COLUMBUS -- Joseph A. Calabrese, CEO and General Manager of the Greater Cleveland Regional Transit Authority (RTA), gave this testimony today before the Ohio Senate Finance Committee, chaired by Scott Oelslager. Calabrese urged the committee to support Senator Dolan's proposed amendment that allows for a long-term solution to the loss of the Medicaid sales tax revenue from the state budget. Loss of that tax revenue means an $18 million shortfall to RTA's operating budget each year.
Good Morning. I want to thank you for this opportunity to testify today.
My name is Joe Calabrese. I am the CEO and General Manager of the Greater Cleveland Regional Transit Authority (RTA). The largest transit authority in the State, RTA employs 2,400 Ohioans, and provided services to over 45 million customers in 2016.
Where were all those Ohioans going? Specifically:
- 60 percent of all trips were to work.
- 23 percent were to school.
- 9 percent were to healthcare.
Nationally 87 percent of all trips on public transit are to take customers to either make money, or to spend money.
I have been the General Manager of RTA since 2000. During that time, we have faced and overcome many significant challenges, but the challenge facing us regarding the MCO sales tax is one of the most significant we have ever faced.
And I know that county leaders around the state feel the same way.
RTA was formed by a vote of the taxpayers in 1974, combining 11 independent systems into one regional system. In this vote, they self-imposed a local tax, in the form of a 1 percent local sales tax, to help fund its operation.
This locally generated tax is critical, as it represents 60 percent of our revenues.
$18 million of that revenue is due the MCO sales tax, annually. If this sales tax were eliminated without a fix, we would have an $18 million hole in our budget and would need to make significant reductions in service. These reductions would greatly diminish our ability to get Ohioans to work, school and to medical appointments.
We cannot simply absorb this loss in revenue. Just last year, to keep our budget balanced, we reduced valued services by 3 percent, and instituted a 25-cent fare increase that went into effect on August 2016. A second 25- cent fare increase is programmed for August 2018.
What would the loss of this revenue mean?
The loss of $18 million:
- Means that we would have to layoff 300 dedicated public servants.
- Could mean that we may not be able to transport 5.4 million customers annually who need to get to work, school or for health-care.
- Could mean that we may not be able to transport 514,000 customers with disabilities annually to wherever they need to go.
- Means that employers will have even greater difficulty in recruiting and retaining the workforce they desperately need to drive our economy. The Greater Cleveland Partnership wants RTA to do more to connecting workers with jobs, not less!
- Annually means that critical services would be lost, making Ohio less public transit friendly, and less attractive to millennials, and to businesses.
To quote the Mayor of Indianapolis: "Trying to attract a millennial workforce to a region without a comprehensive public transit system, is like trying to sell a millennial a cell phone, without a camera”.
The loss of $18 million annually could mean that we lack "local share" dollars to match $72 million in needed Federal capital dollars, annually, to purchase replacement buses, fix aging infrastructure or to upgrade rail stations to ADA compliance.
It is important to note that 80 percent of all Federal dollars for public transit go to private contractors.
The loss of $18 million annually would be devastating to the economy of Northeast Ohio.
The MCO sales tax and its impact on public transit will not only impact the large urban areas, but will impact transit in nearly every part of the state. RTA is one of 8 transit systems in the State that rely directly on Sales Tax, but many other transit systems rely on funding from counties, which will also be impacted by this MCO sales tax issue.
I am heartened that many in the legislature recognize the significance of this issue and the important role pubic transit plays in the Ohio economy, and are working hard to address it.
There are several potential fixes available. One that I believe has significant merit is resetting the franchise fee in July 2018 to keep the state, counties and transit authorities whole, while retaining the one-time allocation for counties and transit authorities in the first year of the coming state budget.
The MCO sales tax issue is a significant one for RTA, and all transit systems statewide. I urge the legislature to find a permanent solution.
Thanks you for recognizing the importance of this issue, and for working hard to solve it.