January 24, 2012

The Reason the Stimulus Failed: A Microcosm

by CarterFliptMe

This story from Milwaukee illustrates why government spending is always mismanaged, seldom helps the economy much, and is, for the most part, wasted.  Mark Belling of Talk Radio 1130 WISN in Milwaukee spoke on his show about this on January 19, 2012, and was brilliant in pointing out why this story is a perfect illustration of what goes on in government bureaucracy every single day across the country.  I feel the need to repeat his illustration, and I thank Mark Belling for, once again, nailing it on the head!  Here's the podcast of his discussion of this article, Parts 1 and 2.

The article is about the Milwaukee County Transit System's failure to move from its old system of accepting cash, cards, and paper transfers, to a new system which will use a magnetic card.  It sounds like a pretty simple task: Get new card readers, install them on the buses, educate the public, and make the transition over a period of time.  But three years after the stimulus funding for this program, the simple task is still not complete. Why, and what does this story have to do with the larger overall federal stimulus funding from 2008?

Why indeed.  Why do well-meant government programs get more-than-adequate funding,  but remain unfinished for years, sometimes never  to be completed?

In the public sector, there is no market pressure.  There is no pressure to get a job done in a timely manner, or at the most cost-effective price.  The money for the job is already allocated, with little regard for the details in how the money is to be spent.  There is very little accountability for those who fail in these two basic demands of the free market, since many of the administrators who oversee and implement government programs are appointed by elected officials.  Often these elected officials are never challenged in elections, since it's usually difficult to defeat an incumbent, especially in an area where only one political party is in power.  The opportunity for cronyism within bureaucracy is great, and we see it at all levels of government.

from the Milwaukee Journal Sentinel
Transit system's 'smart card' fare system two years away
By Steve Schultze of the Journal Sentinel Jan. 18, 2012
The new "smart card" fare collection system for Milwaukee County Transit System's more than 400 buses won't be ready for two more years, an unexpectedly long time that drew criticism Wednesday from county supervisors and the bus drivers union.
Added to the three years of planning so far, the new fare system would take about five years overall to implement.
That's too long, said Supervisor Michael Mayo Sr., who heads the County Board's Transportation, Transit and Public Works Committee. He said he wasn't sure of reasons for the lag time but wants to push for quicker implementation once a vendor is picked this spring to install the new high-tech fare gear.
A long planning period was needed to investigate smart card and cash farebox technologies and to follow federal guidelines, according to Jackie Janz, spokeswoman for the transit system. Officials hope a $7 million federal stimulus grant awarded to the county for the farebox project in April 2009 will fully cover the costs.
Nearly two years ago, transit system officials said they expected to award a contract for the new fare systems by July of 2010. But because of the complexity of the job, an outside consultant, IBI Group of Toronto, was hired to help MCTS with a study, to write bid specifications and to evaluate bids at a cost of $119,000, Janz said.
"We would like this (system) to be installed today," she said. "But this is a monumental change for us and it is going to hit us on every level and we want to make sure it's done correctly."
At least seven revisions to the initial specifications issued by MCTS for new cash fareboxes and smart cards also contributed to the long lead time in the system procurement, Janz said. All seven bidders were notified of the revisions and given extra time to respond, she said. That extended the bid submission period by at least three to four months, she said.
The new farebox system will be based on use of cards whose value is machine encoded. Passengers will simply wave smart cards with embedded electronic chips near an electronic reader upon boarding a bus.
The current bus fareboxes have been in place for 26 years, while the paper transfer system is even older.
Contrary to earlier plans, the venerable paper bus transfer may not be eliminated when the new smart card systems are in place, though they would be phased out over one or two additional years, transit system officials told supervisors at the committee.
Janz said while that was the transit system's recommendation, county officials could change that.
The recommended continuation of paper transfers drew rebukes from the drivers union, who said disputes over validity of transfers create stress and sometimes lead to physical attacks on drivers.
"How many assaults do we have to have before anything is done?" asked Rick Bassler, vice president of Local 998 of the Amalgamated Transit Union.
He called the 24-month time frame for installation of the new system ridiculous and warned it could be obsolete by then.
Union leaders said at least 5,000 of the 30,000 paper transfers issued daily were stolen or used fraudulently, creating huge losses for the transit system.
At a $2.25 fare per standard adult ride, that would add up to more than $11,000 a day in lost revenue.
Daniel Boehm, director of administration for the transit system, said there was no way to estimate losses because of transfer fraud.
Bassler also complained that drivers had not been consulted in the farebox procurement process and he asked for driver participation in an upcoming review of multiple bids for the new system.
Transit company officials made no commitment to that, but several county supervisors pledged to push for union representation on a bid evaluation panel.
The two-year projection for completing the project is an unacceptably long time frame to add technology that has already become standard on many large city bus systems elsewhere in the country, said Supervisor Jason Haas.
Lloyd Grant Jr., managing director for MCTS, said he'd try to prod the firms bidding on the contract for new fareboxes to get it done faster.
Though MCTS in 2010 said it planned to eliminate paper transfers with the shift to smart cards, a report from the firm to the county said it now no longer planned to have magnetic card-style transfers - at least initially.
Installing new fareboxes and a new transfer system at the same time would be too much change, too fast, according to MCTS.
"Paper transfers have been in use at MCTS for over 35 years," the report said. "A hurried approach to the elimination of paper transfers is not recommended."
Adding equipment that dispenses magnetic card transfers would add $800,000 in costs to equip county buses and up to $875,000 a year in operating costs.
Supervisor Nikiya Harris said the money would be better spent on a marketing campaign aimed at educating bus riders about the new smart card system.
Haas said the fare structure should be re-examined in conjunction with the new smart card technology with consideration given to abolishing transfers in favor of a two-tier fare system with a cheaper price for one-way fares and higher price for an all-day pass.


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