For Pinellas and Hillsborough transit officials want collaboration, not consolidation listen01/24/14 Janelle Irwin
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A transit merger between agencies in Pinellas and Hillsborough Counties may not be the best way to save money. An independent study was approved by the Tampa Bay Area Regional Transportation Authority during a meeting Friday that shows collaboration between the two groups could cut costs without the risk of consolidating.
The Pinellas Suncoast Transit Authority and Hillsborough Area Regional Transit hired the audit firm KPMG to start weighing the pros and cons of consolidating the two groups in October. David Dennis is a partner with KPMG.
“KPMG identified approximately $996,000 to $2.4 million of cost savings on an annual basis from consolidation of management, administrative support and operation functions. The cost to implement those functions would range from $1-$10 million.”
That means even though the agencies could save money by merging, it’s also possible they could come out underwater.
“While there are savings that we identified in our report through consolidation, much of the savings through consolidation could be achieved through collaboration and avoid the incremental risks from a technological, legal and operating perspective.”
An earlier study conducted by PSTA and HART at the bidding of state Representative Jack Latvala identified greater savings than the KPMG study. The $100,000 cost was split between the two agencies. The KPMG study, which was funded by the state, looked at more detailed financial analysis of things like transitioning the PSTA and HART fleets to run on the same kind of fuel. Just the cost of that could be anywhere from $5-15 million. PSTA CEO Brad Miller said that’s something the two agencies can do without merging.
“While there may not be savings to the operations, perhaps some savings to the consolidated overhead of the two transit systems might be resulting.”
The transit boards are already working together. Miller said one major collaborative effort includes creating a Smart Card that would allow transit users to have one pre-paid card that could access any regional transit.
“I think as we implement it, it’ll be more cost effective than if you choose to pay cash or want some other kind of fare media, but we’re looking to expand it so that maybe it can also be used for parking or you can use the same card in your wallet for parking or ultimately down the road, I think it will even move to your smart phone and other ways to pay. But it will be consistent across no matter what system you ride on.”
Instead, the TBARTA Board, which oversees regional transit efforts across multiple agencies, is suggesting the state legislature instruct PSTA and HART to continue and expand their collaborative efforts. Ronnie Duncan is the chair of TBARTA.
“Maybe on the surface, taking two existing operations in their current format and putting them together doesn’t make as much sense, but if we come at it from the perspective of, we really want to give people the opportunity to go from the airport to the beach or the airport or USF St. Pete to USF in Tampa, than we need to have a different mindset and that’s what we’ve been talking about here is to how to do that and how to create that vision.”
A draft letter to state lawmakers due in Tallahassee by February 1st highlights the current study’s findings that collaboration carries similar cost savings without the added risk of a merger. But it didn’t include any language about instructing PSTA and HART to work together. Duncan asked and the board approved adding language to the letter that would make the relationship between the two boards more than just a handshake.
“They don’t do something like this unless they’re mandated, forced or pushed into doing it – not necessarily the right way or the right thing that should be done, but that’s what happens. So, I think this directive is saying to them, ‘you will go and sit down and have this conversation; you will go and continue the collaborative effort and every bit of collaboration that you can do, that’s one more thing on the list that you don’t have to worry about and that’s one more way that you are closer together as one organization.’”
Duncan added even though the transit agencies are mostly funded through property tax revenue, there is some statewide funding that could be held over the groups’ heads.
“The state and DOT have dollars invested in both of them and so if the state says, you need to continue that collaboration and, oh, by the way, ratchet it up ten-fold and if you don’t, that money may be at risk.”
A revised version that will be sent to the legislature hasn’t been approved yet. PSTA CEO Miller said his board is focused right now on a one-penny sales tax proposal that will go before voters in Pinellas this November.
“We’re focused on Greenlight Pinellas and the referendum coming up this year to have a much better system in Pinellas County than we have now. So, perhaps HART wants to look the same way. So, rather than just looking at ways where we might take the two current systems and squeezing out some more savings, but look to how we want to grow the system regionally into the future.”
If approved, the sales tax would replace a property tax that currently funds PSTA. It would increase revenue to pay for improvements to the county’s bus system, bus rapid transit and passenger rail. Officials in Hillsborough County are brainstorming ways to fund similar improvements through a coalition of elected officials from the county and its three cities. That group is called the Transportation for Economic Development Policy Leadership Group.