In Search of Funding, Regional Transit Faces a Taxing Dilemma

The population boom in Northwest Arkansas has helped fuel impressive growth statistics for the area’s chief public transit system.

In 2006, the number of passengers from the area’s four largest cities who rode an Ozark Regional Transit vehicle totaled 98,298. In 2010, that figure ballooned to 234,775 — an increase of 139 percent — and executive director Phil Pumphrey said recently ORT is “surpassing last year’s ridership at about a 10- to 12-percent clip.”

That population growth, however, is proving to be a two-edged sword, at least where ORT is concerned.

That same boom is now threatening to all but eliminate the transit system — a result of significant budget cuts.

ORT, like other transit programs throughout the country, is funded through a combination of aid from the Federal Transit Authority and local governments. Its current budget is $2.7 million, of which about $750,000 comes from city and local governments in Northwest Arkansas.

Federal funding comes from the FTA’s 5307 program, a formula program based on population figures.

Because of the census figures from 2010 — which elevated the region past the population threshold of 200,000 and reclassified it as a “Large Urban Area”— the ORT operational budget stands to lose about $750,000 federal dollars, which Pumphrey said would eliminate all fixed routes. When an urban area becomes larger than 200,000, the FTA money switches from operational costs to capital and preventative maintenance expenses.

It is doubtful the local governments can, or would want to, make up for the shortfall and it’s anticipated that Northwest Arkansas will be impacted by the change in FY 2014 (i.e., Oct. 1, 2013).

“If we don’t find a way to replace that money, we’ll be running about two mini-vans in each county,” Pumphrey said.

The answer to the crisis, Pumphrey hopes, is a dedicated revenue stream for ORT in the form of a quarter-cent sales tax in Washington County.

The sales tax, if approved by voters, would generate roughly $7.5 million and increase the ORT budget 222 percent to $8.7 million. That would, of course, lead to expanded services for the transit system, but primarily in Washington County.

The Washington County Quorum Court has passed a resolution saying it will pass an ordinance and refer the issue to the voters.

A date for such a vote has not been determined. Pumphrey is hoping it will be on the ballot for the May 2012 primary.

“If it doesn’t get before the voters and it doesn’t pass,” he said, “there’s no transit system here.”

The University of Arkansas’s Razorback Transit, which serves the UA campus and other destinations in Fayetteville, also faces similar loss of federal funding but is not participating in the sales-tax effort, Pumphrey said, though it would likely benefit from a favorable election result.

“If we get the tax passed, the board will have the opportunity to see if they want to help them,” he said. “I know what they do is important.”

Last year Razorback Transit, which differs from ORT in that it doesn’t charge a fare, transported 1.6 million passengers. The system has 21 buses and covers about 18 square miles.

Students at the UA — which recently announced a record enrollment of 23,199 — are charged $2.41 per credit hour to help fund Razorback Transit.

Fees are assessed each academic semester for which the student is enrolled: fall, spring and summer.

Director Gary Smith said he is “being creative” in exploring several options to make do with less money, including reducing operating costs and using more fuel-efficient buses.

“We’d rather not have to charge a fare, but that may be an option in the future to non-university folks,” he said.

 

Expanded Services

The mission for ORT when it started in 1978 was to serve the disabled and underprivileged. That was accomplished with paratransit routes.

ORT grew during the following decade, and began daily service in Fayetteville and Springdale in 1991.

Mid-day service expanded into Bentonville and Rogers during the next two years and by 1995, mid-day service began in Carroll County.

Further growth has continued during the last decade. ORT began its first fixed route in 2002, offered a major expansion of fixed routes (increased by local government support) in 2005 and its budget has increased more than $1 million since 2001, funding a system that operates 12 buses on 10 fixed routes.

So what expanded services would ORT provide backed by sales tax revenues of $7.5 million? About half than was originally planned.

