With the late afternoon sun streaming through the windows, three passengers sit quietly as the Route 5 bus heads south from downtown Killeen.
In the second to last row, Ashley Harbour, 42, shifts the bag in her lap and looks out the window as the bus passes beneath Interstate 14.
“I’m just happy I’m not walking today,” Harbour said, laughing. Harbour and her husband share a car and take turns riding the bus during the week. Sometimes they will walk the mile and a half to the convenience store for a pack of cigarettes to avoid spending the gas.
During the summer months, with temperatures reaching up 111 degrees in July, Harbour said walking even short distances is difficult on Killeen’s often shadeless sidewalks.
“It can be a pain,” Harbour said. “That’s what’s good about a city bus, I guess.”
Harbour and the roughly 18 passengers per hour who ride Route 5 on The Hop, Bell County’s public transportation system, could be looking for new rides around town if proposed cuts to the service are made in fiscal year 2019.
The Hill Country Transit District, a political subdivision of the state that operates The Hop, is proposing eliminating Route 5, as currently constituted, and Saturday service on all routes, if its request for more local funding from area cities — including Killeen, Harker Heights, Temple, Belton and Copperas Cove — is not met.
A perfect storm of lean municipal budgets, however, has The Hop walking a tightrope in the coming fiscal year, a district official said.
“(The cities) are really going to have a hard time meeting those requests,” said Darrell Burtner, The Hop’s director of urban operations. “Their budget issues sort of become our budget issues.”
If the public transit district doesn’t get the funding it needs to cover its coming shortfall, it would be required to make the proposed cuts, Burtner said, with no relief in sight in coming years.
This year’s proposed cuts on The Hop have nothing to do with failing ridership, as they did in 2017, and everything to do with a mix of short-sighted decision making and financial changes outside of the service’s control.
In 2017, the district sliced three Killeen routes — 2, 7 and 31 — that historically underperformed the district’s standard of 10 passengers per service hour. In addition, the service constricted its paratransit pick-up “bubble” to within 3/4 of a mile of an established route.
This time around, The Hop is proposing to cut the least active stops on Route 5 and fold popular stops into other existing routes, eliminate Saturday service systemwide, and cut non-peak hour service in Heights and Cove.
Route 5 covers around 12 miles, with a northernmost stop at the Killeen Transfer Station in downtown Killeen, in a geographic area roughly bordered by Hereford Drive to the east, Elms Road to the south and Willow Springs Road to the west.
Route 5 had the third highest passenger figures — 67,514 passengers in calendar 2017 — of the service’s 10 regional routes.
The service’s most used route is Route 4, which makes stops along the Interstate 14 corridor in Killeen.
The Hop, originally created as a volunteer service in the 1960s, is primarily funded by reimbursements from the Federal Transit Authority with a dollar-for-dollar match from local and state resources, including the Texas Department of Transportation, area cities and Bell County, proceeds from a state Medicaid non-emergency transportation contract, and the district’s operational funds.
The service, which has urban and rural divisions, has three Killeen routes and two intercity routes that connect Killeen to Cove and east Bell County. There is an additional route each in Heights and Cove, two routes in Temple, one in Belton and a connector route in east Bell County.
The service is cut into operational accounting “zones” — centered in Killeen and Temple — with city contributions roughly split between the two.
In Killeen’s zone, contributions from Killeen, Heights, Cove and Bell County equate to 5 percent of the zone’s total revenue. The district also receives revenue from its “farebox,” or passenger fees, which cannot be used as part of a local match for federal funding, Burtner said.
The district has an estimated $11.1 million operating budget in fiscal 2019, with a roughly $450,000 projected shortfall.
According to Burtner, contributions are determined by percentage of ridership from cities’ residents.
In the past, the cities’ cost per rider has floated between $1 and $2 per rider. In fiscal 2019, the district is asking cities for more than triple their contribution to avoid the cuts in service.
In Harker Heights, where the city contributed $43,235 in fiscal 2018, the district is asking for $163,154 in 2019 — a 277 percent increase.
The district made its new funding request to the Cove City Council on Thursday and is expected to make a similar presentation to the Killeen City Council at a workshop Tuesday.
A significant portion of The Hop’s funding comes from a “fee-for-service” contract with the Texas Health and Human Services Department to provide non-emergency pick ups for Medicaid recipients.
Before 2014, the district’s payments from the state were high enough that city contributions largely stayed flat as the system expanded, Burtner said.
“We contracted directly with (the state), and we made plenty of money off of that to reinvest back in the system,” Burtner said.
But in 2014, the state department overhauled its medical transportation model and contracted with Atlanta-based LogistiCare Solutions, a transportation and integrated health care program broker, to manage the state’s non-emergency transport portfolio.
LogistiCare now manages Medicaid non-emergency transport in six regions covering 115 Texas counties. According to Medicaid.gov, there were 4.35 million Texans enrolled in Medicaid in May 2018.
Adding a go-between from the state to the district, Burtner said, caused revenues to decline as LogistiCare “tightened the screws” on the district’s bottom line. In 2014, the district’s Medicaid contract was worth $3.78 million in revenue. By fiscal 2018, the revenue was $3.15 million, according to district figures.
