Project Connect is in serious danger. The coronavirus has jeopardized every resource needed to build the two light rail lines and many other transit improvements the project envisions. Notably:
Attention. It’s all devoted to the virus, both at City Hall and among the public. Many of the leaders, activists and donors who are key to a successful transit referendum this fall aren’t thinking in the long-term right now.
Money: Sales tax revenue, which makes up the great majority of Cap Metro’s funding, has plummeted. The federal stimulus bill approved last week provided $25 billion to shore up transit agencies, off which Cap Metro is getting $104 million. According to Cap Metro CEO Randy Clarke, that money is simply to help the agency keep services afloat through the end of the year. We’ll see whether that is enough, but there is certainly the prospect that the severe damage to sales tax revenues will continue into next year and put current services at risk.
People are also going to have much less money. The idea of paying for Project Connect entirely with a tax rate election (rather than general obligation bonds) was politically dubious a month ago. Now asking for property owners, a significant percentage of whom are likely facing foreclosure due to lost jobs/income, to approve even a small tax increase (1¢ or 2¢) may be tough. Especially since the drop in property values may prompt the city, county and school district to ask voters to approve other tax increases just to keep basic services afloat.
The federal government may be our only hope
Project Connect has always been premised on major federal support. The general assumption is that the Federal Transit Administration would pay for 40% of the cost of the rail system. However, in order to qualify for those funds, we’d have to prove we have the ability to not just cover the rest of the capital costs but that we have a permanent revenue stream to support operating costs. Unfortunately, we can’t use GO bonds to pay for operating costs. Hence the tax rate election idea.
If we were to assume that nothing changes in terms of federal support, my recommended approach would be to ask for as small of an immediate tax increase as possible and then to fund whatever you can with GO bonds. Yes, those eventually lead to tax increases too, but not until the city begins selling the bonds and spending money, much of which is years away. It’s essentially the city’s version of deficit-spending.
But perhaps amidst the greatest economic crisis since the Great Depression, the rules will change. Trump has floated the idea of a giant infrastructure bill to further stimulate the economy. The good news is that Congressional Democrats already have a $760 billion infrastructure plan that they introduced in January. It includes $105 billion for local transit agencies.
With that kind of increased funding available for transit, are the feds still going to ask local governments to raise taxes to qualify for it? That’s not very stimulus-y.
In fact, now Trump and Democrats are talking about something even bigger –- maybe $2 trillion. Mitch McConnell isn’t happy about it and Congressional Republicans are sounding the alarms about Democrats using this as an opportunity to accomplish long-term environmental objectives, but as the economic crisis continues, the pressure on them to pump more money into the economy will only increase. Nancy Pelosi knows this.
Trump, of course, couldn’t care less about investing in transit. He couldn’t care less about any of the details of the stimulus package. But that’s the good news. It means he’ll sign anything as long as there’s a big number attached to it.
Austin as we know it wouldn’t exist if not for the largesse of the federal government during the Great Depression. Local leaders, notably former Mayor Tom Miller and a young congressman by the name of Lyndon Johnson, maneuvered to get New Deal funds to realize the decades-long goal of building dams to control the seasonal floods that had been such a big constraint on the city’s growth. The Mansfield and Tom Miller Dams put Austin on an entirely new trajectory, allowing it to grow into the major city it is today. They also created thousands of jobs.
Perhaps 80 years from now we will say something similar about the Great Coronavirus Crisis of 2020. How local leaders seized the opportunity to transform Austin’s dangerous, congested, sprawling infrastructure into the safest, greenest and most equitable transportation system in the Sunbelt.
(We have the New Deal to thank for many of our most treasured local public assets. Here’s a list.)
This article comes from the March 30 edition of my newsletter.
The coronavirus may very likely be the knock-out blow to long-struggling local media outlets that depend on ad revenue.
Let’s start with the paper of record, the Austin American-Statesman. After shedding dozens of positions over the years via buyouts, the Statesman was purchased in early 2018 by GateHouse, the largest newspaper owner in the country, whose profit model is based on gutting local papers. Late last year, GateHouse acquired the second largest chain, Gannett, and is now operating under the Gannett brand.
From the New York Times today:
You could, this Sunday, purchase Gannett, the biggest newspaper chain in the country, for a mere $261 million — about a quarter of what Michael R. Bloomberg spent on his presidential campaign.
And (Elizabeth) Green, a founder of the nonprofit education news organization Chalkbeat, is one of the few people who may be able to raise the money to pull off a deal like that.
But she quickly realized that Gannett wasn’t worth it: Buying it would mean signing up to pay off a high-interest loan from a giant New York private equity firm and relying on an advertising business model that may be in its death throes because of the coronavirus.
Indeed, I had already begun writing this article when it was reported that Gannett will require any employee making over $38,000/year (that likely includes every Statesman reporter) to take three weeks of unpaid furlough over the next three months.
