Grand Rapids Pundit

Grand Rapids Income Tax Increase: It’s the Pensions, Stupid.

(Note, the post will remain “sticky” at the top of any new posts until the May 4th, 2010 vote for the requested income tax increase in Grand Rapids)

The Grand Rapids City Commission voted last week to place a 15% income tax increase on the ballot May 4th. The vote was 6 to 0 in favor, showing a remarkable lack of leadership and critical thinking on the part of any of the city commissioners. I guess replacing Jim Jendrasiak in the 1st ward didn’t matter after all. This tax increase request will be on a typical low turnout election day, which is always by design. It’s easier to manipulate election results that way. Surely the city will mail out fliers listing the “benefits” of the proposed tax increase, without any obvious “vote yes” language, to get around state campaign financing laws.

However, the bottom line is this: 100% of the tax increase will go directly into the city’s retirement pension system. This system is rapidly becoming unsustainable for a couple of reasons, which I’ll outline below. The city manager is trying to make the case that this tax increase will somehow increase fire department coverage downtown, but that’s a smokescreen to distract voters from the real fiscal disaster waiting in the wings.

The first, and most obvious reason for the sudden pension crisis is, of course, the current Great Recession. We’re lucky in that the city publishes lots of information on their pension plans. You can peruse the information here: City of Grand Rapids – Retirement Systems. We can glean several things from the monthly pension reports. The graph below summarizes the balances of the pension funds.

The city maintains two pension funds. One is for the police and fire employees, the other (general) for all other employees. As of December 31, 2007, the combined balance of both funds was $753 million. As of December 31, 2008, the combined balance was $493 million, a stunning loss of $260 million, or -35%. This tells us important information. Much of the city’s pension funds are clearly invested in risky assets, probably equities (stocks). For comparison, the S&P 500 stock index dropped 38% during the same period. This is an example of how the city’s bureaucrats can promise bigger and bigger pension benefits during the good times. Since the pension fund obviously is sensitive to the market’s ups and downs, the good times inflate the value of the pension funds, making it look like it’s easier to offer better and better benefits without having to increase the city’s costs.

But, then comes reality, crashing things down. When the market began to tank in 2007, it took the city’s pension fund with it. This sort of drop slaughters the pension fund’s solvency, and this is why the city must now contribute much more money just to keep the fund afloat. Of course, you’ll notice that the fund has recovered, as of December 31, 2009, to the level of $590 million. This is an increase of approximately 20%, while the S&P 500 increased by 27% during the same period. The problem is that the current market rise has run out of steam. Over the last three months, the market is essentially flat and appears to have entered a new down trend.

If the city had simply invested in safer and more stable securities, such as US government bonds, the funds would be in far better shape. For instance, if the pension fund were invested in 30 year treasury bonds, the annual return would have been about 4.5%. Compounded annually, the city’s pension funds would stand at about $836 million today, instead of $590 million (or a loss of around $246 million). But, a safe and secure growth rate like this would have constrained the city’s ability to offer greater and greater levels of benefits. A conservative and thoughtful path of sustainable benefits was possible, but the city’s leaders chose not to got that way.

So, what are the real consequences and costs of this problem? The graph below shows us the increase in the city’s pension system contribution costs.

As you can see, the pension contribution cost is estimated to be $5.009 million this fiscal year (2010). This will increase to an estimated $26.66 million cost in 2015. That’s a whopping 532% increase in just five years. Again, that’s assuming a 7.5% stock market growth rate, so the reality may be much worse. But the important point of data is the difference in pension contribution costs between the current year and next year (2011). As stated, the current year’s pension cost is about $5 million. Next year’s is estimated to be $12.019 million. An increased cost of $7.01 million. Wait a minute. Where have I heard that number before? Ah, yes. Here:

News Headline: “Grand Rapids income tax increase could raise $7 million”

What’s the logical conclusion? The entire tax increase will be spent on pensions. Oh, and that’s just the first year. In 2012 the increased pension cost will be another $4 million. The year after that, an additional $3.5 million, and so on. By 2015, the city will have to raise taxes by $21 million a year, or three times more than the proposed tax increase, just to pay for pensions.

Are you ready to pony up?