“Any time you put a middle man into a situation like that, they need to make money,” Burtner said.
LogistiCare declined to comment for this article.
In response to the problem, transit district officials elected to use reserve funds to cover the shortfalls as expenditures increased systemwide — hoping funding would even out over time.
Burtner said that never happened.
“In 2014, we didn’t know how big of a hit it would be,” Burtner said. “In retrospect, I think we wish we had asked for a bit more money (from the cities) back in 2014.”
By continually dipping into its own pot, the district’s reserves shrunk from $4.9 million in fiscal 2014 to an estimated $1.9 million by the end of fiscal 2018.
Burtner said if the district continues to pull money out of its reserves, it will approach the $1 million threshold — the point at which the service would have trouble paying for operations as it awaits federal reimbursement from the FTA, which makes up about 55 percent of the revenue in the Killeen zone.
“It becomes a cash-flow issue,” Burtner said. “We really need to maintain roughly $1 million to be able to float services for as much as 12 months (until we are reimbursed).”
So — to avoid that fiscal cliff — the district is asking more from the cities on its system.
Cities on the hook
Burtner said the twin impact of decreased Medicaid revenue and constricted area city budgets has the district trying to pull water from an increasingly dry well.
“We’ve just gotten to the point where we can’t pay for it out of our reserves, and we have passed that cost onto the cities,” Burtner said.
For area cities scrambling to balance their own budgets, asking for an additional $335,700 per year — in Killeen’s case — could be a non-starter.
Killeen City Manager Ron Olson declined to comment before The Hop’s presentation to the Killeen City Council on Tuesday.
Among some self-inflicted wounds, cities bordering Fort Hood are dealing with their own uncontrollable financial crisis as an exponential increase in state-mandated 100 percent disabled veteran property tax exemptions has stripped millions from area budgets and limited cities’ abilities to cover their own expenses.
In Killeen, the projected loss of property tax revenue in fiscal 2019 is $3.5 million from the 100 percent exemption alone. With other disabled veteran exemptions accounted for, the loss is closer to $4 million.
The city’s total operational budget, which pays for services like public safety and street maintenance, was $82.1 million in fiscal 2018.
Killeen was also burdened by short-sighted decision making in recent years, according an outside management audit completed in August 2017. The findings of that report showed the city had a history of deficit budgeting and overspending, and lax financial controls.
In Heights, which has not had the well-publicized budget concerns of Killeen, the 100 percent exemption is having a similar but proportionally greater effect. Heights is projected to lose nearly $1.5 million from the 100 percent exemption in fiscal 2019 — a 40 percent increase from 2017.
Unlike Killeen, which is projected to receive around $1.3 million in disproportionate impact aid from the state for honoring the exemptions — Heights receives no reimbursement because it does not directly border Fort Hood..
The city of Heights’ total operational budget was $20.4 million.
“In some ways, you can look at it like a perfect storm,” Heights City Manager David Mitchell said Thursday. “We are in a more unique situation than Harker Heights has never been in. I do not see the city fully funding (the district’s) request.”
The city of Copperas Cove and Bell County, which also contributes to The Hop’s budget, are also heavily impacted by the state exemption but do receive some disproportionate impact aid from the state.
All of those factors add up to area governments hard pressed to move funds away from needed expenditures to prop up the regional bus service.
“If cities can’t meet the request, then we would need to lower the level of service they provide,” Burtner said. “There are very legitimate issues with those cities’ budgets.”
With service cuts growing increasingly likely, the district is seeking resident input at a series of public hearings to be held in mid-August.
“It’s an opportunity for us to explain the financial shortfall, and it’s an opportunity for citizens to give us information back on the changes we are proposing,” Burtner said. “We’re hoping people will be able to say to us, ‘that hurts, but I can walk an extra block of two.’ If it’s really hurting them, then we really want to know that well.”
There are five public hearings currently scheduled, in Belton, Copperas Cove, Killeen, Harker Heights and Temple.
Burtner said he hopes the combination of public hearings and discussion with city officials will give the service the information it needs to affect the least amount of riders if the changes are made.
“We really don’t want to cut something that is performing that well,” Burtner said of Route 5. “We’re going to make those cuts only if we have to.”
The Hill Country Transit District is seeking residents opinions about proposed cuts to The Hop transit system. Hearings will be held for this purpose at the following locations and times:
Belton — 5 to 6 p.m. Tuesday at the Harris Community Center, 401 N. Alexander St.
Killeen — 5 to 6 p.m. Aug. 13 at the Killeen Transportation Center, 3201-A S. W.S. Young Drive.
Harker Heights — 5 to 6 p.m. Aug. 14 at the Harker Heights Activity Center, 400 Indian Trail.
Temple — 5 to 6 p.m. Aug. 16 at the Temple Public Library, 3rd floor, 100 W. Adams Ave.
Copperas Cove — 5 to 6 p.m. Aug. 17 at the Copperas Cove Police Department, 302 E. Avenue E.