October 29, 2012
Via Email: [email protected]
John Laird, Editor
The Columbian
PO Box 180
Vancouver WA 98666-0180
Dear Mr. Laird,
Enclosed is a proposed guest editorial related to C-Tran’s Proposition 1 measure. In case you would like
to fact check this piece, I have also included documents pertinent to my opinions (or, I have included a
link). Your consideration for publication is appreciated.
If you have questions or concerns about what is contained in this editorial piece, please call me at
360.573.5158
Best regards,
Tiffany R. Couch, CPA/CFF, CFE
1603 Officers Row Vancouver WA 98661
P : 360-573-5158 M : 360-601-4151 E : [email protected]
www.acuityforensics.com
C-Tran OpEd October 2012
C-Tran’s Proposition 1 Sales Tax Initiative – The Numbers Tell the Story
Are you confused by the conflicting statements related to C-Tran’s Proposition 1 initiative? Some have
said that the initiative will give the Agency “twice as much money as they need!” Others have said, “the
sales tax is not enough!”
So what are the facts?
In my business, the numbers tell the story. And thankfully, C-Tran has reported numbers which tell voters
how the agency intends to use your sales tax funds.
Just a year ago, C-Tran came to the voters asking for a .2% increase in sales tax, claiming the funds
were necessary for the Agency to maintain current levels of bus service. The initiative was passed,
providing C-Tran with an investment of $10 million annually from local taxpayers.
This year C-Tran is asking voters for an additional .1% increase in sales tax to pay for Bus Rapid Transit
(BRT) and Light Rail Transit (LRT). If passed, voters will be investing in C-Tran by an additional $5
million per year. Passing this year’s Proposition 1would effectively give C-Tran a $15 million annual
revenue increase in just over one year.
Will that $15 million be enough to sustain current levels of bus service, BRT, and LRT?
C-Tran has provided that answer. And that answer is No.
Their current financial plan (http://www.c-tran.com/assets/HCT/HCT_System_and_Finance_PlanFinal.pdf) includes three different scenarios (“optimistic”, “pessimistic”, and “realistic’). Each of these
scenarios shows the following:

C-Tran will come back to voters as early as 2019 and ask for an additional .2% (or $10 million +)
sales tax increase (see Page 33 of their plan).

Even with $10 million in annual sales tax increases last year, a proposed $5 million in annual
sales tax increase this year, and an additional $10 million in annual sales tax increase planned in
2019 (a total of $25 million per year), all of C-Tran’s financial plans show the Agency operating at
a loss (i.e. expenditures will be more than incoming revenue), requiring them to deplete cash
reserves (see Pages 37 – 42 of the plan).
Some may say these are “doomsday” or “worst case scenario” projections.
But, consider this: during 9 of the last 10 years (2002-2011), C-Tran has been unable to sustain profitable
operations. C-Tran has shown significant net losses on the operation and maintenance of their current
levels of bus service. In fact, in a year in which they received a nearly $10 million dollar increase in
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C-Tran OpEd October 2012
revenue from the passage of a sales tax initiative (2006), they were only able to eke out a $1.6 million
dollar net income.
C-Tran may claim that I am being unfair in my analysis because I am not including the grant revenues
they received in each of those years, which appear to “alleviate” these losses on their income statement.
However, let’s be clear. Those grant revenues were strictly for purchases of capital assets (e.g. new
buses). Those grant revenues are separated from the rest of C-Tran’s operating results for a reason: so
that the reader of the financial statement (i.e. you, the investor) can understand the revenue and
expenditures related solely to the operations of the Agency. And those numbers are clear: C-Tran
continually operates at a loss.
C-Tran may also claim that I am being unfair in my analysis because as a result of the 2006 sales tax
increase they were able to “bring back” services that had previously been taken away. Even with a
restoration of services and an extra $10 million per year, why did C-Tran consciously decide to operate at
a loss?
C-Tran has claimed that because of their large cash reserves and lack of long-term debt that they have
been a “pay as you go system.” An observer during a recent community event made the following
comment, “C-Tran is a pay as you tax system.” His observation is correct. A pay as you go system
ensures that an agency maintains operations with current levels of revenue, and expenditures that do not
exceed that available revenue. C-Tran’s entire future financial plan hinges on its ability to tax voters now
and in the future. Even with a 2011, 2012 and 2019 tax increase, C-Tran’s own financial plans fail. And
when those plans fail, C-Tran will be forced to come back to the voters yet again.
Tiffany R. Couch, CPA/CFF, CFE is Principal of Acuity Group, PLLC. A Vancouver, Washington based
forensic accounting firm. She can be reached at [email protected]
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