But wait, there’s more. Before readers try to make the argument that things would be fine without the current stock market conditions, please look deeper into the pension funds’ built-in collapse. That’s right – built-in collapse. This is the second reason for the current pension crisis.

It’s been in front of our city leaders, but they have chosen not to deal with it. What am I talking about? The city receives an annual report on the pension system’s health. You can read these reports here. The chart below is taken from this report (click on the chart to view it full size).

This chart shows us the number of active employees at the city who are participating in the pension plan versus the number of retired employees who are drawing benefits. This is generally referred to an active/retired employee ratio. In 1975 there were approximately 2.6 active employees for each retired employee. This means that the contributions made on behalf of the active employees were likely higher than the benefits being drawn by retired employees. Contrast this with the current ratio of close to one active employee for each retired employee. This means that active employees’ and the city’s pension contributions are likely just going straight out the door to pay for currently-retired employees. This trend will result in failure. It’s the same principal as a Ponzi Scheme. Current “investments” just go right out to the door to pay benefits to others.

The following chart (from the same report) shows us the cost of pension benefits as a percentage of current employees’ payroll (click to view full size):

This is the cost of unsustainable defined-benefit pension plans. As you can see, in 1975, the city contributed $5 for every $100 in payroll. This cost has ballooned to nearly $45 per $100 of payroll cost. You are now seeing exactly why the city budget has been squeezed. Even with fewer employees and a relatively flat budget, the city continually runs out of money and is forced to cut services.

We, as citizens, are seeing a degradation of basic city services so that pensions can be fully funded.

To put a cherry on top, the below is an excerpt from the pension report (Page B-1):

Voluntary Retirement. A member may retire after 30 years of service regardless of age, or after attaining age 62 and completing 8 years of service. Effective January 1, 2001, members covered by the Emergency Communications Operators Bargaining Unit, after attaining age 55 and completing 8 years of service. [emphasis added]

This means that if you’re 62 and have worked for the city for only eight years, you get a lifetime pension. If you’re part of the Emergency Communications Operators union, you can retire at 55 after only eight years of service. And you’ll notice that this was approved as recently as 2001 by our city’s leaders. The problem was compounded that recently. Now they think that citizens should pay for this through higher taxes.

The end result is that, due to our city leaders’ absolute failure to manage finances well, they are trying to push the cost off onto taxpayers without doing anything to address the underlying problem. The politicians find it easier to raise taxes than deal with angry unions – and that’s exactly what they are doing again. The city commission is afraid to tackle the real problem, so the easier path is to “kick the can down the road” and try and deal with it later. The problem is that eventually you are forced to deal with it. Instead of dealing with the issue when it was easy to manage, the city has gone beyond the point of being able to fix it without disruption. The current path of the city’s pension fund is bankruptcy.

It’s easy to spend and make promises when the times are good. But now the residents (and taxed non-residents) of Grand Rapids are being asked to pay for the politicians’ and bureaucrats’ inability to think ahead and act in their fiduciary capacity as representatives of the citizenry. Who do they work for? The city’s unions or the city’s citizens?

Grand Rapids Pensions: Thanks Taxpayers!

Posted by: GRPundit on Monday, 22nd Feb, 2010

Michigan Unemployment Insurance Fund is Bankrupt

A little-discussed news item is that, as the Great Recession drags on, states are getting crushed under piles of borrowing to continue to pay unemployment benefits. As states run out of money, they begin to borrow from the Federal Government.

Why is this issue important? Because the state will eventually have to repay this borrowed money. We’re talking about billions of dollars.

According to the web site Pro Publica, Michigan is the number two borrower of federal funds to pay unemployment benefits (behind California). The negative balance of the state’s unemployment fund now stands at $3.429 billion. This negative balance is rising almost exponentially. In December alone, the state paid out $243 million more than it collected in unemployment taxes from employers.

2009’s “stimulus” law contained a provision that allowed states to avoid interest payments through 2011, but the bill will eventually come due. The kicker is that higher unemployment taxes on employers will be imposed to attempt to pay this shortage back, but that will just serve to kill more jobs as businesses are saddled with even more costs of doing business.

As the private sector has collapsed under the weight of debt saturation, government has begun to take on the debt load.This won’t end well.

