The city of Memphis is not releasing funding budgeted for the Memphis Area Transit Authority in a timely manner, said Hamish Davidson, an external auditor hired to work as interim chief financial officer for the transit agency.
Davidson described the situation to the MATA Board Tuesday, just minutes before the board approved a significant overhaul of the system, including eliminating five routes and ending service earlier.
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“We have no visibility of when these funds will be, or if they will be, released to us. It is going to get to the stage, unfortunately, that there will be vendors that will withdraw their services and there will be critical services (withdrawn) and there will be no buses running the streets,” Davidson told the board. “These funds are being withheld.”
In a written statement to MLK50: Justice Through Journalism, city officials said Davidson’s statement was “a mischaracterization of the situation.”
“The City has been regularly releasing funds in alignment with MATA’s requests,” city officials said. “As of today, we are currently reviewing and processing the batch of invoices we received on September 10. For the record, the City requested invoices, proper backup documentation and a strategic plan for paying down MATA’s unpaid bills on August 13. MATA did not provide any documentation until September 9, and provided backup documentation on September 10, and further clarification on September 18. MATA acknowledged the original request was made on August 13.”
Davidson said that MATA’s bank account is currently left with several hundred thousand dollars, “an extremely precarious situation.”
Recently, the city has released dollars needed for MATA to pay its employees at the end of the day before payroll is made, when that funding is realistically needed to be released to MATA earlier, Davidson told MLK50: Justice Through Journalism.
The second issue is that the city has not released funding MATA needs to pay its vendors. Currently, MATA owes about $4 million to vendors, Davidson said. A request was made to the city to disburse needed funding for vendors Sept. 9, Davidson said, but it has not been released as of Sept. 24.
“Some of (the vendors) have extended significant amounts of additional credit to us (and) they’re at their breaking point,” Davidson said.
If a critical vendor stops providing services, MATA will cease being able to run, he said.
The difficulties come as the city has required MATA to provide additional details of expenses, requirements the city put in place as MATA faces intense scrutiny over its finances. Memphis Mayor Paul Young has also approved two audits, one on MATA’s finances and another on its operations.
Davidson said MATA has answered all questions from the city and provided required documentation of expenses.
Timely disbursements of city funding are essential for payroll and operating expenses, Davidson said, particularly since federal and state monies don’t come in until much later in the year.
Tuesday, MATA Board members approved a capital budget for fiscal year 2025 as well as fare changes and a route restructuring, to be implemented Nov. 3.
The restructuring includes:
- Having 30-minute frequency on weekdays for the top five routes (8 – Chelsea & Highland, 36 – Lamar, 42 – Crosstown, 50 – Poplar and 52 – Jackson).
- Eliminating five routes (16 – Southeast Circulator, 28 – Airport, 34 – Central & Walnut Grove, 37 – Perkins and 69 – Winchester)
- Ending service at 7:15 p.m. on weekdays, 6:15 p.m. on Saturdays and 4:15 p.m. on Sundays
- Making changes to several routes to fill gaps caused by the five eliminated routes
- Having 60-minute bus frequency for most routes on weekdays and Saturdays, then 120-minute frequency for most routes on Sundays.
Katherine Burgess is the government accountability reporter for MLK50: Justice Through Journalism. Contact her at katherine.burgess@mlk50.com
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