The San Francisco Municipal Transportation Agency board of directors took a vote on Tuesday that could put The City’s taxpayers in the hole for a whopping $170 million in revenue bonds — not counting interest payments that can come close to doubling such bond issues.
At first glance, it might seem rather odd that a local agency can dump so much into its public bond debt without obtaining direct approval by a citywide voter referendum. But guess what, you — the San Francisco voter and taxpayer — virtually gave the SFMTA an open checkbook to do that.
This permission was somewhat stealthily included in Proposition A, a 2007 ballot measure approved by 55 percent of San Francisco voters. Prop. A was sold to the citizenry as a measure for giving the SFMTA greater authority over parking administration, a change touted as a painless way to give deficit-ridden Muni an extra $26 million a year in revenue.
The fact that SFMTA, which is projected to have long-term debt, will be able to borrow against future earnings should concern taxpayers and transit riders alike. These bonds must only pay for system improvements; the money cannot legally be used toward the SFMTA’s currently projected two-year operating deficit of $80 million. Of the $170 million approved by SFMTA directors, $50 million is for fixing up creaky city-owned garages, nearly $50 million is pledged for long-term Muni system improvements, and a third $50 million would buy back and refinance the SFMTA’s existing debt at the historic lows of the current bond market. The extra $20 million was added just in case of any cost overruns.
We won’t argue with the seeming reasonableness of these expenditures. But unfortunately the SFMTA is all too familiar with cost overruns. A recent independent audit found that the transit agency has wasted an astonishing $90 million on its pending capital projects by consistently going over budget.
As of now, all that needs to be done for authorizing final release of these bonds is an approval vote by the Board of Supervisors, which is penciled in for the March schedule. Our supervisors are not exactly known for refusing to spend money that can be allocated by a simple majority “yes” vote. But if enough public protest arises, they might well prefer playing the role of tough fiscal watchdogs and put a lid on those suspect work orders instead of rubber-stamping the bond issue.