In late 2009, the Advocates for Public Transit group was formed with a purpose to study ORT’s funding issue and offer solutions to the ORT board of directors. The group of 25 included a wide cross-section of representatives from major employers, health and human service organizations, and hospitals, to name a few.

The group chose former Springdale mayor Jerre Van Hoose — a member of the ORT board of directors and chair of the executive committee — as its chairman and on Dec. 10, 2010, released the Northwest Arkansas Transit Development Plan.

The 39-page document — with data projections covering employment, population and demographic figures — was the result of a process that studied current service, identified unmet needs and emphasized efficiencies.

After public input was solicited and surveys were conducted by the Survey Research Center at the University of Arkansas, the group recommended a quarter-cent sales tax for both Washington and Benton counties.

The tax would generate approximately $15 million ($7.5 million per county), which was the projected funding need. The two-county plan called for the current system to grow to 59 buses with 39 fixed routes by 2020.

The additional money also would fund capital needs including transit centers, bus stops and amenities, additional vehicles and a new operating hub.

Elected officials in Benton County weren’t on board with the idea, voting against putting it on the ballot. The all-at-once budget increase just wasn’t feasible, one justice of the peace said.

“I’d sure like to see a public transit system,” said Dan Douglas, who represents District 9. “In this [plan], I heard nothing about trying to make routes more efficient, nothing about making any part of the operations more efficient. It was give us more money and we’ll buy bigger buses and put on more routes. Let’s face it. Maysville [citizens] could pay taxes and really not use it.

“Anytime there is a tax increase, voters need to have a say in it, but the first thing to consider is to ensure what we put out there is fair and equitable. Let’s start with something that is a little more reasonable than going from $2 million to $17 million.”

Another JP said the buses he sees rarely have more than a handful of passengers, and that asking voters to approve a sales tax increase was careless.

“We would like to allow it go to the voter,” said District 4 JP Tom Allen, who also chairs the finance committee. “But speaking for me, it’s irresponsible to let that proposal go to the ballot.”

Other opponents have questioned why ORT couldn’t ask for a smaller amount; an eighth-cent tax, for example.

When asked if that was considered, Pumphrey said: “The plan addressed what the public told us they needed, through survey and public meetings.”

 

Not So Fast

Even opponents to a sales tax proposal in Washington County agree Northwest Arkansas needs a public transportation system.

But they also believe a budget of nearly $9 million to make up for a $750,000 shortfall is too steep.

“I recognize it’s easy for me to sit here and say this is what Ozark Regional Transit ought to do, but we have come to a wall in terms of the realities of where the electorate will go,” said Mike Landry, a member of the Washington County Tea Party. “They need a shovel and they want us to buy them a bulldozer.”

Pumphrey said the money would be used to expand the current transit system, which he feels is an undervalued part of the infrastructure.

“Some people say the plan is too big; to me that’s not the argument,” Pumphrey said. “It’s infrastructure. You don’t have to have a public transit system, but name one city that doesn’t? We are well overdue and the public here is smart enough to know that when they look at this area and ask what are we missing infrastructure-wise, they’re going to say public transit.”

Pumphrey said he is returning to the Washington County Quorum Court in January hoping to learn when the proposal will be referred to voters. Until then, he said the advocate group must raise $75,000 to market to the public just what the plan for the transit system will be.

With potential sales-tax collections now at $7.5 million rather than $15 million, Pumphrey said plans and route mapping are being re-studied and scaled back.

But the money collected in Washington County can’t be spent outside the county, said Van Hoose. And that will still cause some questions as to how and where ORT will expand its services in other areas, mainly Benton County.

The amount of service provided would be directly proportional to the amount of funding provided by each city and county.

“I can understand why the [FTA funding] system is set up the way it is,” Van Hoose said. “It’s to help you get started. And that’s what we’ve been able to do these last 10 years in building this transit system. We’ve got a great foundation honed over the last decade. I think it’s efficient. It’d be a shame to lose it.”