Salaries and benefits cripple RIPTA's finances

Posted 7/16/10

The financial problems at the Rhode Island Public Transit Authority (RIPTA) resemble those affecting cities and towns throughout Rhode Island.

The quasi-public transportation authority is dealing with a carryover deficit of $1.6 million from …

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Salaries and benefits cripple RIPTA's finances


The financial problems at the Rhode Island Public Transit Authority (RIPTA) resemble those affecting cities and towns throughout Rhode Island.

The quasi-public transportation authority is dealing with a carryover deficit of $1.6 million from last year’s budget, and an anticipated $2.2 million deficit in the current fiscal year’s budget.

Roughly 87 percent of RIPTA’s $99.1 million current year budget, assuming the authority’s board affirms the proposal at tomorrow’s meeting, is spent on labor costs – employee salaries and benefits. The number practically mirrors that of the ailing cities and towns and school districts.

“The number is in the upper eighties,” said Mark Therien, RIPTA’s Assistant General Manager.

A RIPTA bus driver with five years experience earns $23 per hour. If a bus driver worked full-time, 40 hours per week, he would earn $47,840 per year. But that number doesn’t take into account overtime. A first-year bus driver earns $18 per hour.

RIPTA employees are also part of a pension system. An employee becomes vested into the system after 10 years of service, and can begin collecting a pension at age 52 – though he or she would be subject to significant penalties.

Health insurance is another one of RIPTA’s big cost-drivers. RIPTA is basically self-insured, which means it pays claims directly and pays an insurance company to administer those claims and uses their discounts. The authority spent about $12 million on health care costs last year – a $1.1 million increase.

A 20-percent co-share for health insurance, Therien said, would solve many of the agencies problems, at least in the short-term, he said.

“That would take care of a lot,” said Therien. “We’re asking the arbitrator for better than we’re getting, believe me.”

With a 20-percent co-share payment from the employees, the authority would save the company $1.44 million in this year’s budget.

But the agency is currently in the midst of arbitration with the bus driver’s union. The state legislature deems the drivers “essential” workers, which makes it illegal for them to go on strike in the event of a labor dispute – which they’re currently involved in. What the arbitration process yields is anybody’s guess, but public sector administrators are always seem to be pessimistic about the process.

The arbitration process means an non-elected arbitrator, who doesn’t have to answer to anyone, will decide how much arbitrarily what the bus drivers should be paid, and how much of a health insurance co-share payment is fair.

RIPTA’s administrative costs are roughly 10 percent of its budget. Senior administrators haven’t received a raise in three years.

“We stay very thin in administration,” said Therien.

To cope, RIPTA’s administration has proposed increasing rates and eliminating 25 bus routes. The base fare would increase from $1.75 to $2.00 – a 14 percent increase. The monthly pass would jump from $55 to $62.

Overall, there would be modifications to 30 bus routes statewide.

But that’s only the beginning. The agency has a five-year plan that will reduce RIPTA’s scope. In the second year, the agency will shut the whole system down at 9 p.m. Two years from now, RIPTA will reduce 10 weekend routes, and all Park N’ Ride services will be eliminated. In three years, 10 weekend routes and all holiday service will be eliminated. And on top of all that, by the fifth year, there will be frequency reductions on 17 urban routes.

The irony of RIPTA’s funding mechanism is the fact that when ridership increases, the quasi-public agencies funding decreases. That’s because roughly 50 percent of RIPTA’s money is derived from gas tax receipts (25 percent is derived from fares, and another 25 percent comes from federal and other revenues). Last year, the General Assembly increased the gas tax by two cents, and allocated the extra money towards RIPTA. Every time someone pumps a gallon of gas into their car in Rhode Island, the state levies a 31 cent tax. Of that 31 cent tax, 9.75 cents go to RIPTA.

The additional 2 cents was expected to yield an additional $9 million last year. The revenue projection was close, if off, as it yielded the state $8.4 million.

But it didn’t solve problems like the state legislature had hoped. The gas tax actually yielded less money per penny of tax than it had the year prior. And RIPTA expects that trend to continue. Despite the additional funding, RIPTA found itself with a $1.6 million deficit.

And as more people take the bus, less people are spending money on gas. The fact that Rhode Island increased its gas tax may have forced more people to buy gas in Massachusetts, where the gas tax is 23.5 cents per gallon – 7.5 cents cheaper. It also doesn’t help that the escalating cost of gas over the last few years has forced people to think about using other alternative forms of transportation, including RIPTA.

In fiscal year 2009, the gas tax yielded $4.32 million per penny. Last year, after the tax increase, it yielded $4.185 per penny.

Those problems are in no way unique to RIPTA. Public transportation authorities throughout the country are struggling with the same issues and looking to come up with solutions. And with the exception of a few transit systems in Japan, there are no transit authorities in the world that are self-sufficient.

Several audits of RIPTA over the last few years have found that the agency is well managed, with high ridership (when compared to similar sized systems), and relatively low maintenance costs.

Nevertheless, there have been complaints that RIPTA isn’t well managed.

“Anyone who says that I would simply say ‘look at the audits’,” said Therien.


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