Metro’s $120 Billion Tax Increase: No Oversight, No Deal

This new tax, along with an 18 year extension of the half cent increase in our sales tax that we authorized in 2008 when 67.2% of the voters approved Measure R, will raise an additional $120 billion that will fund a “variety of transit related infrastructure and programs needed to build and operate a balanced multi-modal transportation system.”  

This ballot measure will require the approval of two-thirds of the voters in the upcoming November election.  But this is not an easy lift as Measure J, the 2012 attempt to extend the existing half cent sales tax by an additional 30 years, received only 66.1% of the vote, just shy of the required two-thirds vote. 

Metro is a sprawling organization with an annual budget of $5.4 billion, 10,000 employees, and $15 billion in assets.  It also incurred an operating loss of almost $1.5 billion which is covered by over $2 billion of sales tax revenues derived from three separate sales taxes that total 1½%. 

Metro is overseen by a 13 person Board of Directors, all of whom but one are elected officials who have very little, if any, experience in managing or overseeing a complex, capital intensive organization.  The directors include the five County Supervisors, Mayor Garcetti, two members of the City Council (Bonin and Krekorian), a Garcetti political appointee, and four other elected officials from Duarte, Glendale, Inglewood, and Lakewood.  

There is also the Independent Taxpayers Oversight Committee that is charged with determining whether Metro is in compliance with the terms of Measure R.  This committee, consisting of three retired State of Federal judges appointed to two year terms, is required to meet at least twice a year, hardly enough time for these uncompensated former judges to get even an elementary understanding of Metro.  

This committee is also required to monitor the use of 15% of the sales tax revenues that are allocated under Measure R to the local jurisdictions. These funds are to be used to augment, not supplant, local revenues that are being used for transportation purposes.  A quick review of the City of Los Angeles finances indicates that the City of Los Angeles may not be in compliance with this provision, a fact that appears to have escaped this politically appointed committee. 

Metro’s Board of Directors and the politically appointed Oversight Committee do not have the expertise to oversee this complex organization that will be spending over $120 billion of our money over the next forty years.  Furthermore, our elected officials have not earned our trust and confidence, especially now that the fiscally responsible Zev Yaroslavsky and Gloria Molina are no longer on the Board of Supervisors. 

If Metro, Eric Garcetti, and the transportation lobby want to us to approve a tax increase of $850 million a year by bumping our sales tax by half a cent to 9½%, one of the highest rates in the country, they would be wise to establish a well-funded, professionally staffed, independent watchdog organization to review and analyze Metro’s operations, long range plans, finances, and management with a critical, yet constructive, eye.  This oversight body will also need to develop a strong outreach program so that it can establish a credible relationship with the public. 

The Board of Directors, the Board of Supervisors, the Los Angeles City Council, and the transportation lobby cannot take us for granted.  You must earn our trust, confidence, and respect if you want our YES vote. 

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Note: This is the first of several articles that will cover this proposed increase in our sales tax to 9½% as well as other proposed tax increases being considered by the County and the City of Los Angeles over the next two years.    

(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and a member of the Greater Wilshire Neighborhood Council.  Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at:  [email protected].)

-cw