MARTA Revamp Bill Moves Forward

The Georgia House passed a bill that would revamp governance of the Metropolitan Atlanta Rapid Transit Authority, privatize some services, and impose tighter restrictions on the issuance of bonds.

House Bill 264, sponsored by Rep. Mike Jacobs, R-Brookhaven, would shrink MARTA's government board to 11 members from 18, and require more members to be appointed from outside of Atlanta. Brookhaven is about 12 miles north of Atlanta.

The measure would also require the transit authority to privatize accounts payable, payroll processing and human resources administration, employee recruiting, telephone maintenance and the customer hotline, information technology, computer support, workers' compensation administration, paratransit bus service, and bus and train cleaning by July 2018.

The bill would temporarily lift some restrictions on the use of a 1-cent sales tax collected in Fulton and DeKalb counties giving MARTA the ability to use more than 50% of those revenues on operations for the next three years. However, the revenues cannot be used for any new benefits, raises, bonuses, cost-of-living, or merit increases. The sales tax secures bonds issued by MARTA for capital expenses.

Jacobs' bill would reduce the longest permitted maturity of the agency's bonds to 30 years from 40 years, and impose phased-in restrictions on the amount of outstanding debt. The measure says that starting in July 2016 MARTA's annual debt service cannot exceed 40% of sales tax revenues, and beginning in July 2019 debt service cannot exceed 35% of sales tax revenues.

The bill passed the House 113-57 last week, and is now under consideration in the Senate.

In November, Moody's Investors Service said the Transit Authority would consume its reserves by 2018, which could derail plans to fund billions in capital needs over the next decade.

MARTA, which does not receive operating support from the state, also faces an operating shortfall of $248 million by 2021, said Moody's, which assigns an A1 rating to MARTA's $1.43 billion of third-lien subordinate bonds.

Moody's assigns an Aa2 rating to $365 million of first- and second-lien sales tax bonds, which have closed trust indentures so no additional debt can be issued.

MARTA disputed some figures mentioned by Moody's, and said that it currently has a $1.6 billion backlog of capital needs. The authority also said it has identified $6 billion to $7 billion in unfunded future capital needs over a 30-year period.

By law, sales tax revenue pays debt service before any excess can be spent on operations. MARTA has argued for some time for permission to use more sales tax revenue for operations due to the economic downturn. The authority has also implemented budget and service cuts over several years.

Some portions of HB 264, such as privatization of certain functions, were recommended as budget-cutting measures in an audit last September by KPMG LLP.

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Transportation industry Georgia
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