Two Sets of Books: The Met Council Strikes Again

On October 4th, 2017 the Office of the Legislative Auditor released the first in a new series of quarterly audits of our sprawling regional authority, the Met Council, with a focus on its transit financial activity. Transit financials are of particular interest right now, as the Met Council is pursuing nearly $1 billion in federal funds for its much maligned Southwest Light Rail Transit (SWLRT) line that it hopes to impose on the Twin Cities as part of expanding its Metro Transit system.

However, as that project has stumbled, an apparent disconnect has emerged: On the one hand, the Met Council appeared to be telling the federal government that Metro Transit's financials were in good enough shape to earn SWLRT the second highest rating available (Medium-High) from the Federal Transportation Administration (FTA).
 
And on the other hand, the Met Council was telling the Minnesota Legislature (and anyone else who would listen) that its Metro Transit division is facing a structural deficit that must be addressed with additional taxpayer funding.

And the OLA's verdict is...

"Metropolitan Council staff told us they use one set of assumptions (based on historical state and local funding) when preparing their federal transportation plans, and a different set of assumptions (based on current appropriations law) when preparing internal reports and information for the Minnesota Legislature."

But hey, citizen taxpayers, don't you worry your little heads about that! Speaking from behind the green curtain,  Met Council Spokesperson Kate Brickman assures us:

"(T)he council did not do anything to misrepresent its financial condition to the state, or federal government. 

'The reports the council provides the state legislature is a two-year budget forecast based on forecasted revenues and expenses," Brickman said. "In contrast, the federal government requires a 10-20 year projection based on anticipated legislative and Council action, which is informed by historical action.'" (KSTP, Oct 4th, 2017).

Really? Let's take a deeper look at the OLA report and see how that claim holds up to scrutiny:

REVENUE
A primary stream of subsidy funds for Metro Transit is the state's Motor Vehicle Sales Tax (MVST). When talking to the Legislature, the Met Council has repeatedly said that this funding stream is falling short of forecast, and this is causing a significant and negative budget impact that the Legislature needs to help close. But when searching for funding from  the federal government for SLWRT, the Met Council needs to show that they have robust and secure funding in place to operate the transit system. 

Magically, the Met Council figures show the MVST growing robustly to over $337 million in 2021 instead of the $317 million they use when talking to St. Paul.  In fact, over five years from 2017 to 2021, the Met Council tells the feds that they will receive nearly $63 million dollars more in funding than they claim when they are seeking new state support.

Again, these are Met Council's own numbers, over the exact same 5 year period. This is not a question of a  two year versus 10 year period.

EXPENSES
Metro Mobility is a federally mandated service that provides bus service for individuals who are unable to use fixed-route buses due to disability or health conditions.  Per the OLA report:

"The Council's internal Transportation Finance Plan (i.e. what the Met Council shares with the Legislature) assumes an 8.95 percent growth rate in Metro Mobility ridership, while the Council's federal plan includes only a 5 percent growth rate."

Magically, that translates into an additional $29 million in cost over 5 years when the Met Council is begging for support at the Legislature, while they look like a sound fiscal agent who has things under control when they need to show exactly that to the feds in order to get their $1 billion for SWLRT.

Overall, through the five-year period 2017-2021, when presenting to the Legislature, the Met Council claims expenses will be $269 million greater than what they tell the federal government when they are seeking investment dollars for SLWRT.

BALANCE SHEET
At the end of the 2017-2021 period, the Met Council claims to the federal government that Metro Transit's net position will improve by $29 million, which is a great story when you want someone to grant you money because you are such a solid caretaker of taxpayer dollars. And yet the figures they show to the Legislature indicate that Metro Transit's net position will decrease $95 million - a $124 million difference in cash flow.

BOTTOM LINE
The Met Council tells two different audiences two completely different stories when it comes to Metro Transit financials over the exact same time frame. Magically, those stories align with the best path for the Met Council to receive more taxpayer funding from the federal and state governments.

Two stories. Two sets of books. One suspicious Met Council.