UTA finances cause heartburn on Capitol Hill
Legislators aired worries Wednesday whether the Utah Transit Authority can continue walking a financial tightrope without needing an eventual taxpayer bailout, while UTA officials swore that the agency is fine.
"We're all extremely anxious," said Sen. Aaron Osmond, R-South Jordan. "This could become a financial problem that the state's going to have to deal with if the forecasts as articulated [by UTA] don't take place. And it's enormous in the potential impact to the public."
Meanwhile, UTA General Counsel Bruce Jones said, "We are very confident that we can complete and operate our present projects. And we will not take on new projects except as funding sources are available."
That came as the Infrastructure and General Government Appropriations Subcommittee reviewed a Legislative Auditor General's report that was released two weeks ago.
The audit says UTA has taken on dangerously high levels of debt to add new rail lines, and may be using faulty figures and projections as it walks a shaky financial tightrope. It said that UTA's revenue projection are optimistic, while expenses are understated. It says that "may force UTA to reduce transit service and/or delay future transit projects."
Osmond asked if UTA has worked out plans in case its rosy projections do not pan out. UTA General Manager Michael Allegra said the agency has worked on many scenarios, and said resulting spreadsheets are complicated. Osmond responded, "We can handle complex spreadsheets," and asked that the data be shared. Allegra said it is public and reviewed by UTA's board regularly.
Sen. Mark Madsen, R-Eagle Mountain, worried about a part of the audit that said UTA ridership remained flat between 2006 and 2010, even after the FrontRunner commuter rail began operations in 2008. He was also concerned about audit warnings that UTA is only counting "boardings" Â not complete passenger trips Â so an increase in transfers can falsely make it appear that more people are riding trains and buses.
Allegra assured him that ridership was up in 2011 after two new TRAX lines began operation. Madsen asked if that was based on boardings or trips, and Allegra said it was boardings Â and said that is the standard measure used by the industry.
Allegra also said UTA figures that overall ridership increased, in part, because farebox revenues increased Â now covering 22 percent of operating costs instead of 20 percent in 2010. However, UTA also raised its fares in 2011.
Osmond noted that auditors in 2008 called for UTA to measure trips and not just boardings, among other recommendations not followed. "Why should we have confidence that the recommendations that they have now are going to be implemented?" he asked. Allegra promised to implement recommendations of the current audit.
UTA officials also said several times on Wednesday, to reassure legislators, that most of its outstanding bonds "are AAA rated." However, the bonds that it has most recently issued were given much lower ratings.
Its heavy debt and lower sales tax revenue in recent years led rating companies to downgrade UTA's bond rating last year to A+, down from AA-.
Rep. Janice Fisher, D-West Valley City, said the state may need to keep a closer eye on UTA, since findings from the audit raise questions about whether its part-time board is doing that well enough. "Who is minding the hen house?" she asked.