Just how broke is Tri-Met?
Members of Portland's apoplectic transit-hater crowd find their heads spinning this week with the release of the troubled transit agency's latest audited financial statements. These documents confirm what people have been suspecting for months: that Tri-Met's finances have not been well managed, and the whole operation is careening toward disaster.
The most eye-popping revelation is that Tri-Met's unfunded liability for retiree health care benefits is now $816.5 million. That's up from $632.2 million a year ago. And hey, people, that's just to pay the retired employees' medical bills! It doesn't include the liability to pay them their pensions, which adds another $267.3 million in unfunded liabilities to the tally. Cha-ching! You math majors out there can see that the total unfunded pension and retiree health care liability is now approaching $1.1 billion.
And even that mega-number may be low. The actuaries who come up with these figures make all sorts of assumptions in predicting what the future will hold, including how much Tri-Met will earn on investments that it socks away to pay future benefits to these folks, and how much medical care is going to cost going forward. Some of the assumptions made in the current financials seem a bit, shall we say, optimistic. Such as:
Significant actuarial assumptions used in the valuation include a rate of return on the investment of present and future assets of 7.0 percent, an annual cost of living increase of 4.0 percent and annual salary increases of 5.0 percent....If you finding yourself thinking that you're going to make 7% or 8% on your investments, or that health care rates are going to "trend down," over the next decade, call Amanda Fritz for emergency psychiatric evaluation.Significant actuarial assumptions used in the valuation include a rate of return on the investment of present and future assets of 8.0 percent, a benefits in payment status annual increase of 3.0 percent, and a 3.0 percent annual rate to determine the normal retirement benefit for active employees....
Significant actuarial assumptions used in the valuation include a discount rate of 4.5%, and health care cost rates trending down from 10% in 2010 to 5% in 2020 for the major medical component, which is representative of the entire plan....
Another item that jumps out of these financials is that Tri-Met is apparently playing the same "interim financing" shell game that Portland uses when it goes out to borrow huge sums of money for "urban renewal" shenanigans. It authorizes "interim" financing of projects early on, before the public has any firm handle on what the project entails. While the jumbo "interim" loans are outstanding -- up to five years these days -- Tri-Met spends all the money. By the time it informs the public that it's going out for the permanent, long-term mortgage, the money's all been spent, the "interim" loan is due any day now, and it's way too late to say no to the long-term bonds.
We also see that Tri-Met is the tenant under several leases of office space out there, paying rent of about $1 million a year. This being Portland, one can only imagine how those properties are selected, and how the rents are set. Past or present proximity to Neil Goldschmidt is no doubt an important factor in that analysis.
In some ways, the timing of the bad money news works well for Tri-Met, which is currently begging voters for a property tax increase, supposedly to fund its current operations. On the other hand, the ugly balance sheet also reflects poorly on the agency's management, which has made some screamingly bad choices with the doomed WES commuter train to Wilsonville and a streetcar to nowhere on Portland's east side, and now proposes to double down with a mystery train to a place called Milwaukie.
Regardless of whether the voters are dumb enough to give the transit district its property tax, Tri-Met appears to have hit a financial iceberg. And its captain, Ted Fred Hansen, left an hour ago on a speed boat. The rest of you, go by streetcar!
| Posted at 8:45 AM | Permalink |
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Comments (35)
And now they have borrowed another 6 million to study light rail down Barbur, bringing their GANG train to folks there. Though a Dem I am voting for Dudley just so he can clean up these Boards like Tri-Met and the Port.
Posted by b | October 8, 2010 9:14 AM
Whaddya mean broke? They got enough to build that bridge with and expand light-rail.
Vote NO on the TriMet bond. They don't need it.
Posted by Steve | October 8, 2010 9:20 AM
Jack, like it or not, you are just going to have to vote for Dudley, as he is the only one that can reconfigure the TriMet board who then can appoint a new managment team.
Posted by John Benton | October 8, 2010 9:23 AM
Jack,
Please consider running for public office in the near future. You are the only voice of sanity in this insane asylum known as Portland.
Posted by mk | October 8, 2010 9:34 AM
8% returns are crazy? But Richard Riviere is able to guarantee it for years to come...
Posted by Andrew | October 8, 2010 9:55 AM
I'm certain they can complete Barbur Blvd with savings from the Milwaukie light rail line.
