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Audits Show Continued MTA Problems

Maryland’s Office of Legislative Audits has released a new report showing that things haven’t changed a whole lot over the the Maryland Transit Administration, with continued mismanagement of funds and still dwindling Farebox recovery rates.

The Audit, which covers the January 1,2011-Deember 15, 2013 period under the O’Malley Administration, hits the MTA for 6 specific issues:

  • Not verifying contractor-billed labor rates;
  • Error in calculating the vendors’ service hour billing rates for the Mobility Paratransit Program;
  • Paying state fuel excise taxes despite being exempted from said taxes;
  • Accepting contractor prices without an independent cost estimate;
  • Failure to  comply with State procurement regulations;
  • Lack of controlsover fare collections, purchases, disbursements, and inventory.

Particularly damning are the issues related to the Purple and Red Line procurement. As Kevin Rector notes in the Sun:

The Maryland Transit Administration failed to verify the accuracy of millions of dollars in contractor-submitted architectural and engineering costs for the Red and Purple light rail lines, according to a state audit released Monday.

The unverified labor bills from four contractor groups hired to work on the two pending transit lines, scheduled for Baltimore and the Washington suburbs, respectively, account for or relate to $232.8 million in overall costs under the multibillion-dollar projects, the audit found.

That figure includes the labor costs as well as overhead and profit calculated under a formula based on the labor costs.

The Report also notes that the Farebox recovery rate during this period dropped again. I’ve covered the Farebox recovery rates before and noted last year that rail operated by the private sector in Hong Kong has a Farebox recovery rate of 186%. But Maryland in the O’Malley Years failed to even achieve the Farebox recovery rates mandated by law. From the report:

MTA reported that it did not attain passenger fare revenue levels during fiscal years 2011, 2012, 2013,and 2014 as required. State law provides that the MTA shall recover 35 percent of its operating costs by establishing reasonable fares and implementing necessary cost containment measures. However, as noted in this chart, during fiscal years 2011 through 2014, MTA’s combined farebox recovery rates for its bus, Metro subway, and light rail operations failed to meet required levels in each year. As reported upon in our preceding audit report, required levels have not been attained since fiscal year 2005.

These issues are particularly relevant as Democrats jump up and down about Governor Hogan’s proposed elimination of automatic gas tax increases. While the Democrats complain that a tax cut is a Transportation Trust Fund raid (never mind their own $868.3 million in raids), they are suspiciously quiet about stories like this MTA Audit. Why? Because so their fighting over the gas tax increase was related to the multi-billion dollar Red and Purple Line projects. These projects will be administered by the MTA, an agency which very clearly has not been able to get out of its own way, follow basic budgetary principles, or cover enough of its costs and fees and fares to meet the pathetically low farebox recovery rates required by law……but the Democrats believe that automatic gas tax increases should go to this agency in order to fund projects that they are already over costs due to mismanagement, and will likely never recoup their costs based on previous Farebox recovery rate achievements.

The good news is that Governor Larry Hogan has appointed a successful transportation official in Pete Rahn as Secretary of Transportation, and he has vowed to clean up the mess, as reported in the Sun:

“These fiscal compliance issues clearly demonstrate the need for MTA to institute comprehensive control measures that ensure taxpayer funds are fully accounted for and spent properly on programs and initiatives that help us build and operate a safe, convenient transit system for the citizens of Maryland,” Rahn wrote. “I can assure you that the issues raised in this audit are taken seriously.”

I hope that Secretary Rahn does institute those controls to address the concerns in this audit. However this audit proves not only that the MTA is in serious need of a complete overhaul, but that Democratic concerns the gas tax are unfounded and unnecessary. Democrats should be concerned, however, as to why mass transit in Maryland got to be such a mess on Martin O’Malley’s watch.






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