WTA to go to voters on tax hike, critics say wrong time

On April 27, a ballot measure will allow voters to decide whether they want to increase local sales tax by...

By Ashley Mitchell

On April 27, a ballot measure will allow voters to decide whether they want to increase local sales tax by two-tenths of one percent to support the Whatcom Transportation Authority (WTA).

If the measure fails, WTA expects to make major bus service cuts. Despite potential cuts, those in opposition insist this isn’t the appropriate time for a sales tax increase.

As a result of the economic recession, sales tax revenues have been down more than 11 percent countywide. A portion of that sales tax revenue contributes to 90 percent of WTA’s operating budget and the transit service currently isn’t making enough each year in services to maintain its budget, said Maureen McCarthy, community relations and marketing manager for WTA. Currently, WTA receives six-tenths of one percent of the sales tax, and under state law, it can receive as much as nine-tenths of one percent.

In response to the decreased funding, WTA has considered a 14 percent reduction in bus service in a proposal for its yearly budgeting cycle. WTA has seen a significant decrease in funds and for nearly three years the authority has been using money from its reserves to make up for the lost funds, McCarthy said.

During the past two years, WTA has seen a 39 percent ridership increase — 32 percent in 2008 and 4.8 percent in 2009 — earning the agency national recognition. Given this increase, McCarthy said WTA has made other attempts to balance the growing deficit and avoid cuts, such as a 25 percent across-the-board increase in fares, but eventually something had to give.

“A 14 percent service cut is the last thing [WTA] wants to do,” McCarthy said. “So our board decided to consider other options and they wanted to give the community a chance to vote whether they would like WTA to cut back on its service.”

On Feb. 11, the Bellingham City Council unanimously endorsed the ballot initiative. Councilman Michael Lilliquist said he felt WTA made a reasonable request because it has taken many other routes to fight its budget deficit and the value the city would get back would be worth the additional price.

Lilliquist said that Bellingham spends more than $15 million a year supporting individual transportation, whether it be to widen current roads or add new ones.

“For example, if you put one or two buses on every road it takes dozens of cars off the roads,” Lilliquist said. “Upholding a solid transit system would allow people to get around on the existing streets at their existing widths, saving the city from having to redo them or create more.”

While Bellingham is in support of the ballot measure, not everyone in the county agrees. On Feb. 16, the Lynden City Council voted in favor of a resolution opposing the sales tax increase. People for Progressive Transportation, the main opposition group to the measure, was in agreement with the Lynden council and the reasons behind their decision.

The group’s campaign chair, Brett Bonner, said their basic argument is two-fold. He said they believe now is not the time to raise taxes given the unsettled economy and struggling families and businesses. Bonner also said the group feels WTA has not hit its crisis point because its $22 million reserve, or “rainy day” fund can supply the transit service until 2012.

The group is recommending WTA not cut back on service, tap into the fund, and see what happens with the economy. Bonner said if nothing improves, then it would be appropriate for WTA to request a tax increase next year.

Bonner said WTA is currently working under a $3.8 million cash flow deficit. If the ballot passes, WTA will receive $6 million per year, which would provide them with $2 million more than they were previously running under.

“If WTA has this rainy day fund to tap into, it saves the county $16,000 a day in sales tax,” Bonner said. “Plus, the community has started looking to buy from other counties, such as Skagit County, because their sales tax is lower. In this economy, every penny counts.”

According to a reserve fund analysis, out of the $22 million in reserves, more than $14 million is allotted for “operating reserves” and “undesignated cash reserves,” but as WTA continues to operate under a deficit, this amount will hit a critical low in two years. McCarthy said a board-set policy keeps a certain amount of money in reserves to ensure payroll and other necessary funding, so completely draining the account isn’t an option.

McCarthy said if the ballot measure passes, the sales tax increase will stop the running deficit for WTA and allow them to stop draining the reserve fund. If the increase doesn’t pass, a service cut would merely slow down the bleeding, and eventually another cut will need to be made in 2012, she said.

“This situation is very typical of what is happening at other transit agencies,” McCarthy said. “It is a bad time to make a service cut and raise taxes, so the board figured it would be best to let voters weigh in on the potential cuts.”

Of the proposed cuts, WTA considered cutting multiple week-day routes that are less productive, which adds up to 10 percent of the service cut, and the additional 4 percent would come from a cut of all Sunday transit services. Under the current process, if the measure fails, WTA would hold a public hearing on these proposed cuts, reach a final decision,  and the cuts would go into effect in September.

Additionally, Whatcom County Superior Court Judge Steve Mura has dismissed the lawsuit over the wording of the ballot for the sales tax increase brought into action by Bonner and People for Progressive Transportation.

The wording of the ballot included the words “maintain and improve,” and the opposing group claimed the language did not accurately describe the issue. The group had ten days after the auditor certified the language to challenge the title. The lawsuit was not filed within this deadline and the case was dropped.

The ballot language that will appear on the April 27th election will be: “Shall public transportation services in Whatcom County be maintained and improved by authorizing the Whatcom Transportation Authority to impose an additional two-tenths of one percent sales and use tax effective Oct. 1, 2010?”

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