Posted by the other Steve | October 8, 2010 9:59 AM
And its captain, Ted Hansen, left an hour ago on a speed boat.
You must mean FRED Hansen.
like it or not, you are just going to have to vote for Dudley, as he is the only one that can reconfigure the TriMet board
John, you just sealed my vote. I don't like Dudley much but the alternative is far worse.
Posted by Erik H. | October 8, 2010 10:01 AM
Even the federal Budget Office in it's calculations for ObamaCare has lower rate of return numbers than TriMets 7.0% and 8.0%. And several review agencies of ObamaCare don't predict health care costs "trending down from 10% to 5%". I guess TriMet knows more than they do, or any of us.
There are now a few TriMet board members that are beginning to question "prophecies" of the TriMet establishment. They better start asking more questions, with followup questions; and educate their fellow board members. And they can begin with Milwaukie LightRail, as they have done in that last two board meetings. Better yet, vote for Dudley and maybe the Board can we reconstituted with a majority that has common sense.
Posted by Lee | October 8, 2010 10:02 AM
OK - this definitely shows gross incompetence but is there a criminal of civil element here that could result in legal sanctions? I am not an attorney, though I sometimes play one for grins. This, however, is well out of the areas of law that I am familiar with.
Jack, Nonny, anyone who is a lawyer, got answers?
Posted by LucsAdvo | October 8, 2010 10:14 AM
Just how broke is Tri-Met? Is that some kind of a challenge?
Tri-Met is so broke they're building a light-rail to bankruptcy court.
Tri-Met is so broke that if you buy a monthly pass, they'll pick you up at your house.
Tri-Met is so broke they want to charge an extra fare for your erogenous zones.
Posted by Bill McDonald | October 8, 2010 10:24 AM
Switching from biodiesel to CNG buses would reduce emissions by over 50% and save about $1.70 less per gallon equivalent (more than 50% fuel cost savings)
Or electric buses....
Why isn't this in discussion? Trimet runs B5 anyway, it's not really bio-anything but nobody is on it?
Conversion would cost dramatically less than a light rail or streetcar project and be more effective, more useful and more utilized by people who don't drive.
And guys, don't vote for dudley for this reason, just get involved in your community. Its hard to govern from the depths of those pockets....is he even pretending to deal with Portland's issues?
Posted by Jackson Cafazzo | October 8, 2010 10:32 AM
I can't wait for the day when every dime of our tax money goes to pay for benefits to FORMER government workers retired in Baja or somewhere.
We won't have to wait long.
Posted by Snards | October 8, 2010 10:46 AM
The PERS actuaries use an 8% earnings assumption. I don't think Tri-Met's 7% is so outrageous.
Posted by Kai Jones | October 8, 2010 10:48 AM
Kai, they are both "outrageous".
Posted by Lee | October 8, 2010 11:06 AM
Probably the best article on the State of Trimet:
http://www.beaverjournal.com/2010/10/04/trimet-sagas-latest-chapter-health-care-benefits-to-pay-or-not-to-pay/
Posted by Peter | October 8, 2010 11:46 AM
Snards:I can't wait for the day when every dime of our tax money goes to pay for benefits to FORMER government workers retired in Baja or somewhere. .
Yes, can visualize Sam, Randy and the rest on a veranda, an island somewhere sipping margaritas and laughing about how they well they did here to enjoy such retirements.
Posted by clinamen | October 8, 2010 11:47 AM
Tri-Met is so broke they're riding C-TRAN buses to work.
Tri-Met is so broke they have downgraded the Free Rail Zone to the Free Walking Zone.
Tri-Met is so broke they renamed the Green Line "Future Site of the Phil Knight Expressway."
Tri-Met is so broke they hired twelve additional staffers to figure out how to solve their financial problems.
Posted by Spikez | October 8, 2010 11:47 AM
Tri-Met is so broke they're now Bi-Met.
Tri-Met is so broke they're reserving the rearmost seats for the working girls and their customers on the 72 line.
Posted by Larry Legend | October 8, 2010 12:34 PM
Banko-Met?
Tri-Over?
Tri-Chap-13?
Posted by Mister Tee | October 8, 2010 1:31 PM
Tri Met's so broke that to rub two nickels together, they have to float a bond.
