high efficiency electric motors and highly efficient engines that power them and the recapturing of regenerative energy, then highly efficient batteries.

Reducing consumption at all levels should produce lower prices. That should be kept relatively constant, with increases in taxes based on the price of crude. If its component cost is 60% as it is today then if it lowers the price should be kept constant and the related demand pushed down. Lower demand through efficient alternatives the tax should be variable and keep the price constant. The alternative is only efficiency, in more fuel efficient.

The tax should go into the alternatives, as the demand or consumption fall the price would remain the same. The increased taxes directed into alternatives, that further reduce consumption. Alternatives should be real, and in a variety of forms. From not owning a car, walking area that are nearly fully contained live work environs to simply reducing commutes and relative miles driven. Then just by reducing the MPG and eliminating low mileage vehicles.

Taking a small part of the line, just 2007 -2009 not a real difference in prices.  

Incompetent Design

  Please see the above comment---Thank you DifferentPointofView--I appreciate your input here and welcome you to REALNEO. Please feel free to contact me any time.   You can click on most of the posters here and you should have the option to contact via email, if we have set up our accounts with the email option. 
 

re: Incompetent Design

I appreciate your input here and welcome you to REALNEO. Please feel free to contact me any time. You can click on most of the posters here and you should have the option to contact via email, if we have set up our accounts with the email option

Thanks for the welcome!

RTA issues

Did someone post these things here?

Policy Matters Advocacy effort for Public Transit

It is difficult to pay attention to all the website, email news... Just sayin'.

Looks like there will be a train - 3C is funded, sort of... but what about local public transit. Still struggling.

"Most of the fare increase got lost because of ridership drops,"

What a mess... "RTA plans to avoid fare increases and service cuts in 2011" ... especially love:

A steep decline in fare revenue was unexpected, Fisk said. Initially the agency projected $55.7 million from fares this year but now expects $47.4 million. It is budgeting $50 million in fares for 2011.

The $8 million loss this year is the same amount RTA had expected to generate in additional revenue following fare increases last September. A bus ride now costs $2.25.

"Most of the fare increase got lost because of ridership drops," Fisk said.

Total ridership of 18.9 million for the first five months of this year was 11 percent less than the same period in 2009. While some ridership losses were due to 12 percent service cuts in April, it is mainly attributed to unemployment and people working fewer days each week, officials said.

Higher transit fares and lower gas prices have resulted in people deciding to drive to work or to special events instead of taking RTA, said General Manager Joe Calabrese.

Disrupt IT