The problem is that so many people are now dependent on government handouts, the political will to fix the situation will be almost impossible to come by. The entitlement  culture will only be curtailed where there is no other choice. And that may be sooner than we think.

We see our own microcosm of this with the crushing pension costs in Grand Rapids. The city’s commission is asking for an income tax increase, 100% of which will go to pay pension costs. And that’s just for the first year. They will have to come back to taxpayers to cover the tens of millions more they will need to pay just to keep the pension fund solvent. Let me repeat, just so it’s clear. This income tax increase will do nothing to improve or prop up city services. It will go only to pay for pensions.

Multiply this by all the cities in Michigan by all the states in the nation by all the people on federal benefits.

Just to illustrate, please observe the national debt’s growth rate:

National Debt Doom

That’s called a parabola. It will fail. Nature doesn’t tolerate exponential growth rates.

Posted by: GRPundit on Tuesday, 16th Feb, 2010

Housing and Taxes

The City of Grand Rapids and several surrounding areas are considering tax increases this May to shore up local budgets. Of course, much of the reason is the Great Recession we are currently in. Much of the problem is that city governments outspent themselves and sold taxpayers down the road by promising unionized municipal workers very generous and unsustainable pension benefits. We’ll address that issue soon because we are doing research on the coming budget armageddon in Grand Rapids due to the pension ponzi scheme problem. However, another piece of the puzzle is the decline in housing prices, which also leads to lower city government revenues.

We’re hearing bleats from the likes of the National Association of Realtors that housing may be turning around and that prices are up. Prices may have ticked up slightly in some areas. This is due to a few government and bank policies that are distorting the market – temporarily.

First, The Federal Reserve has printed nearly $1.25 trillion of counterfeit money to buy Mortgage Backed Securities from Freddie Mac and Fannie May. This has had the affect of creating a market for mortgages that wouldn’t have been there otherwise. This has kept rates low and loans easier to get. This program ends in March.

Second, we all know about the $8,000 first time homebuyer tax credit that was set to expire last year and was extended to April of this year. This also bumped up demand and prices, but at the expense of future demand and prices.

Third, banks and the government mortgage entities tried foreclosure moratoria to give borrowers time to catch up and work out loan modifications. This has been a failure and foreclosures are picking up again.

Some suggested reading material to learn more about these market-distorting policies:

• The Housing Double Dip Began In December
• Foreclosures down in January, but surge on way?
• Rising FHA default rate foreshadows a crush of foreclosures

According to Trulia, if you bought a house in Grand Rapids in 2005, the value of your house has dropped 25% or more. Anecdotal looks at housing in my personal experience shows a 30-40% decline.

The point is that the decline is not ending and more pain is to come. Foreclosures are increasing and more and more people are realizing that paying on a mortgage for a house that will take decades to regain its value is a waste of time, money, and worry. As I previously posted, the option of walking away from your mortgage is rapidly becoming more and more attractive. This is a good thing. Why? Because it clears the market more quickly and gets us to where we need to be (and will eventually end up anyways) in order to begin rebuilding the economy. The government has wasted, literally, trillions of dollars to prevent the inevitable.

Banks are trying very hard to make people believe that walking away from your mortgage is somehow immoral or shirking your responsibility. Yet banks and businesses walk away from mortgages all the time, because it’s simply an economic decision.

See the article Double standard in mortgage walkaway:

NEW YORK — Tishman Speyer Properties walks away from 11,232 Manhattan apartments because it can’t pay its mortgage. That’s good business.

Rick Gilson, a college custodial supervisor in South Dakota, wants to walk away from the mortgage on his mobile home. If he does, he’ll be a deadbeat.

Those two borrowers face the same financial dilemma: Their mortgages far exceed the values of their properties. Yet one gets to walk away without guilt, while the other can’t.

Gilson is too scared to dump the mortgage on his mobile home. He owes $31,973, but the home is only worth about $14,000.

“I have 12 years of money put into this property that I will never get out,” said the 50-year-old Gilson, from Rapid City, S.D. “But I am still paying because this is what I have been told to do. That’s what I think is right.”

