Transit System Threatens Halt
August 25, 2005
The Birmingham Jefferson County Transit Authority (BJCTA) is warning that public transportation may shut down August 31 if the Metro Area Express (MAX) does not receive $2.8 million owed by the city of Birmingham. Of the money owed, $1.1 million is a fiscal year 2003 debt the city has not paid, while the other $1.7 million is for current services in 2005. The BJCTA’s 2006 fiscal year begins October 1, 2005. Phil Gary, chair of the MAX board of directors, said the agency was not aware of the financial crisis until the first week of August, after a recent audit.
At a Birmingham City Council transportation committee meeting on August 17, MAX representatives presented the information to the Council for the first time. Surprised Council members were concerned but said it was the responsibility of the Mayor’s office to execute payment for what the Council had already approved. “The money is there,” said Councilor Elias Hendricks, and transportation committee chair Carol Reynolds told MAX representatives that the issue would be taken to the Mayor. In addition to Reynolds and Hendricks, Councilor Valerie Abbott was also present. None of the three would offer an opinion about the failure of the Mayor’s office to make payments to the BJCTA.
“The Council has approved the FY2003 payments to the MAX agency, as well as the 2005 payments,” said Phil Gary. “We need the executive office to authorize the finance department to write a check so that we don’t have to stop services . . . It would be a tragedy not to be able to run paratransit [the transit services provided for those with medical needs and disabilities].”
Interim MAX Executive Director David Hill, a former MAX operations manager, said that the $1.9-million surplus MAX reportedly had did not really exist. The miscalculation occurred because lump-sum payments to the transit system had been made at irregular intervals, giving the appearance of more money in reserve than what existed. Citing past “creative accounting” practices, Hill added that there was no three-month reserve supply of money, as had been reported. He blamed the poor bookkeeping on the failure of the MAX board to add a financial expert to the staff. “We had no CPA or accounting professional at all on our staff to provide accurate financial reports,” explained Hill. MAX has since hired a CPA as the new comptroller.
At a specially called MAX board meeting (convened hours before the transportation committee meeting), board member Reginald Swanson demanded to know what authority Birmingham had to delay payments. Swanson demanded that the board take the matter to court as soon as possible. New board member Guin Robinson urged the board to let the city of Birmingham respond before taking legal action. Swanson argued that the transit system was only two weeks away from ceasing operations and said the litigation should proceed if the board got no satisfaction from the Council later that afternoon. Phil Gary was equally irate. “I think it’s appalling that the city will not remit to us [money owed] for services provided,” said Gary. MAX board member Johnnye Lassiter, who represents Bessemer, added, “I would hate to have to go to Bessemer and tell them the system will shut down because the Mayor of Birmingham is not paying his bills.”
In December 2004, the MAX board ended a two-month drama regarding the fate of former Executive Director Mark Stanley. As the director for two years, Stanley boosted ridership, increased routes, added night and weekend service, and increased revenues. But MAX chief Phil Gary criticized Stanley’s financial and staffing management and said Stanley deserved no credit for public transit improvements. After an initial vote last October to fire Stanley, the four dissenting board members refused to attend subsequent meetings to confirm the vote. This prevented a quorum in light of the absence of board member Reginald Swanson (who was in favor of firing Stanley) due to hospitalization. Eventually, a quorum showed, and Stanley was voted out five to four. The minority in support of Stanley then asked for Phil Gary’s resignation, which was voted down. Critics have blasted Gary for wanting Stanley out, saying that Gary—a former MAX general manager who was asked to resign at the board’s request in 1995—can micromanage the agency as he pleases. It should be noted that under Gary’s management, MAX lost money, cut routes, laid off drivers, and increased fares.
Birmingham currently provides $6 million of the $16 million MAX annual budget. The city appoints five of the nine MAX board members. Birmingham Mayor Bernard Kincaid, who was invited to the August 17 transportation committee meeting but was on vacation and did not attend, later said that MAX invoices from 2003 and 2005 had not been submitted. Phil Gary insists that the invoices were turned in. &