TriMet Tax Fraud

TriMet, Portland’s transit agency, gets about half its operating funds from a payroll tax. In 2004, this tax was 0.6218 percent, meaning employers had to pay TriMet $62.18 for every $10,000 they paid employees. Employees, other than the self-employed, are largely unaware of this since it is on top of pay, not a deduction from pay.

In 2003, TriMet persuaded the Oregon legislature to allow it to increase the tax by 0.01 percent per year for ten years, starting in 2005. In 2009, TriMet went back and convinced the legislature to allow it to continue increasing the tax by 0.01 percent per year for another 10 years. Thus, the tax now stands at $69.18 per $10,000 in payroll, and will rise to $82.18 per $10,000 in 2025.

At the time, TriMet promised that all of this tax increase would be dedicated to increasing service, and as of 2010, TriMet CFO Beth deHamel claims this is being done. But according to John Charles of the Cascade Policy Institute, that’s not what is happening.

Poring over TriMet budgets and records, Charles found that, from 2004 (before the tax was first increased) and 2010, total payroll tax collections grew by 34 percent, more than a third of which was due to the tax increase. Thanks to fare increases, fares also grew by 68 percent, so overall operating income grew by about 50 percent, of which about 7 percent (almost $20 million) was due to the increased payroll tax.

So service must have grown by about 7 percent, right? Wrong. Due to service cuts made last September, says Charles, TriMet is now providing about 14 percent fewer vehicle miles and 12 percent fewer vehicle hours of transit service than it provided in 2004 (comparing December 2004 with December 2010). TriMet blamed the service cuts on the economy, but its 50 percent increase in revenues belie that explanation.

By 2030, according to TriMet’s financial forecast (not available on line), the agency will have collected $1.63 billion more payroll taxes thanks to the tax increase. Yet the agency itself projects that hours and miles of service in 2030 will be slightly less than in 2004.

Where did all the money go if not into service increases? Charles says some of it went into employee benefits. TriMet has the highest ratio of employee benefits to payroll of any transit agency. At latest report, it actually spends about 50 percent more on benefits than on pay, and is the only major transit agency in the country to spend more on benefits than pay. This doesn’t count the unfunded health care liabilities; by 2030, TriMet health care benefits alone are projected to be more than its payroll.

TriMet claims it is keeping its promise to the legislature. But it counts debt service on light rail, cost overruns on the Westside commuter train, and similar costs as “increased service.” That’s not more service; it is simply more spending. Substituting high-cost rail transit for low-cost bus transit is not an increase in service. At best, it is an increase in snob appeal.

TriMet ridership in 2010 was about 9 percent more than 2004. But the agency implemented severe service cuts near the end of 2010. We’ll know in a few months how badly those service cuts have hurt ridership.

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9 thoughts on “TriMet Tax Fraud

  1. metrosucks

    I have to admit. For a few seconds, I thought of predicting Dan’s & highwayman’s response to this post, and possibly aping it. And then I realized that their response would be so over the top, so ludicrous, that any aping attempt on my part would be quickly overshadowed by the insanity of a Dan/Highwayman combo, reflexively rushing to defend the Trimet Crime Consortium.

    That being said, it’s long past due that the idiots at Trimet started going to jail. Hasn’t anyone had enough of the endless waste on streetcars, choo-choo trains, mixed used development, anything but buses that would serve the people who actually use public transportation? Not in the Socialist Republik of Portland, apparently.

  2. paul

    When I asked a San Francisco official about how they would make sure any extra money was used for actual service, not just increased costs, they said it now is only made for a level of service. So if the service goes down then the money Muni would receive goes down. This is what Portland and the Oregon legislature should have done. For example, subsidies should only be per passenger mile carried. This should help to make Trimet actually look for the most efficient way of moving people.

  3. C. P. Zilliacus

    Isn’t the bottom line here that Tri-Met expenses, and especially expenses for labor, have gone up much faster than Tri-Met’s patronage?

  4. Andrew

    Public transportation’s fixed costs are so high that it rarely makes sense to cut service in order to balance a budget. Once you’ve paid for buses and trains and tracks and depots and stations, most of your costs are already set. On a variable level, the cost of an additional run of a bus, train, or trolley is generally far less than the revenue that would be collected from the riders. In theory, the proper response to a budget crisis in transit should be to increase service and efficiency to attract more riders at the margin and increase revenues faster than costs.

    But cutting service as the response to a budget problem is the inevitable proposal because in a politicized, unionized and subsidized environment, its imposisble to adjust staff levels, pay, or benefits of union drivers and mechanics and very difficult to get rid of HQ management headcount. Plus in many instances, ridership has been driven so low that only the most desperate and dependent are actually riding, all the variable/margin traffic having been driven away long ago, so a service cut just leaves riders with fewer options and longer commutes.

    We see the same thing with toll roads. We can introduce EZ Pass type systems, which should lead to a massive reduction in headcount by ridding the world of most toll collectors, but the politicians are afraid to make these people go and find real jobs, so the expected efficiencies never materialize.

  5. C. P. Zilliacus

    Andrew posted:

    We see the same thing with toll roads. We can introduce EZ Pass type systems, which should lead to a massive reduction in headcount by ridding the world of most toll collectors, but the politicians are afraid to make these people go and find real jobs, so the expected efficiencies never materialize.

    You have not read Peter Samuel’s TOLLROADSnews, have you?

    Wilbur Smith, McCormack Taylor to do Penn Pike’s cashless study

    Florida’s Turnpike begins Toll-by-Plate in Miami-Dade – first step to AET

    First move to all-electronic tolling (AET) at New York’s Henry Hudson toll bridge – gates go

  6. Frank

    “TriMet blamed the service cuts on the economy, but its 50 percent increase in revenues belie that explanation.”

    Lying liars. *u©k TriMet. *u©k Oregon. Sinking ship. Won’t be long now.

  7. CascadeTelcom

    How can taxpayers that previously voted against the Tri Met Neil Goldshit debacle do anything to stop the waste of taxpayer funds, federal, state and local?
    We need additional roads, bridges and rubber tired busses not the Tri Met tax suckers. Any ideas?????

  8. metrosucks

    How can taxpayers that previously voted against the Tri Met Neil Goldshit debacle do anything to stop the waste of taxpayer funds, federal, state and local?

    Unfortunately, we’re probably going to have to live with it, as much as I hate to say so. There is no will to do the right thing, the politically unpopular things, such as say, speaking the truth. And Trimet won’t cease operations on any rail system, no matter how unsuccessful it is, because they’d have to give the feds back their share.

    Trimet no longer cares about serving their original ridership. It’s been this way since the first light rail line was installed, but has accelerated in the last several years as the agency seems to morph into a social engineering agency instead of a transportation agency.

  9. PortlandAfoot

    Actually, TriMet reports ridership monthly, so we already know the impact on ridership: bus boardings are down about 2% year-on-year (it was a bit more during the winter, before gas prices rose) and MAX has generally been growing due in part to the Green Line being so new.

    The economy is a major complicating factor, of course.

    TriMet has tried to define “service” as broadly as possible — last week I added the full list of what TriMet considers service. Put another way, it’s been allowed by the legislature to define “service” however it likes, since the tax laws were written without a formal definition or requirement.

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