Until now, the focus of the real estate crisis has been on individuals. One in four U.S. homeowners, or nearly 11 million Americans, are underwater on their mortgages. In some parts of the country — Florida, Nevada, Michigan, California and Arizona — the share tops 40 percent.

Some experts say it makes sense for some people to walk away if they’re deeply underwater, even if doing so could wreck their credit score for seven years. It may not be worth it to keep paying a mortgage when they can find comparable rental housing for considerably less money.

The argument against walkaways is that they will wreak economic havoc if a lot of people do it. Banks will have more bad loans on their books. They’ll make fewer loans. Home prices will plunge more.

The rules are different, though, for the walkaway of all walkaways.

That title is reserved for what happened to one of New York’s trophy properties, the 56-building Stuyvesant Town and Peter Cooper Village complex. Spanning 80 acres on Manhattan’s east side, it’s the largest single-owned residential area in the city. Its red brick buildings, built by Metropolitan Life in the 1940s for World War II veterans, are still a haven for the city’s middle class.

Commercial real-estate firm Tishman and its partner, investment firm BlackRock, paid $5.4 billion to buy the property from MetLife in late 2006 — right at the market’s peak. They hoped to make money by converting rent-regulated apartments into luxury condos and raising rents.

Then the housing crash hit. The value now: $1.8 billion.

And you thought you overpaid for your house.

I suggest you read the entire article.

Just look at it this way – if it’s significantly cheaper than your mortgage payment to rent a property similar to your current home, you’re underwater and losing money each month.

Of course, if you decide that fixing your family’s balance sheet is more important than propping up a bank, you should consult an attorney who specializes in foreclosure and short sales. Every state is different in terms of its real estate law, so you must get good advice before making the decision.

More on the local impact, and reaction, coming soon…

Posted by: GRPundit on Friday, 12th Feb, 2010

Appeal Your Grand Rapids Property Tax Assessment

2010’s property tax assessment documents were sent out last month and you have a very small window of time to appeal your assessment. In many cases, taxable values went up while property values went down. The city of Grand Rapids has a web page with the required documentation you need to fill out for an appeal, available here.

There are several tools available online to see the values of homes that recently sold in your area for comparison to your own, such as trulia.com and zillow.com. Be sure to look for the “recently sold” sections of those web sites. Since property values have dropped approximately 30% in the area, it’s well worth it to challenge your taxable property values.

The Michigan Taxpayers Alliance also offers a DVD workshop that helps you with the process, for $10. You can check it out here.

State Representative Dave Hildenbrand offers a useful guide for appealing here.

Be aware, the deadline for filing appeals is February 12th!

Posted by: GRPundit on Wednesday, 3rd Feb, 2010

Fiscal Armageddon – Time for Tough Choices

The October revenue report for the state of Michigan has been released, and there’s very little good news to be had. Revenues were again below the most recent projections. October saw tax collections that were $31 million below expectations. The best real-time indicators of economic activity, sales taxes and income tax withholding, are both down, again.

Due to the near-complete collapse of state revenues, the cuts have (finally) been forthcoming. Public schools received per-pupil cuts of approximately $300 for the current fiscal year. State agencies have been ordered by the governor to cut 10% of their budgets. The cycle of layoffs and reduced revenues continues.

The result? Governor Granholm and the MEA have begun hyperventilating. This week they staged a massive lobbying effort to get legislators to increase taxes. Apparently they don’t require Economics 101 in teacher colleges.

On the city level, Grand Rapids has seen a similar decline in income tax revenues and property tax revenues will probably see declines due to historic drops in resale values of homes and commercial property. Immediately upon announcing the layoffs of 125 city employees, Mayor Heartwell called for a ballot question to raise taxes in the city. He claims there hasn’t been a tax increase in 15 years. Apparently the constant reduction of the personal income tax exemption, the added property tax bill “service fee,” and the increase in trash collection property tax don’t count as tax increases in the mayor’s book.

Oh, and don’t forget that The Rapid is coming back, probably in early 2010 to ask, again, for a tax increase to build the redundant and wasteful “Silver Line” bus service, to clog up Division during rush hour.