The ad-based revenue model that used to prop up local papers has been eroding for 20 years. The reason they succeeded for decades was simple: there was no competition. Where else would a local car dealer advertise other than local media? Where else but the classifieds section of the local paper would a landlord place an ad for a vacant apartment?
Craigslist completely destroyed the once-profitable classifieds business and the broader internet opened up new advertising opportunities that local media couldn’t compete with. Sure, local papers sell online ads, but they don’t get anywhere near the money they used to get for ads in print.
Many of the local businesses that continued to advertise in local print –– local retailers, local bars and restaurants –– were just dealt a potentially fatal blow by the coronavirus. Whatever margin local media was operating on before will likely evaporate.
It’s well-established, for instance, that the Austin Chronicle, which has remained a much thicker paper than many of its peers in the alt-weekly world, has stayed alive in recent years due to the largesse of its founders, Nick Barbaro and Louis Black. Both men were made rich by SXSW, and have used their fortune to keep the lights on at an unprofitable enterprise. The Chronicle has also asked readers for donations, an unusual step for a for-profit publication.
I don’t know what the implications of SXSW’s cancellation in particular has on Barbaro or the Chronicle, but it’s likely that the closure of local retailers and eateries will prove devastating to the paper. The first paper where my work was ever published, Isthmus, an alt-weekly in Madison, Wis., announced that it would “go dark for an undetermined period of time due to a dramatic drop in advertising.
The death of the advertising model does NOT have to be the death of local news. At least not in Austin. Strong news reporting –– in many cases better than what the ad-based model provided –– can be supported through philanthropy and/or subscriptions.
The philanthropic model is best-exemplified by the Texas Tribune, which raises money from donors large and small and makes money by hosting events. KUT, like other public radio stations, is also funded mostly through donations as well as some public funding.
The Austin Monitor and the Texas Observer feature a blend. Both are nonprofits but they also sell subscriptions.
And then, of course, there’s this newsletter, which is funded entirely through subscriptions.
I’m fairly optimistic about the long-term future of local media in Austin. Not only is it a large and growing city, but it has a large population of highly-engaged people who have both the interest and the mean$ to support nonprofit or subscription-based media. I am much less hopeful that quality media will survive in poorer communities, including some large cities.
(To be clear, I don’t expect any of this to serve as much consolation for the many journalists who are looking ahead at pay cuts and layoffs. I don’t want to see any current publications fail and I very much encourage employees of local media outlets to unionize so that they have a seat at the table during the tough times ahead)
In this context, my own contribution to local news is limited by the fact that one person only has so many hours in the day to work, especially when I’m trying to take care of a 1-year-old.
However, my hope is that in the coming months the subscriptions will continue to grow and I will be able to devote myself to this project full-time. I’ve also begun to consider ways that I can offer the product at free or reduced rates to those for whom $10/month or $100/year is a significant burden. One idea that a reader shared is allowing subscribers to pay a little extra for their own subscription (perhaps $1/month or $10/year) to subsidize subscriptions for others. If you have other ideas, feel free to share.
The breakneck pace at which this crisis has unfolded is astonishing. Here’s a timeline.
March 4: In response to concerns about SXSW, Mark Escott, interim director of Austin Public Health, says there is “no evidence that closing SXSW is going to make the community safer” and said “the threat of community spread is low” in Austin
March 6: Mayor Steve Adler declares an emergency that cancels SXSW
March 7: Adler, Travis County Judge Sarah Eckhardt and Kirk Watson urge Austinites to support businesses impacted by SXSW’s cancellation by going out to bars, restaurants and live music venues. (The video has since been taken down from all of their Twitter feeds)
March 10: Escott announces that events over 2,500 people will be subject to closure if they cannot present satisfactory plans on how to mitigate the risk of infection. However, he tells City Council members that there was no reason to discourage people without symptoms of going out to bars and restaurants since there was “no local spread.”
March 11: Escott announces new measures aimed at protecting infection at nursing homes and emphasized that those under 50 have very low risk of dying of the disease.
March 13: Austin has its first two confirmed cases of COVID-19. Escott says Travis County is now at Phase 3 of the COVID plan, which describes confirmed cases but no person-to-person spread.
March 14: Adler and Eckhardt announce ban on gatherings of more than 250 people.
March 17: Adler announces closure of bars and dine-in restaurants and bans gatherings of more than 10 people. Austin Public Health says the area is now at Phase 5, indicating “sustained community spread”
March 19: Travis County up to 41 positive cases. Far more are likely out there but haven’t been tested.
March 21: Up to 61 confirmed cases.
Most of us are not yet in a position to judge the actions that public officials took in recent weeks based on the information they had at the time. However, this sequence of events, which mirrors the rapidly changing response at the national level, illustrates just how hopeless we may be at predicting the full impact of this virus on our health care system and economy. As hungry as we may be for reassurance from experts that this crisis will soon pass, I would be wary of anybody who expresses confidence about what will happen next.