Though a financial audit of the Ann Arbor Transportation Authority’s 2011 finances found that the organization was financially sound, the document alleged that AATA was in violation of federal labor law.

Last week, the AATA released the results of its annual audit conducted by public accounting firm Plante Moran. The audit found the AATA to be in violation of the Davis-Bacon Act, which requires contractors and subcontractors for government-funded agencies provide their employees with pay rates comparable to those of other employers in the region.

Prevailing wage requirements of the Davis-Bacon Act apply to contracts in excess of $2,000. Instead of applying the act to the total work of a contractor, the report alleged that the AATA considered each individual project within a contract separately. Therefore, all vendor payments were under $2,000, relieving contractors from sending their weekly certified payroll reports to the AATA for monitoring of compliance with the law.

Since the AATA failed to review payroll reports from contractors and subcontractors, wage rates were not monitored and therefore wage violations could have gone unnoticed.

The audit recommended that the AATA change its wage reporting process from a per-project basis to a per-contract basis, to better comply with the Davis-Bacon Act.

The report also alleges that when the AATA received certified payrolls for Davis-Bacon Act monitoring, it neglected to compare them with the wages claimed by employers in regularly conducted wage rate interviews required by the act.

AATA spokeswoman Mary Stasiak said she could not comment on violations of the act, and referred comments regarding the violation to AATA controller Phil Webb, who didn’t respond to several interview requests.

Law Prof. emeritus Theodore St. Antoine said he could not comment on the AATA audit specifically, but noted that any employers that do not comply with the act could face repercussions.

“These statutes are usually enforceable in the Department of Labor, and (employers that do not follow the Davis-Bacon Act) can be forced to pay employers their dues; they could be fined for non-compliance,” St. Antoine said.

The Davis-Bacon violation was the only major violation on the report on the AATA’s finances. Stasiak said the AATA was forced to dip into its reserve funds in 2011 — likely due to a decrease in government funding — but still maintained the minimum amount of reserves.

According to the report, the AATA received more than $3 million from the federal government in 2011. The AATA also receives some financial assistance from the state of Michigan through a portion of state gasoline taxes, vehicle-related sales taxes, license fees and other taxes and fees.

The AATA also receives significant funding from Ann Arbor property taxes. Since property values have decreased, the taxes collected are subsequently decreasing, which will impact revenues for next year, according to the report.

“The July 1, 2011 property tax levy decreased 1.2 percent from the July 1, 2010 levy,” the report stated. “Current projections show a further decrease of 1.0 percent in the July 1, 2012 tax levy because of declining property values.”

With fewer funds available through these avenues due to the poor economy, the AATA may see less revenue next year. Stasiak added that the AATA has not been negatively affected thus far, and she does not foresee making any substantial fare increases in the near future.

“There was a certain amount of property taxes that are not going to be collected,” Stasiak said. “It has reduced the amount of taxable revenue collected and has over the past couple of years. It hasn’t affected us at this point; we are still operating and have not had to decrease our services. In fact, we have increased our services this year.”

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