But the fiscal problems are just beginning, and there is very little sign that anyone is proposing real solutions. The “easy” way out, increasing taxes, will only work so much. They will run in to the law of diminishing returns. The speaker of the state house, Democrat Andy Dillon, apparently grew some huevos and bucked his MEA masters by proposing the pooling of all public school health plans into one statewide health plan. The MEA, fearing the loss of their money-laundering cash cow health plan MESSA, promptly went ape-sh*t. This illustrates the difficulty of real, substantive change at the state level. So many special interests peddling their influence (in the form of money) makes it nearly impossible to propose an innovative solution to the state’s structural budget problems.

Of course, then there are the unsustainable defined-benefit Ponzi public pension plans. They will fail. It’s just a matter of time. Even politicians can’t repeal the laws of compounding numbers. But I’m sure they will try.

But we should turn to the local level, where real people can have the most chance of affecting change. We can, as a city, choose to continue down the ultimately disastrous path of “the easy way out,” or we can have real, substantive change in how city government does business.

A quick overview of what’s going on at the local level: As state revenue declines, so does the state subsidy to cities called revenue sharing. Revenue sharing has been on the decline for several years. City leaders keep pointing to how much has been “lost,” but their complaints fall on deaf ears – or at least ears that understand that cities fall further back in line from other special interest groups.

As revenue sharing declines, so have city income tax receipts. The city’s income tax revenue is down 14% (apparently year on year).

Not only has revenue been on the decline, the gigantic hydrogen bomb of the city’s pension system is preparing to detonate. The city’s 2010 fiscal plan (published before the layoffs were announced this week), is available here. One paragraph should stand out and set off all the alarm bells in the city:

In FY2007 our two pension retirement trusts were 110% and 120% funded.  Both employer and employee contribution levels were at or near the lowest possible levels.  This advantage was eliminated by the breathtaking decline of the financial markets over the past 18 months.  We now know that our retirement funds are significantly underfunded. This means that both employee and employer contributions must move dramatically higher.  Proposed changes to actuarial assumptions and plan provisions will freeze employee contributions at the bottom of the contribution range and provide additional time for the City to adjust to higher employer contributions.  Nonetheless, the employer share will go from 7.7% in to 9.29% in FY2010, and 13.62% in FY2011 for the General Pension and from an FY2010 rate of 0% to an estimated 23% in FY2011 for the Police/Fire Pension.  These percentages assume that we will be able to implement critical smoothing techniques that will mitigate the intense upward pressure on required contributions. The increase in employer funding requirements contributed to the FY2010 GOF operating deficit of $2.9 million.  Unless we see a significant increase in the market value of retirement plan assets over the next couple of years, the estimated pension contribution will continue to rise. (emphasis mine)

Translation: 2010 layoffs are just the beginning. Fiscal Year 2010 includes a pension contribution (as a percentage of salaries) for the police and fire employees of 0%. Yes, 0%. This will go from 0% to 23% (of salaries) in one year. A search of the fiscal plan shows that total personnel costs for police and fire are about $67 million. Let’s back out about 40% of that (just a wild guess) to come to actual base salary cost. We come up with about $40 million. Now,  re-read the above paragraph. The city is going from contributing $0 in the current fiscal year to the police and fire pension plan to (my estimate) of 23% of salaries in 2011 – or about $10 million. The increase in contributions for the other defined-benefit pension participants on the city’s payroll will increase from 9.29% this year to 13.62% next year. This is unsustainable.

The mayor’s solution? Raise taxes.

Lest I be declared someone who only points out problems and no solutions, here are a few suggestions:

1. Lay off all non-essential employees. This includes the “equal opportunity” department of five people.
2. Outsource information technology (IT) services.
3. Eliminate the Office of Children, Youth, and Families.
4. Convert all employees, now, to a defined-contribution retirement plan. NOW.
5. Eliminate the Downtown Development Authority. This entity sucks up about $17 million of local property tax revenue that would normally go to the city’s general operating fund. The DDA also currently owns the Van Andel Arena. Sell the arena, pay off the outstanding bonds, and use the excess to pay off some of the DeVos Place bonds. The DDA currently operates as a taxpayer-funded subsidy to developers, giving away free money to those who ask.
6. Implement a fire department response fee. Most (if not all) homeowners insurance plans offer coverage if you’re charged for fire department response.
7. Eliminate the city’s trash collection services. There is a special property tax levied for this. There are plenty of private trash haulers. Once the trash collection services are eliminated, go to voters and ask them if it’s ok to convert the current trash levy on property tax to a general fund levy so that it can be spent on other city services (including police).
8. Contact every citizen and ask them what their priorities are. Do you prefer Police and smooth roads, or do you prefer an equal opportunity department and subsidies for developers?

