Friday, June 4, 2010

Privatizing MARTA makes no sense

Posted By on Fri, Jun 4, 2010 at 3:02 PM

MARTABike

In May, the AJC's Kyle Wingfield penned a multi-part opinion series about MARTA's financial woes. One possible solution the conservative columnist proposed was to privatize the cash-strapped transit agency's operations. MARTA board member Michael Walls, a labor attorney and former chairman, says Wingfield's idea might sound good on paper — but it would be neither feasible nor profitable in reality.

A recent column by Kyle Wingfield recommended privatization as a possible solution for MARTA’s financial problems. Wingfield claims that a private contractor would be able to operate MARTA with the same, inadequate funding sources while increasing service.

Wingfield’s sole rationale is that, since privatization has “worked” at other systems, then why not here?

Not so fast. All systems are different and must be evaluated individually. Beyond that, there are some fundamental reasons why it’s simply not possible for a responsible private operator to run MARTA’s bus service more frequently, efficiently — or profitably.

In order for a private operator to increase service, it must identify sufficient savings to pay for added service with enough left over to turn a profit. About 83 percent of MARTA’s operating costs are for labor, fuel for its buses, and electricity for its trains. Those costs will remain the same no matter who runs the system.

Obviously, a private operator cannot buy fuel or electricity at less than the market prices, so there are no savings to be gained there. Moreover, because of federal law, a private operator cannot significantly reduce MARTA’s labor costs either.

Moreover, Section 13(c) of the Urban Mass Transit Act requires that, for MARTA to remain eligible to receive Federal funding, it must continue to recognize the Amalgamated Transit Union — which represents MARTA’s bus and rail operators — and allow collective bargaining. That obligation applies whether MARTA operates the system itself or hires a private contractor.

The actual process for setting union wages is approved by the federal government and codified in the MARTA Act. That process requires that, if MARTA and the ATU cannot reach agreement, the Governor appoints an arbitrator who then sets wages. Those requirements cannot be changed easily, as we learned in the mid-80’s when the Georgia Supreme Court ruled that MARTA could choose to ignore an arbitrator’s decision.

In subsequent litigation, the federal court in Washington D.C. ruled the state court’s decision effectively rendered MARTA ineligible for federal funds. Fortunately, the Georgia General Assembly changed the MARTA Act to establish the process that exists today. Regardless of who operates MARTA, its labor costs — like its fuel costs — will remain the same, and together will still constitute about 83 percent of available funding. Not only will there be no additional money to expand service, but a private operator would have to extract profit from the remaining 17 percent of its funding sources.

Since there is no margin for any savings with respect to MARTA’s two biggest costs, a private operator would be left with only two options: Further service cuts or deferring maintenance and upkeep on MARTA’s buses, rail cars and stations. That would mean adopting the same type of short-sighted business practices that have led to the recent coal mine tragedies and fuel spill in the Gulf of Mexico. We certainly don’t need that.

(Photo by Joeff Davis)

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