COVID-19 has throat-punched the American transportation industry. United, Delta and American airlines are cutting staff through furloughs, layoffs and buyouts. Aircraft manufacturer Boeing is pursuing voluntary layoffs so aggressively that business reporters are starting to put quotes around the word “voluntary.” The company that provides school bus service to the San Francisco Unified School District furloughed its 260 drivers until classrooms reopen for in-person learning. Even humble Greyhound Bus Lines has laid off at least 100 California employees.
But mere laws of economics do not seem to bind the Super Friends governing the Bay Area Rapid Transit system. Ridership on BART is down – way down, to about 12 percent of pre-plague levels. That means income from riders is way down. And that should have the BART board looking for ways to cut costs.
Instead, facing this near total disappearance of customers, the BART board this summer nevertheless passed a 2021 budget that is actually bigger than last year’s big, fat budget. That’s good news for the bureaucrats at the top of the agency, where administrators, police, engineers, staff attorneys, and the manager of BART’s civil rights department clock annual incomes of $400,000 and more. This is the agency where a janitor famously earned nearly $300,000 per year – while sleeping in the station’s broom closet.
What was the joke about Italian fascists who at least made the trains run on time? At BART, only the paychecks run on time.
BART’s unique superpower is apparently the ability of a majority of its board members to ignore financial reality. Some of this is sleight-of-hand, substituting super-heated political rhetoric for basic math. Consider this moment from BART’s August 27 meeting: board member Debora Allen, a rare voice of reason on the board, had called for fiscal restraint, maybe even a revision of the BART budget. That elicited theatrical outrage from John Arantes, president of the Service Employees International Union (SEIU). Speaking during the public comment section, Arantes accused Allen of using the pandemic “as an opportunity to attack workers and destroy BART as a successful public transportation agency.” Her goal was not to save the agency from bankruptcy, he concluded, but “to see BART fail” and “to use this crisis as a tool to implement the ideological agendas of hate and destruction.”
But such tub-thumping is merely a distraction – using words like “attack,” “workers,” “destroy,” “hate” and “destruction” the way a Vegas hypnotist uses a swinging watch. The real source of BART’s confidence these days is the anticipation of another federal bailout. The agency has already banked and spent the nearly $1.3 billion it received in March, courtesy of the federal CARES Act. But BART, a public agency in the nation’s richest metropolitan area, with some of the richest employees in America, wants more.
In fact, BART and other transit agencies should cut expenses through furloughs and curtailing retiree benefits.
Just as restaurant workers, airline pilots and school bus drivers cannot expect guaranteed, full-salary employment in the face of greatly reduced demand, public transit workers should not expect federal taxpayers – many of whom earn far less than BART executives and train operators – to make them whole during this unprecedented crisis. This is precisely why the nation has an unemployment system, one that has been topped up with extra benefits during the current emergency.
BART is doing more than attempting to protect current employees at public expense. It’s also insulating retired workers from the economic impacts of COVID. With some BART retirees receiving over $200,000 in annual pensions and benefits and many more receiving over $100,000, it’s not unreasonable to expect at least the highest income retirees to pick up their family’s insurance costs during these challenging times.
But don’t reason with BART officials. For the current fiscal year, BART’s projected operating revenue won’t even fund these retirement costs. The latest budget projection calls for $70 million in farebox revenue and $23 million in other operating revenues, including advertising and parking fees. The total, $93 million, is less than the $120 million BART has budgeted for pension benefits.
Nor will fares and other operating revenues cover the $46 million BART expects to pay for retiree medical benefits. Eligible BART retirees are as young as 50 years old, and they and their dependents and survivors receive full medical coverage for life yet pay premiums of as little as $117 per month.
While the so-called California Rule protects pension benefits, that’s not true of other benefits. Retiree medical and other post-employment benefits (such as BART-funded life insurance policies) are not treated as property rights by California courts. They can be scaled back or even eliminated. While BART’s retiree benefit policies are not unusual by California standards they are far more generous than those offered in nearby states, as David Crane recently noted in City Journal. Crane cited examples of California public agencies, including in Ventura, Stockton, and Glendale, eliminating or sharply scaling back their retiree medical benefits.
BART must adjust to its new low ridership reality. By protecting employees and retirees from furloughs and benefit cuts during this unprecedented time of reduced demand, the BART board is taking taxpayers for a ride. Next stops: higher taxes, reduced service, and maybe even federal bankruptcy court.