If serious, dramatic changes are not implemented, the city will go bankrupt. This has started to happen in other states. There is no chance in h*ll that the economy is going to return to anywhere near where it was at the peak of the last cycle in 2007 – at least not any time soon.

Tough choices need to be made now – if our politicians can stomach it.

Posted by: GRPundit on Friday, 13th Nov, 2009

Mayor Heartwell to Taxpayers: Drop Dead

Last week the Grand Rapids Downtown Development Authority board approved the expenditure of $850,000 to help the city buy five new DASH buses for the downtown parking lots. The catch is that mayor Heartwell asked the DDA to kick in extra money so the city could buy hybrid-electric buses instead of standard buses. The standard buses cost $353,000 each, according to the Grand Rapids Press. The hybrid-electric buses cost $200,000 more (for a total of over $550,000) – each.

Earth to Heartwell: We are entering Great Depression II.

The mayor’s justification for the request to spend $1,000,000 more on five buses was summed up thusly:

Heartwell argued the DDA should somehow come up with the money — he didn’t know where it would come from — because having buses labeled ‘hybrid’ plays well with the city’s efforts to market itself as ‘green.’

“If for no other reason than the important symbolic benefit of having buses around downtown that say ‘hybrid,’ it’s an investment worth making,” he said. “It’s terribly expensive to do, but if we don’t start making these kinds of investments in our environment, we’re being short-sighted.”

So, in other words, the word “hybrid” painted on the side of a bus is worth spending an extra $1,000,000 of taxpayer money. Right.

Wisely, the DDA voted 5-1 (with Heartwell being the “one”) to reject his request.

Just to drive the point home of how the mayor is completely out of touch and apparently has absolutely no idea what a position of public trust involves, I was just leaked the actual improvements in gas mileage that the hybrid-electric buses enjoy. Get ready for this. These are the numbers from The Rapid (ITP) itself:

A standard diesel transit bus gets 4.45 miles per gallon. The hybrid-electric buses get 5.12 miles per gallon. Yes, that’s right – an improvement of 0.67 miles per gallon – all for the spiffy additional cost of $200,000 each.

Remember this when the city commission comes to taxpayers asking for a tax increase to shore up the rapidly-deteriorating budget.

Posted by: GRPundit on Wednesday, 19th Aug, 2009

Rapid Silver Line: They Almost Got to Take Credit

An important article appeared in the Grand Rapids Press last week that highlights several issues regarding the failed Silver Line bus system and the false claims of economic development that are touted by the Silver Line’s supporters.

The Grand Valley Metro Council (very much pro-Silver Line) won $400,000 in federal grants to clean up several abandoned sites along Division avenue, in the hopes that this will attract more development. You can almost hear how this would have been announced if the Silver Line had passed. It would have been touted as the first in a series of positive developments because of the Silver Line. Of course, the Silver Line had nothing to do with this grant award, but it underlines the claims that these sorts of transportation projects somehow spur development. However, as this news item shows, the development is largely spurred by government subsidy, not the appearance of a fancy silver-colored bus line. The Rapid supporters confuse correlation with causation. It goes against logic that replacing the current buses with buses that are painted silver will someone convince people and business to move to Division Avenue.

As we have previously pointed out, the development in Portland around mass transit, as the pro-Rapid supporters love to point to, only occurred after government subsidies were enacted. The development did not occur due to the mass transit system. This is the heart of the pro-Silver Line argument; that the Silver Line “would have” spurred several dollars’ worth of development for each dollar spent. This is simply not the case. The only evidence the Rapid points to in support of their argument is a thinly-documented three page article, as we pointed out here.

