Congressional Joke
Posted by Fred Jandt
Editor, Mass Transit magazine
Why is it that transit always takes the backseat to the auto industry? No, I’m not complaining about funding for roads versus transit or anything like that. I’m talking about the pending auto manufacturer bailout. Tacked on that bill is a provision to have banks cover the loans several large transit agencies are currently in default on. Couldn’t transit rate at least its own bail-out bill?
And, of course, the complaints are already flying in on having transit tied to this bill. Senate Finance Committee Chairman Max Baucus (D- Mont.) wants the transit portion excised because it “really just helps the banks” that entered into the Sell In Lease Out (SILO) or Lease In Lease Out (LILO) deals with the transit authorities. Sure these SILO and LILO deals have since been ruled illegal by the IRS, but that just meant you couldn’t do them any longer, they didn’t stop the ones already enacted.
So the transit authorities are just supposed to sit there quietly and take it on the chin while auto manufacturers are getting bailed out? Let’s just forget that the transit authorities were paying for these deals and only defaulted due to a technicality when companies like AIG went belly up recently. Basically the transit authorities are looking for a cosigner on a loan they already have and are paying off, not a new loan itself.
It’s also interesting to note that the little bit at the end of the auto bail-out bill about federal judges getting raises — an annual cost of living adjustment — is just flying under the radar. So people earning more than $150,000 annually getting a raise doesn’t rate anyone telling them to wait until the spending bill covering U.S. courts is passed, but keeping major transit agencies in Houston, Chicago, Los Angeles and Washington, D.C., from shutting down major services is not worth it?
Please.
And of course, this comes at the same time that Senate Banking Committee Chairman Chris Dodd (D- Conn.) asked the auto manufacturers, “You all made buses at one point, didn’t you? … Any thoughts about getting back into that line of work?”
So we have one senator, a Democrat chairing a major senate committee, telling the auto manufacturers they should think about starting to build buses and rail cars as part of this bail out. And at the same time we have another senator, a Democrat chairing a major senate committee, trying to pull the funding from those same transit agencies as part of this bail out.
The fact that transit is being touted so highly on one hand while on the other it still remains the red-headed stepchild of the transit industry is just a joke. Transit works. It’s been proven. As gas prices plummeted, transit ridership still rose with the largest quarterly increase in 25 years.
The public is speaking. They want transit and they want it now. Somebody needs to sit down the members of Congress in one big room and get them to realize that.
Thanks for reading the MT Position updated every Friday,
Fred
fred.jandt@cygnusb2b.com
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December 12th, 2008 at 12:06 pm
Maybe APTA, again, should lead all of us up the Hill… TA’s, Buses, OPS, riders, consultants, fare systems folks et. al…just as the auto people had their subs…upon subs…upon subs out in (somewhat) force. We are the ’somebody’. Obama will more than likely stimulate the economy with yet another massive billions for infastructure…yes, get the in-waiting projects moving, but the funds also need to be allocated to doing things right once and for all. And in timeframes that our talent can achieve, if allowed. Or else, it’ll be more of the same…
each fighting for their own piece of the pie…while we collectively throw out the whole (country). What we here in the US and the world is experiencing is a major cleansing…I just pray that wisdom prevails in all areas.
So far…I don’t see it.
December 15th, 2008 at 9:33 am
If there is a transit agency in need of a bailout, it’s Massachusetts’ MBTA. Debt in the billions that there is no way to pay. Some of the debt is grandfathered debt left by the predecessor companies that were rolled into the T in the beginning, in 1964 (I think). Debt that is older than many of the patrons riding it today. There are rumors that the debt is so bad that we may be in for “huge fare increases.” Right now a subway ride costs $2.00, so it’s not a true burden, but “huge” has been rumored to mean something on the order of $7 or $8 per ride.
Walking or biking may become very desireable.
December 15th, 2008 at 12:27 pm
Sell In Lease Out (SILOs) were ruled illegal by the IRS because they are are form of “Imputed Income” that was not being taxed.
The reason for this ruling that the transit agencies -not the actual owner(s)of the transit vehicles involved in the SILO agreements- were carrying the liability insurance on the vehicles instead of the leasing companies themselves.
Since liability coverage (and the payment of damages for personal injuries) are a huge part of the expenditure in running a transit vehicle, it would consume all of the profits made by the vehicle leaser.
In other words, the leasers were collecting the profits, but the transit agencies were footing the bill for the liability coverage and damage awards and this is considered a form of Imputed Income.