AC Transit would buy time to turn its finances around and avoid further service cuts if a regional commission next week approves a $24.5 million bailout from a pool of federal money intended for bus and rail car replacement and maintenance.
The Metropolitan Transportation Commission on Thursday will consider a committee recommendation to allow the funding diversion, the latest of several diversions of capital funds to AC Transit operations in the past decade.
The nine-county commission has broad powers in allocating state and federal transportation funds to Bay Area public transit operators. Federal money typically is set aside for capital projects, while bus and train systems fund their operations with local money and some state help.
To receive an additional $10 million diversion, AC Transit would have to pledge to do more to cut costs, improve efficiency and seek other revenues, commission staff members said.
Without more actions to bolster its ailing financial condition, AC Transit faces a projected $260 million budget deficit over the next 10 years, commission consultants concluded in a report.
"It is neither prudent nor equitable to continue to divert a portion of these badly oversubscribed capital funds for the operating needs of only one transit agency," MTC staffers wrote in a report.
AC Transit managers said they need relief to stabilize their financial picture after cutting service twice last year, voting to raise fares Aug. 1, and extracting cost-cutting concessions from unionized bus drivers and mechanics this past fall.
Transportation commission staff members recommend that the commission provide $35 million in relief for AC Transit in two phases.
It would receive $24.5 million this year from two sources.
Most of the money, $17.5 million, would come from congestion relief funds that had been earmarked for AC Transit's bus rapid transit project in Oakland and San Leandro. Another $7 million would come from federal bus and rail maintenance funds.
MTC staffers also propose diverting another $10 million of capital maintenance funds after AC Transit takes more measures to reduce costs or raise revenues.
In the long run, MTC staff members said, the region cannot keep its buses, rail cars and equipment in good shape if it continues diverting capital funds to maintenance.
"We are eating our seed corn," said Randy Rentschler, a spokesman for the nine-county transportation commission. "This is not sustainable."
Without the funding diversion, AC Transit would be forced to consider more service cuts and layoffs in the next two years, district spokesman Clarence Johnson said.
"This gives us more time to look at reducing costs or raising revenues," he said.
The funding diversion plan was supported unanimously last week by MTC's programming and allocations committee.
The commission meets 9:45 p.m. Thursday at the MetroCenter Auditorium, 101 Eighth St., Oakland.
Contact Denis Cuff at 925-943-8267. Follow him at Twitter.com/deniscuff . Read the Capricious Commuter at IBAbuzz.com/transportation .
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