However, this Press article also points out that they haven’t given up on the Silver Line boondoggle. The article states, “Although [The Rapid] expects the Silver Line route eventually to win the voters’ blessing, plenty of other properties could be helped in the meantime . . .” Clearly they aren’t done with trying to sell this mess to the voters. Based on the negative Silver Line feedback both in the Press and on other online sources, it seems unlikely that they can salvage this project without significant changes. Even the pro-transit people weren’t convinced about the need for the Silver Line.

Posted by: GRPundit on Wednesday, 13th May, 2009

Rapid Silver Line Goes Down

Rapid Silver Line: FAIL

It’s fantastic news for taxpayers and for fiscal sanity in the Grand Rapids area. Last night the expensive and redundant Rapid “Silver Line” tax increase request went down in flames. The overall vote total was 52% against and 48% in favor, but when looking at the six cities in the Rapid service district, we see that a majority of the cities rejected the request:

Grand Rapids – 53% yes, 47% no

East Grand Rapids – 64% yes, 36% no

Grandville – 36% yes, 64% no

Kentwood – 46% yes, 54% no

Walker – 32% yes, 68% no

Wyoming – 36% yes, 64% no

As you can see, Walker, Wyoming, Kentwood, and Grandville all soundly rejected the tax increase request and even Grand Rapids was closer than expected.

The pro-Silver Line people are predictably dour. The comments of Peter Varga, executive director of the ITP (Rapid), sum up their attitude perfectly. He said it was rejected simply because voters didn’t understand the request. Right. Voters heard from this blog as well as other groups (including our friends at KCFFR) who exposed the bad plan of the Silver Line. The Rapid folks tried their hardest to limit the information available on this request, but active citizens exposed the Rapid and let voters know the facts. This web site alone received thousands of visits from people searching for more information.

The message was clear:

• This new Silver Line was a duplicate of already-existing bus services
• The Silver Line would cost tens of millions of dollars (just for buses)
• The Silver Line would have cut off traffic on Division by shutting down lanes and dramatically increasing congestion
• The Silver Line was slower than existing bus services (see our previous posts on the issue)
• The claims of spurred development and “new jobs” were based on speculation and conjecture

In summary, bravo for the voters of the four cities who rejected this request. Make no mistake, they will be back, asking for more. Their next request will be for more than $100 million for an even more inefficient light rail line.

Posted by: GRPundit on Wednesday, 6th May, 2009

Rapid Silver Line – Bus “Slow” Transit

The supporters of the proposed $110 million Silver Line bus system in Grand Rapids tout it as a “Bus Rapid Transit” line. The proposed route of the Silver Line is up Division from 60th Street, a jog around the hospitals around Michigan street, and back to the Rapid station. The total route, according to Rapid, is 9.8 miles. It will take 35 minutes for the new “Silver Line” to travel this route. An important note here is that, as we’ve previously pointed out, Division will be turned into an effective two lane road (one lane each way) so that these Silver Line buses can have their own dedicated lanes. This supposedly will speed these buses up because they won’t have to share these lanes with regular cars. 

But wait, the Rapid already has a bus, route #1, that travels from the Clyde Park Meijer, down to 68th Street, up Division, and around to the Rapid station. The total distance for the current buses on this route is 12 miles, according to Google Maps. In addition, according to the Rapid’s web site, the buses on this route take about 33 minutes.

Let’s do the math. The Silver Line is supposed to take 35 minutes to travel 9.8 miles, with dedicated lanes on Division. The current #1 bus, traveling 12 miles, takes 33 minutes, sharing the lanes like every other vehicle on the road. The Silver Line factors out to be traveling at around 16.8 miles per hour. The current bus factors out to 20.57 miles per hour.

Huh? How do they call this Bus Rapid Transit? It’s Bus Slow Transit. It’s slower than the regular buses that take the same route now!

Don’t forget that these dedicated Silver Line lanes on Division will squeeze all current traffic on Division down to one lane in each direction. Traffic jam, anyone?

Be sure to cast your vote on this idea on Tuesday, May 5th, if you live in Grand Rapids, East Grand Rapids, Wyoming, Walker, Kentwood, or Grandville.

