Executive's letter to Council Chair Phillips addressing Metro vetoJune 9, 2014
The Honorable Larry Phillips
Chair, Metropolitan King County Council
C O U R T H O U S E
Dear Council Chair Phillips:
Today, I am vetoing Ordinance 2014-0210.2. It is the first veto I have issued since becoming King County Executive in 2009. This is not an action I take lightly. Over the nearly five years of my administration we have worked tirelessly and collaboratively with this Council to create solutions to the challenges facing the people of one of the nation’s largest counties. One such challenge is the inadequate funding of transit service. Despite the outcome of Proposition 1 in April, we must keep working to secure a permanent, adequate, stable funding source to operate Metro Transit. Our people and our growing economy depend on it.
We must manage the State’s largest transit agency responsibly. Ordinance 2014-0210.2 is not responsible. It violates the Comprehensive Financial Management Policies adopted unanimously by the Council less than two months ago. Specifically, it spends future revenue that does not exist, and it draws upon one-time revenue to fund ongoing operations. Further, it violates King County Metro’s Council-adopted Strategic Plan by allocating service hours based on political considerations rather than data and established objective criteria. We’ve come far in our nationally recognized work to reform and modernize King County government and should not endanger this progress.
Specifically, this veto is based on the following:
1. We Cannot Spend Money We Do Not Have. Transit service levels must align with current known revenue. I will not support legislation passed by a bare majority vote that seeks to avoid this reality. We must have a balanced budget. Ordinance 2014-0210.2 ignores the need to reduce Metro expenditures consistent with currently anticipated revenue.
One of my main priorities as Executive has been to preserve our bus system despite the devastating effects of the Great Recession, during which Metro permanently lost $1.2 billion against pre-recession projections. The Council has been my partner in seeking ways to preserve our Metro bus system through reform and tough cost-cutting measures that, since 2008, have helped save or raise $800 million. We have:
A responsible King County Council joined me in taking tough actions to keep Metro bus service on the street, even while our neighboring transit systems in Snohomish and Pierce Counties suffered a 37 percent reduction in service. We worked together to achieve meaningful reforms that will benefit the agency, and the public, through the discipline of continuous improvement, rather than resorting to such empty managerial platitudes as “budget-scrubbing” and “top-to-bottom” review. For this progress, we received recognition from the Municipal League of King County, which previously had been one of Metro’s toughest critics. Through it all, we hewed to the principle that the budget must balance and the transit system must be sustainable.
- Adopted four fare increases in six years (with a fifth approved for 2015);
- Partnered with labor to eliminate the long-standing 3 percent COLA floor and obtained agreement for a zero COLA in 2011;
- Approved the two-year Congestion Reduction Charge, which we successfully sought from the State Legislature;
- Terminated the downtown Seattle Ride Free Zone;
- Eliminated more than 100 positions, mostly in administration;
- Hired outside professionals to audit Metro, and implemented their recommendations;
- Drawn down $100 million in reserves, and delayed vehicle replacement;
- Brought transit employees fully into our money-saving Healthy Incentives healthcare program, for which King County is receiving the prestigious Innovations in American Government Award from Harvard University; and
- Established a program of continuous improvement and the use of Lean principles.
Recognizing that all the hundreds of millions of dollars in realized and ongoing savings generated through our reforms were still not enough to balance the budget and sustain the current level of service, the Council voted unanimously to send Proposition 1 to the ballot. Councilmembers, to a person, understood that revenues for transit, and indeed our entire transportation system, are wholly inadequate to the needs of a growing population and economy.
We can speculate that sales tax revenue might come in higher than projected. Or it might not. We can hope for a favorable outcome in labor negotiations or arbitration. But that is largely outside of our control. We can book savings from unspecified “efficiencies,” presumably beyond both the $150 million of annual ongoing savings we have already created and the additional savings achieved through our very real initiatives in continuous improvement and Lean. We can budget based on hope. Or we can budget based on reality.
This ordinance commits us to spending money that we do not know to exist. Our only responsible course is to match spending with the revenues we know exist today.
2. We Should Not Spend One-Time Money For Ongoing Expenses. This ordinance effectively results in delaying by four months the cuts proposed for the first quarter of 2015. Metro estimates this will result in an added cost of at least $14 million. That is one-time money being used to sustain ongoing service. There is no additional revenue, one-time or ongoing, in this plan. If the ordinance assumes no new revenue, we should not continue to spend money on service that we cannot sustain. To do so only digs the hole deeper, impacting more riders and necessitating cuts to more productive investments.
Some have asked that Metro’s reserve policies be reconsidered, to see if the agency could safely lower reserves to pay for service. Metro management believes that the current policies are the most prudent and are consistent with industry best practices. Reserve policy is a legitimate topic to discuss and debate. I have directed an outside, professional analysis to provide an objective review and recommend appropriate reserve levels for policymakers to consider.
But even if, after the audit, it appears safe for Metro to operate with thinner reserves, reserves are still one-time money. One-time money cannot sustain ongoing operations.
3. Service Reductions Cannot Violate The Strategic Plan. I do not support the Council majority’s action to suspend the elimination of certain Dial-a-Ride (DART) services. In 2010, after a lengthy and successful regional process, I proposed and the Council unanimously passed a new transit strategic plan with service guidelines that base Metro service decisions on transparent and measureable data on ridership, productivity, social equity, and geographic value. The intent of our service guidelines was to make decisions based on established policy, objective criteria, and data, and expressly not based on politics.
The DART routes proposed to be cut are of great value to the people who use them. But they were determined to be among the least productive routes according to the County’s adopted service guidelines. There is a worthwhile conversation to be had about broadening the use of alternative transit services, such as DART, to mitigate the impacts of reduced fixed route bus service. However, such changes should be handled consistent with County Code requirements for amending our transit policies. Ordinance 2014-0210.2 violates the Transit Strategic Plan and service guidelines, and creates additional financial impacts that are not reconciled. This compromises the integrity of our regional planning process and sets a dangerous precedent.
I understand this veto creates uncertainty in the short term. Metro will need direction soon on the treatment and implementation of the proposed service reductions, especially the first round scheduled for this September. I ask the Council to keep working on an ordinance that does not violate the principles I’ve laid out in this message. That is why I was encouraged to see the compromise proposal offered by four Councilmembers as an amendment today. I genuinely believe that approach allows us to continue gathering the information and monitor revenues that may eventually allow us to avoid some service reductions, but to do so in a manner that is financially sustainable and consistent with the Strategic Plan.
It is my hope that this veto will result in a better plan, one that a strong majority of the County Council will support. We have all worked very hard on reforms that have made King County Metro a better managed, more efficient, and fiscally responsible agency. We must keep moving this work forward. I look forward to our continued partnership to make that happen.
King County Executive