There’s only been one in-depth effort in recent years to provide the Memphis Area Transit Authority with a dedicated funding source and it came from an unusual place: Outside city government.
Through months of planning and advocacy, Shelby County Mayor Lee Harris pushed in 2019 for a “sustainability fee” for households with more than two vehicles, estimating that the effort would raise up to $9 million for the beleaguered city transit system. If approved, the move would also act as an entry by the county into providing significant operating revenues for the city-owned transit agency.
Get more stories like this in your inbox every Wednesday in The Weekly.
Subscribe to MLK50’s newsletter
and get Memphis-rooted news and insights
right-sized for your neighborhood.
However, the effort never received the support of the Shelby County Board of Commissioners. They later approved the use of tax dollars from expiring payment-in-lieu-of-taxes projects (a plan also approved by the city). The amount brought in by that effort fell short of anticipated revenues by 29%, according to the nonprofit Innovate Memphis.
Now, with the agency experiencing layoffs, cutting routes and facing restructuring, city leaders are looking for ways not just to save MATA but to fix and grow it. They agree the agency needs funding, but how to get there is uncertain, particularly as city leaders question how MATA has been managed. The situation is troubling, said Harris.
“I’m sad,” Harris said. “I’m sad by what we see happening to MATA right now. I think we could lose public transit. … There are a lot of things that are discretionary, but public transit is not discretionary. We can’t lose public transit. It is not optional. It is something we must have.”
MATA, funded through a combination of local, state and federal funds, with a small amount of its budget coming from fare revenues, falls far behind peer cities in funding. The agency is city-owned and operated by a board of commissioners named by the city mayor and approved by the City Council.
While MATA receives just $33.3 million in local operating funds, New Orleans receives more than $101 million, Indianapolis more than $83 million, Louisville more than $68 million, Kansas City, Missouri more than $65 million and Nashville more than $71 million, according to data shared by Innovate Memphis.
Harris’ effort came after the development of Transit Vision, a component of the citywide Memphis 3.0 development plan. Approved by MATA and the City Council, Transit Vision called for an additional $30 million investment in transit, with a goal of making 39% more jobs reachable by transit in an hour for the average Memphian and 49% more jobs reachable in an hour for low-income residents.
Yet, the funding for the project was never secured. Instead, MATA generally operated at a deficit — with more expenditures than revenues — for at least the past 10 years, according to Hamish Davidson, an external auditor hired to work as interim chief financial officer for the transit agency.
So even as MATA was unable to achieve its “Transit Vision,” the agency dug deeper and deeper into a financial hole. Federal dollars during the height of the COVID-19 pandemic provided a cushion to the transit system, allowing it to avoid route cuts.
By the time those federal dollars ran out, “MATA had grown itself into something that was unsustainable,” Davidson said.
Emergency funds unlikely
For MATA to grow rather than shrink, it would need a dedicated funding source, experts have said.
“The issue that MATA has is that it has no security in the level of its funding from its main source, City of Memphis, from year to year,” Davidson said. “Unlike most transit authorities across the USA, MATA’s city funding comes through the city’s Operating Fund, so MATA is at the mercy of demands on city funds from the police, fire department, parks, public works etc. As you see, there is no general increase from year-to-year to take account of inflation, never mind expectations of expanded services.”
The creation of a dedicated funding source would take time, the support of the Memphis City Council and possibly, a public vote.
For now, advocates are asking the city for emergency funding needed to stave off the route cuts coming Nov. 3. It’s funding the transit agency is unlikely to receive.
Members of the City Council have criticized MATA but not publicly discussed where to find millions in emergency funding. They also await the results of two audits requested by Memphis Mayor Paul Young, one by PricewaterhouseCoopers that will examine spending practices and one by TransPro to review operations and offer technical assistance. Results of the TransPro audit are expected by the end of the month.
“It starts with balancing our budget,” said Courtney McNeal, a MATA commissioner since this March. “If you don’t have a balanced budget, you’re going to continue to spiral … balancing the budget will allow us to build MATA back up.”
Even as MATA officials have regularly asked for more funding, city officials have questioned how MATA has used the funding it does receive.