See our prior posts on this subject:

• Rapid Silver Line – More Concealment and Deceit
• Rapid Silver Line – Another Waste of Money

Posted by: GRPundit on Tuesday, 21st Apr, 2009

The Rapid Silver Line – More Concealment and Deceit

Grand Rapids Pundit has received one of the pro-Silver Line post cards in the mail, as I’m sure many residents of the ITP service district have (Grand Rapids, East Grand Rapids, Walker, Wyoming, Kentwood, and Grandville). This post card, which you can view here, exemplifies the continued contempt that the ITP/Rapid has for the taxpayers. The post card says virtually nothing about the reason for the tax increase. In fact, they bank on voters knowing as little as possible about this tax increase. The more voters know, the more likely it is that they will vote no.

The only detail the post card has on the Silver Line is as follows:

Silver Line is more like a light rail system than a traditional bus. A proven solution in other communities, it will maximize ridership opportunities, economic development, and travel-time savings. Silver Line vehicles will use:

• Dedicated lanes during peak times
• In-station fare collection to speed boarding
• Intelligent transportation system applications such as signal priority, allowing quick travel between stations

That’s it? Yes, that’s it. As previously stated, they don’t want you to understand all the details.

What is the Silver Line really? As we’ve previously reported, it is a Bus Rapid Transit line that will dedicate one lane each way on Division Avenue from 60th street to the Rapid Station for use only by these new buses. This means that Division will be limited to one lane each way for regular vehicular traffic during peak traffic hours (rush hour). You heard that right. Division will turn into a traffic nightmare, likely pushing traffic to side streets to find better ways to get where they are going.

They say that this new “traffic priority” system will allow for these buses to travel much faster than current buses (which already travel the same exact route as the proposed Silver Line). How much faster? Well, we don’t really see any improvement. The Silver Line’s route would be 9.8 miles long and would take the new buses 36 minutes to travel. Huh? Yes, that’s right, 16 miles per hour. We don’t honestly understand how they can call this a Bus Rapid Transit line.

But wait, it gets better! This whole project is a $70 million tax increase – all so that they can duplicate the bus route they already have. No kidding: they already have a bus that travels this route. There’s no reason to raise taxes by $70 million just to duplicate what’s already there.

If you are a resident of East Grand Rapids, Grandville, or Walker, you will see no benefit from this line at all. If you are in Kentwood or Wyoming and happen to live near Division street, you might be able to use this new line conveniently, but as said before, there already is a bus line on this route. Basically, very few residents of any of the six ITP cities will see any benefit, yet will be expected to pay for it.

In the same vein as the near-informationless post card, the Rapid’s pro-Silver Line web site lists one source for their claim that the “investment” in the Silver Line will create jobs and produce a return on investment through new development. They reference an article named “Bus Rapid Transit: A Powerful Real Estate Development Tool” by William Kaplowitz. They don’t provide a link to this article, nor the text of it. So we did a simple Google search and came up with the text of the article. Read it for yourself here. The article makes a couple of simple, poorly-documented claims about development, and that’s it. That’s what they use to try and get residents to raise their own taxes by $70 million.

What they don’t discuss is that most of the time this “new” development was already happening or happened only because government created tax incentives to do so. In other words, they confuse correlation with causation. Just because development occurred around same time as the bus system’s implementation, it doesn’t mean that the buses caused the development. For example: there already is a lot of development going on along Division. It is likely that the Silver Line people would say that the Silver Line caused that development if they try and tout the “benefits.” But once again, since there already is a bus line along Division, it’s hard to understand how new buses would suddenly spring up more development.

But this is how the ITP/Rapid works. They don’t release their budgets. They don’t make true ridership numbers (by route, etc.) easily available. They don’t release the true operational statistics of their system. They don’t release the minutes of their board meetings, as the City of Grand Rapids does. They operate as though they don’t need to be accountable. But they’re a publicly-funded body and they need to operate transparently. The Rapid operates secretively so that you don’t understand how they operate. It’s all part of their contempt for taxpayers and efficient operations.

Don’t forget for vote on Tuesday, May 5th if you live in Grand Rapids, East Grand Rapids, Wyoming, Kentwood, Walker, or Grandville.

Read more on this issue:

• Rapid Silver Line: Another Waste of Money
• Rapid Silver Line – Bus “Slow” Transit
• ITP Watch
• ITP Watch: Rapid Silver Line Blog

Posted by: GRPundit on Sunday, 19th Apr, 2009