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Forensic Accountant, Tiffany Couch Analyzed the C-Tran budget and found:
1.
Proposition 1 funds are not necessary for C-Tran to maintain current levels of bus service.
2.
If C-Tran maintains current levels of bus service, and foregoes expenses related to High Capacity Transit (HCT) initiatives, reserve funds will remain intact through 2023.
3.
If Proposition 1 fails to pass, current C-Tran board policy indicates that High Capacity Transit project costs will take higher priority over current levels of bus service; causing bus service to decline or to be eliminated.
4.
C-Tran’s 20 year plan, “C-Tran 2030” is significantly at risk due to overestimated revenues and underestimated expenses.

C-Tran responded
Ÿ
She used nine months of operating expense data for projecting 17 years of expenses. She was informed that the nine months of data did not include significant service expenses that have not yet been expended due to timing of the projects.
Ÿ
Her analysis eliminates all capital improvements for 17 years. Her analysis shows cash restricted for capital projects that can never be implemented because the cash is never spent.
Ÿ
Her analysis assumes no change in any revenue source than what C-TRAN has experienced in the last nine months. Federal funding is currently in jeopardy and interest income will decrease as cash balances are depleted.
Ÿ
Her analysis assumes an average annual increase in expenses of less than one-half of one percent (0.44 percent). Essentially, this means no cost increases for fuel, equipment parts, or maintaining our vehicles, and no adjustment for cost of living increases (CPI) for 17 years.
Ÿ
She ignores the Board of Director's Policy for 90 Days Cash on Hand. In fact, she whittles down the reserves to nothing to have No Cash on Hand. Essentially there would be no money to pay vendors or payroll.
Tiffany Couch’s Response to C-Tran’s Rebuttal
Here are my responses to their bullet points:

· She used nine months of operating expense data for projecting 17 years of expense.


Not true.

If you look at my analysis on page 4, I do take C-Tran’s actual 9 month cash position and extrapolate that into what the full year of “cash burn”might look like.

I then double that for 2012, which calculates to approximately 1.8 million dollars of cash burn next year

If you look at page 4 of my analysis and then Table 3 on page 5, you will see that C-Tran’s actual cash burn for the last 5 years has approximated 1.9 Million dollars.

C-Tran’s actual operating results for the last 5 years (6 years if you count 2011) support my analysis.

· Her analysis eliminates ALL capital improvements for 17 years.


Not True

Please look at page 6 of my report under “Proposed Capital Budget”
§
I simply eliminate High Capacity Transit related capital expenditures, not ALL expenditures

Please look at Table 4 called “Revised Capital Budget”
§
I list a capital expenditure item there representing capital costs NOT related to High Capacity Transit

Please look at Exhibit B
§
I leave a restriction for capital assets in the budget

By using the ACTUAL CASH BURN RATE for C-Tran, I’m analyzing the impact on cash as it relates to BOTH operating and capital expenditures. This is clearly seen on their statement of cash flows (which is what I used for the burn rate in the first bullet above). A summary of C-Tran’s cash flow statement is on Page 5 of my report.

· Her analysis assumes no changes in revenue sources


I’m using C-Trans own 2011-2012 budget that clearly shows significant ($10M per year) grant funding

C-Trans 2030 plan also indicates the continuance of grant funding

· Her analysis assumes an average annual increase in expenses of less than one-half of one
percent…..


True

I chose NOT to use C-Tran’s highly aggressive revenue growth rates as per their 2030 plan. (Which takes Sales Tax Revenue growth of 140.66% over the next 19 years). Had I done that, C-Tran would never run out of cash.

Instead, I give them deficit cash burn rates of a compounding 5% per year (again, on current bus service levels only)

· She ignores the 90 days cash on hand policy


Not True

Please see Table 4 on page 7 of my report. It’s listed as “Working Capital Reserve”

Please see Exhibit B. I leave their working capital intact. I clearly state that in 2021 (the year that I say they run out of unrestricted reserves) that they will have to dip into capital reserves.

· Used an incorrect “Total Retail Sales” number in the first year of the 2010-2030 revenue


Analysis

Not True

I use 2010 actual retail sales as per C-Tran’s CAFR in my analysis

· 2011-2013 Budget does have 11.3M in HCT Activities:

I did find a slight error. I accidently double counted the CRC Consulting costs in my analysis. I will revise that to be $11.0M instead of $11.3M
· Cash Reserve Policy ignored


Again, I have addressed this above. I absolutely used C-Trans cash reserves policy

Sales Tax Revenue Assumptions
§
I used actual Clark County sales tax revenues and then used C-Tran’s revenue growth assumptions in my analysis

Using ACTUAL sales tax revenue and their growth figures, you will not get to $99M in sales tax revenue in 2030.
§
They indicated they would send me their own analysis but I did not receive that.

· Debt Service Payments are in overall budget


This was not sent to me.

Page 73 of their 2030 plan looks like a budget to me….it spells out cash flows from revenue, cash expenditures for both capital and operating expenses. Why would it omit debt service payments?

· At no time did I state that I was preparing a public document


This is true.

I did not think I would. I feared that the public press would be so significant that I did not want to bring this onto myself.

However, the findings were so significant that I felt it was important to inform the voters.

· Misrepresented the reserve and sales tax base and growth rate.


Not true (see above)

How did I do this if I used actual numbers and C-Trans own plan?

· I used too small a sample


The last 6 years operating results are not enough?

This represents the most accurate pictures of C-Trans most current level of bus service to the Citizens of Clark County. If you would like me to extend that sample, I can. I would be happy to revise my numbers. Please let me know whether or not youd like to review that analysis.

(This is the full response)

Capital Budget (Page 23 of 2011-2012 Budget):

Tri-Met Ticketing

2,700,000

BRT Analysis

  426,125

20 year Planning

6,239,386

 

—----------------

Total Per C-Tran's Capital Budget

9,365,511

 

 

C-Tran Operating Budget (Page 20 of 2011-2012 Budget)

CRC Consulting

200,000

Ballot Measures

960,000

HCT Study

500,000

 

—---------------

Total Per C-Tran's Operating Budget

1,660,000

Total

11,025,511