Posted by Steve | October 8, 2010 4:06 PM
Tri-Met is so broke, now they are charging for all carry-on luggage.
(a bag of groceries will be $25.00)
Posted by lie2me | October 8, 2010 4:37 PM
Tri-Met is so broke they're building a light-rail to bankruptcy court.
LOL! Great lines, Bill! Just look at what you've started. ;-)
Posted by Max | October 8, 2010 4:37 PM
TriMet is so broke, now you have to sit through a 30-second ad before the doors open at your stop.
Posted by lie2me | October 8, 2010 4:40 PM
TriMet is so broke, their executives and supervisor SUV's don't have leather or satellite radio!
Posted by lie2me | October 8, 2010 4:42 PM
Tri-Met is so broke that the drivers will be passing the hat at the half-way points of each route in each direction, but only if you are a bus rider.
Tri-Met is so broke they are negotiating with the union to make drivers pay for the privilege of working for a "green" employer.
Posted by LucsAdvo | October 8, 2010 5:10 PM
Btw the Colorado legislature passed a law that required Denver regional Transit agency to contract our a part of the work, These days, from what I have read, about 50% of the service is contracted out and the savings is about 25% on operating costs.
I'll let y'all do the research but someone might mention it to their local leg person.
Posted by Bluecollar Libertarian | October 8, 2010 5:40 PM
Sorry about the "Ted" Hansen reference. But in a way it's funny. Let's call him Ted from now on!
Posted by Jack Bog | October 8, 2010 6:15 PM
I like your phrase, "a mystery train to a place called Milwaukie."
Posted by Bill McDonald | October 8, 2010 6:31 PM
Like voting for Dudley will get you anything better.
"If voting ever changed anything, it'd be illegal."
Posted by swimmer | October 8, 2010 6:37 PM
Its not about hating transit but more of the way it's operated. If the riders paid for the capital outlay and 100% of the operating costs I would be all for public transportation. However, when they only pay 19% of the operating cost, not including paying any of the unfunded liability as you just pointed out, it clearly is not fair. I wonder what a ride really costs verses what the rider pays? If the rider had to pay the full cost would he/she find it a good value? It's all a shell game to promote government and union jobs to keep voting for the democrat machine. This all reminds me of the games they played when I lived in Chicago.
Posted by Jeff | October 8, 2010 8:44 PM
Ya we are in deep doo doo here, too bad us drivers had nothing to do with with creating this mess, now we are in the same boat as the riders, screwed!
Yup, that unfunded liability is interesting, numbers numbers numbers, they just keep coming.
How bout the unfunded liability of THIS little government program. I figured us Trimet workers will catch up to it in about $999,500,000,000!
That could be any day now the way things are going.
Tax money is tax money ya know!
Posted by al m | October 9, 2010 2:02 AM
Ya, and I agree Fred looks like a Ted, actually a Teddy bear, its was a great disguise wasn't it?
Posted by al m | October 9, 2010 2:05 AM
TriMet never tells the truth
Fringe beneifts went up $27 Million & TriMet made $27 Million in cuts.
In one year, 09-10 Trimet has a $27 million increase in cost of fringe benefits.
They publicly blame the economy and make $27 million in cuts?
How do they blame the economy when their
Total operating and nonoperating revenues rose 6.5%
http://www.trimet.org/pdfs/publications/financial-statments-june09-10.pdf
Easy they, lie.
Posted by Ben | October 9, 2010 6:37 AM
Trimet increased both rider fare rates and the payroll tax rates - while cutting services. Now they want even more through a property tax levy. I'm voting no. Kill the beast.
Posted by Frank | October 9, 2010 9:29 AM
My mother used to sing a little ditty in response to family requests for one thing or another: "When the tax return comes!"
Of course it was a joke; the tax return couldn't begin to cover all of our needs.
People exercised this wishful thinking with Obama and Now I see normally rational people doing the same thing with Dudley.
I don't recall hearing that Tri-Met reform is at the top of his agenda or, indeed, if he will have the power to make any significant change in that agency during a first term other than to appoint his own cronies or donors to available board positions.
I'm not a Kitz fan but Dudley does not walk on water.
Posted by NW Portlander | October 9, 2010 9:29 AM