Tag Archives: Maricopa County

State Subsidy Reliance

Like many state services across the country, the Phoenix area’s new light rail system is facing cuts because of budget shortfalls. Like many transit systems, the light rail is funded by a combination of fares and subsidies that come from the local, state, and federal governments.

This payment arrangement makes transit systems vulnerable to volatility in government budgets as well as business cycle fluctuations. An Arizona Republic article explains:

The money shift reflects how much of Maricopa County’s voter-adopted plan to expand transit service in the next 15 years has fallen victim to the economy. That includes some extensions of light-rail lines.

“We’ve pretty much gutted all of our future capital projects that aren’t federally funded in order to keep service intact,” said Paul Hodgins, a planner at the Regional Public Transportation Authority, which manages bus service in much of the Valley.

When new Metro Chief Executive Officer Steve Banta begins his first day on the job in two weeks, one of his first actions will be to review cuts with his new board.

Metro covers about a quarter of its costs from fares, and depends on sales-tax revenue from Phoenix and Tempe and general-fund money from Mesa. With tax revenue down, cuts look inevitable.

In New Jersey, a state that, like Arizona, has a very large budget deficit, legislators are facing similar challenges.  Governor Chris Christie is leading an effort to privatize state services to save taxpayer money and increase efficiency.

While privatization can be a solution to curbing government costs and improving service to constituents, the process must be undertaken transparently.  The New Jersey Star Ledger warns that previous projects were fraught with corruption:

A privatization effort under former governor Christie Whitman that turned auto inspections over to Parsons Corp. in the 1990s was called a “mammoth boondoggle” by investigators. Parsons was criticized for hiring an array of politically connected subcontractors.