Last year I was able to talk about a lot of cost savings in the 2014 Pierce Transit Budget. In 2015 the theme of the budget is “service improvements to weekends” to the tune of about 16,000 service hours (link to TNT article). Weekends were hit the hardest in the last round of cuts to the Pierce Transit system back in 2012. This change represents a 3.7% increase in service. For perspective, it takes about 10,000 service hours to fund one regular 30-minute route per year. If this kind of increase were to continue (which it most definitely will not), it would take till 2025 to get back to where we were in 2008 (~600,000 service hours). The difference between 2008 and today is 150,000 hrs, which is roughly 70% of the service that serves the geographic bounds of the City of Tacoma today. Overall, it looks like we’re at service levels not seen since 2002, when the full effects of I-695 were bearing down on all transit agencies across the state.
CTAG was not briefed about this service restoration prior to it being discussed at the Board meeting on Monday. So in typical fashion, I have a few questions/concerns, and I may get a few things a little off. If my concerns are unfounded then no harm has been done. But as a skeptic and a representative of the ridership, I must recognize that in the past that the public has been burned by creative financing or lofty projections of perpetual sales tax growth that eventually led to extremely painful cuts and two failed ballot measures. I don’t want that happening again.
A word of caution
So I want to caution riders and the general public to understand the true nature of these service improvements, and also to be skeptical of the narrative that says that PT didn’t really need the money. I encourage people to understand what the facts are.
While the addition of the weekend service hours will make mobility easier on Saturday and Sunday starting in 2015 and the trips added to Routes 1, 500, and 402 will address some overcrowding, and latent demand, and I thank the Planning Department for being responsive to the needs of the ridership, the pot of money that these improvements come from is tenuous and I question whether it is truly sustainable in the long term. (* – The increase in service to Route 4 on the other hand is being supported by increases in efficiency, including the conversion from a route-deviated timed-transfer to an on-street transfer with direct routing.)
So here’s how the additional hours were paid for:
- 3 staff positions that were to be added were taken off the table
- The assumption of $5m in long term debt (Pierce Transit has had no debt and no interest installments for some time)
- Continued depletion of the reserve fund
- Increases in the sales tax that met finance projections that were made in July 2014
Pierce Transit’s Financial Plan
What should concern people is that the 2015 Pierce Transit Budget and the Financial Plan till 2020 assumes a more than $62m total drawdown on long term reserves and relies on an eventual return to 6% annual growth in the sales tax by 2020. What if long term growth is only 5.5%? Or 4.5%? At present our reserve fund is more than four times the size it needs to be at $91.8M, but with these financial assumptions by the end of 2020 the operating margin (the delta between the actual reserve and the board-mandated two-month operating reserve) is slated to shrink from $72.7M to only $3.3M. Past 2020, the assumption is that the reserve fund will start growing again. However, the slightest of deviations from this plan below the sales tax projections could put us into trouble in the out years, assuming we don’t make modifications to the capital budget, or find new grant funding or efficiencies, or go out for another ballot measure that passes this time.
Operating expenses appear to be being kept in line at a 4.2% growth rate, which is great. Cost containment in this range is a lot better than it has been in past years. However, what concerns me on the capital side is that the agency’s technology budget (31% of capital expenditure) rivals that of the agency’s allocation for revenue vehicles (40% of capital expenditure). Further review in this area may be warranted.
So my message is, don’t expect this to be a trend. We seem to be getting the hours that staff can justify putting out on the street, but it seems like we’re going to be getting it all in one go, with few expected increases in additional years. If we want additional local service from now on, we will need to pay for it with more route and schedule efficiency, lower capital expenses/more grants, or more revenue authority. My bet is that we will need to demonstrate more efficiency by increasing the number of trips per service hour by reducing dwell times and increasing vehicle speeds, before going back out for more revenue authority. That sort of efficiency has to be demonstrated pretty quickly to go out to the full district, or a buyback program has to be established pretty quickly if we are going to target the core urban municipalities for revenue partnerships.
However, at the end of the day the Board was happy with the configuration of the where the hours are supposed to go, so it appears that there will be an amendment to the budget to add them on early next year.
Read more about Pierce Transit’s Preliminary 2015 Budget, here.