Transit System Plans 10% Service Cut

The Milwaukee County Transit System (MCTS) delivered a sobering report to the County Board’s Committee on Transportation, Public Works and Transit detailing an impending budget shortfall and an expected 10 percent cut to services.

For a number of reasons, MCTS is expecting a $6.4 million budget shortfall in 2020. Urban Milwaukee first reported the expected shortfall in March, when MCTS officials used it to explain their attempts to negotiate increased employee health care contributions from the bus operators’ Amalgamated Transit Union 998 (ATU).

When Nate Holton, director of diversity and inclusion at MCTS and the lead negotiator for MCTS with ATU, told the committee the budget shortfall could translate to service cuts, County Supervisor. John Weishan, Jr. issued a strong rebuke. He told Holton that position was “ill informed” and “inappropriate.”

The long-term fiscal problem for the MCTS was forecast a decade ago in a 2008 report by the Wisconsin Policy Forum, which warned that without new funding sources, the system would run out of money The MCTS is facing the shortfall because federal and state revenues are not sufficient to maintain operations, and all local sources of revenue have been exhausted. State revenue, in the form of transit and paratransit aid have been flat or declined nearly every year for the better part of the last decade. And rising inflationary costs — notably health care costs — continue to consume any savings from budget cuts.

“We are out of local funding options and are at a crossroads,” MCTS managing director Dan Boehm told the committee.

For some years the transit system staved off the predicted disaster, as a result of federal grants that became available to cover much needed, deferred capital costs. Specifically: the replacement of the aging fleet. Between 2009 and 2012 MCTS was able to capture $84 million in federal funding to assist in purchasing 270 buses over five years. But that was one-off funding. And starting in 2022, 90 buses will be considered at the end of their life and in need of replacement, which translates to roughly $45 million in capital costs for the system. Keep in mind, that in recent years the annual MCTS budget has been somewhere between $150 and $160 million. Though bonding is an option for capital costs, the price tag for buses that will technically age out in 2022 represents approximately 30 percent of MCTS annual budget.

For a while now, Milwaukee County has been using $36 million worth of federal grants to pay for operating costs. These Congestion Mitigation and Air Quality (CMAQ) grants have directly supported service lines like the Green Line, Purple Line, Blue Line and 30x, Boehm said. But that money is drying up. And fortunately, Milwaukee’s air quality is improving, but unfortunately, that means the county has less access to these CMAQ grants. By 2021, those funds will be completely gone, leaving a new $2.4 million hole in operating revenue.

In the 2019 budget, MCTS reduced service by 3 percent, and ridership and farebox revenue continued to decline on top of the structural fiscal challenges. All of this undergirds the ongoing negotiations with the ATU.

MCTS is asking ATU to increase out-of-pocket health care contributions for an individual in a single or family plan from $750 to $2,000. That means that a person would reach their maximum on a single plan at $2,000. The same would apply to an individual on a family plan, but if multiple members needed health care, each person on the plan would have an out-of-pocket max of $2000 up to a total of $6000.

That is the last proposal MCTS offered before they started offering arbitration. And the union solidly refused both the proposal and all offers of arbitration, so nothing has moved. Union members and leadership have previously said they saw the arbitration offers as tactical moves by MCTS to force concessions in wages or health care.

MCTS recently proffered “open arbitration” on all remaining contract items to ATU. This format is different from the previous offer of arbitration, first made in March. Under open arbitration the arbiter is not limited to the offers put forth by either side, and can look for a compromise or decision not put forward by either party.

A source familiar with negotiations said the open arbitration offer was a riskier position for MCTS relative to their last offer of arbitration. Under the open format, MCTS could theoretically face a deal that completely favors the union. Though, the inverse is also true for the union.

For now, ATU president James Macon has not accepted open arbitration. He told the committee Wednesday he would be at the already scheduled meetings in May.

“We gonna negotiate, negotiate, when they get tired of negotiating we gone walk,” Macon said. “I don’t leave the office until 2021, if they want to fight with me until then, we will walk and talk, walk and talk.”

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