This must be the month of government bailouts: Bear Stearns, Fannie & Freddie, and locally, a one million dollar cash infusion from our tax coffers to the STAR commuter train from Lebanon to Nashville.
While many would argue that Fannie & Freddie are too big to fail, a commuter train that is losing money may be a different story. The one million dollar giveaway would only be to keep them operational for the rest of the year, and hinges on an agreement of additional funding from Lebanon and a new management by MTA officials.
When an operation is failing, or has a budget shortfall of 1.7 million dollars, that usually means you need:
- a line of credit for the short term
- to raise prices
- cut costs
- find additional income streams
- hire better business and logistics talent
You don’t need an MBA to figure that one out. But really, 1.7 million dollars is not a discraceful sum for an operation like a railway. A government handout is certainly more preferable to a company than a line of credit.
Here are their problems:
- Ridership projections that the project was counting on are not being met – people are not using the train. However, usage is increasing with fuel prices soaring. Lifestyle changes take time for a culture that is completely unfamiliar with the idea of public transport.
- a series of accounting mishaps caused some problems in book-keeping (please)
- Fuel costs are going up
Well, I’m glad to hear that management will be replaced, because it sounds like there has been a degree of inexperience or ineptitude on the part of the current folks who are running the show. Perhaps the logistics experts at MTA will offer a better handle on this. Metro Bus lines is not a small fry operation.
Let’s also keep in mind that the STAR is really more of a public service than a private enterprise, even though it is running as a private company. If you consider the STAR a quality public service, think of it as a temporary subsidy for a public good that will run on its own, in the black. I’m sure that there are plenty of tax and spenders out there who would argue that metro should build even more trains, and raise taxes to do so.
I don’t agree with the subsidized transport, but do like the idea of commuter trains: IF they are profitable and being used. Otherwise don’t waste the tight budget we’re working with in a city that already has budgetary issues of her own. I would offer the following recommendations:
- Replace management, and invest in experienced logistics pros (MTA is good, but are they as good as pros from the Rail industry?)
- Maximize alternative sources of funding (I would recommend my friends at Advertising Vehicles who now run MTA advertising).
- Invest in personnel to attract grants and other donation from private sector
- Hedge against fuel costs through futures (ok that is a little too big for one little train line)
- Invest in PR once financials are on track
- If budget is not balanced by 2010, scrap the whole thing.
Trains are a wonderful idea in a perfect world, but let’s face it: Southern Americans love their cars like nothing else, even if that means standing in traffic, like today where hundreds of cars were sitting at a veritable standstill on I-24 because of a stalled car (that probably ran out of gas).
Perhaps the biggest mistake was running a bus from Lebanon. It should have been established from Murfreesboro or Smyrna. A simple analysis of traffic patterns would demonstrate the viability of that project…