Tuesday, Memphis City Councilman Chase Carlisle, who chairs the council’s budget committee, told advocates the council isn’t in a position to provide increased funding to MATA while much about the financial situation remains unknown.
“The reality is that until we have a better understanding, which we don’t today, of the operations of MATA, you would be throwing money into something where you couldn’t even demonstrate you were paying bus drivers or paying the technicians,” Carlisle said. “… We are doing our level best in positions that we are in to follow the advice of counsel, the financial experts that are auditing, so that after we come through this time, this phase with MATA, we don’t find ourselves here again.”
And Wednesday, after Davidson criticized the city for not releasing funding to the transit agency in a timely fashion, City Attorney Tannera Gibson wrote a strongly worded letter to MATA Interim CEO Bacarra Mauldin saying MATA must provide documentation regarding use of funds. The letter also said that any use of funding “inconsistent with the stated purposes … will likely affect MATA’s ability to receive additional funding from the City for any purpose.”
The letter also required MATA to cooperate with TransPro and said MATA has failed to provide proof that it has resolved financial deficiencies with the Federal Transit Administration.
Dedicated funding requires council, community support
More route cuts are a far cry from the transit system envisioned in 2018 as a part of Memphis 3.0.
Earlier this year, the nonprofit Innovate Memphis published a white paper laying out funding as MATA’s primary concern and explaining the various means by which the city could create a dedicated funding source.
“Local funding has been flat or decreased over the past number of years. So we’ve dug ourselves into a hole, and then we’re surprised that the hole is so deep,” said Jackson McNeil, Innovate’s transportation and mobility director.
The paper was published prior to new leadership at MATA and recent news about its financial straits, so it’s “not about plugging a $20-million hole right after budget season,” McNeil said, but is instead focused on the longer conversation of how to build MATA up through “a larger and more reliable dedicated funding source.”
In 2017, the state passed the IMPROVE Act, allowing counties and cities to levy taxes for funding public transit following a local referendum.
In Nashville, voters will decide on just such a referendum this November, a proposal to increase the sales tax by a half-cent, with the funding going toward not just bus service, but also new traffic signals and sidewalks.
“I think Nashville could chart an encouraging path for us as a city,” McNeil said.
Other options to create a dedicated funding source for MATA include a transportation utility fee, a wheel tax or a gas tax. Options like the local sales tax or property tax could also be used to raise revenue, but wouldn’t be dedicated solely to transit.
MATA has not taken an official position on where a revenue increase should come from, but has, in public meetings, asked for feedback on a 14-cent property tax increase.
A tax or fee increase would likely face a difficult path to approval, particularly after the city already increased the property tax by 49 cents in its most recent budget cycle.
Mauldin pointed to Indianapolis as a city from which Memphis could draw inspiration. Before a tax referendum was passed, their public transit system had a budget of about $84 million (equivalent to MATA prior to this year’s right-sizing). Since then, they have made “exponential change to the system,” including bus rapid transit lines. The changes have grown the city, including bringing high-level sports events and acting as a “catalyst” for other development, Mauldin said.
Councilman Jeff Warren said he believes MATA will need an entire “reconfiguration” in light of current technology, including on-demand vehicles, and because the authority has not been under council control.
“I really think we haven’t had a handle on this,” Warren said.
Young, the mayor, said he hopes to bring a proposal on funding MATA to the City Council by the end of the year.
“We as a city and city administration are all in on transit. We understand the importance to our community, the importance to the riders that depend on this transportation to get to and from all of their daily needs,” Young said.
Rather than putting a “Band-Aid” on the system, Young said he hopes information from the audits will show exactly how much funding MATA needs to get to decreased wait times and a “dramatically more efficient” system.
“I think, in general, I certainly support the notion of having a dedicated funding stream for MATA,” Young said, “but it really comes down to working with City Council, working with our public if it has to go toward some type of public vote and identifying what that funding stream is and the willingness of our community to support it.”
Katherine Burgess is the government accountability reporter for MLK50: Justice Through Journalism. Contact her at katherine.burgess@mlk50.com
This story is brought to you byMLK50: Justice Through Journalism, a nonprofit newsroom focused on poverty, power and policy in Memphis. Support independent journalism by making a tax-deductible donation today. MLK50 is also supported by these generous donors.