• Daily Camera:  RTD holds firm on bus route cuts in Boulder County; and,
• Denver Post: RTD board approves transit cuts but keeps some service for blind riders.

The Daily Camera article, in particular, carries two quotes from my comments during our discussion regarding the service cuts.  Specifically, it notes that I said, “[O]ur hands are tied” and “We find ourselves with our backs against the wall.”  All that is true, but it is important to clarify the context for these comments to fully understand the predicament that the RTD Board wrestled with during last night’s debate.

From the very outset of our conversation regarding the 2012 budget, it was clear that RTD was facing a very challenging year.  Staff explained that we could only balance the 2012 budget with either significant fare increases, service reductions or a combination of both.  Since we raised fares almost every year I have been on the RTD Board prior to 2012 and further fare increases would seriously jeopardize access for the transit dependant, let alone drive away discretionary customers, the focus for balancing the 2012 budget fell on service cuts.

This is where I get on my soap box regarding RTD finances.  As I have explained in previous posts, RTD is mired in a funding model that primarily ties our fate to sales tax, a revenue source that is highly volatile and has very little connection to the demand for transit service.  Thus, when the economy is in the tank and sales tax receipts drop, RTD is forced to cut service (or raise fares) during a period when the public often is more heavily dependant on transit and has less capacity to absorb increased transportation costs.  

The goal of the Long Range Fiscal Sustainability Task Force that I chaired this year was to identify operating efficiencies and revenue enhancement that would provide RTD with a more diverse financial base.  The Task Force discovered many promising opportunities, as outlined in its report (which you can read here: Fiscal Sustainability Task Force Report).  As I said last night, I will be riding staff to make sure we follow-up on all of these options.  We need to break out of the paradigm that limits our budgeting options during poor economic times to either cutting service or raising fares!

Unfortunately, most of the opportunities that the Fiscal Sustainability Task Force identified will take a year or more to implement due to the need for legislative authorization and/or further policy analysis.  So, for 2012, we were stuck with limited choices for balancing RTD’s budget.  After holding down employee costs and other discretionary spending, the final budget gap was roughly $10 million, a wide chasm representing about a 9 percent cut in RTD transit service.  It was in this context that I spoke last night of having our hands tied and our backs against the wall.

I could wax eloquently regarding the undeserved hit that Boulder County is taking in the service cuts that RTD staff ultimately proposed to cover the $10 million budget gap.  As I said last night, the staff proposal has terrible consequences for routes that are both heavily patronized and highly popular.  This includes reduced service on route 203 and the BOLT as well as complete elimination of the Superior call-n-Ride and the CC route.  Each of these adjustments is painful and I share many of the sentiments that my constituents offered in opposition, either through their direct e-mails to me or in their public hearing comments.

Of course, my fellow Board members and their own constituents offer similar appeals on behalf of service cuts in their respective districts.  In truth, when you are staring down the barrel of $10 million in service cuts, everyone feels the pain and staff did not spare any corner of the RTD district in its recommendations concerning the most appropriate adjustments to meet the budget target.  I felt fortunate that we were able to reverse a few initial staff recommendations for cuts on such routes as the SKIP and elimination of the DD routes.  Those bright spots aside, it was impossible to attract support from my RTD Board colleagues for sparing further routes in Boulder County while they accepted painful service cuts in their own districts.

As other Board members noted, last night’s vote was one of the most painful they ever cast.  Knowing that we were upholding our fiduciary responsibility to balance the RTD budget did not make it any easier to accept.  The charge now, as I suggested above, is to immediately get to work on building a more stable financial footing for RTD so we can begin to restore the service cuts we were forced to make last night and to meet the growing demand for transit service across the Denver region.

You can read about my initial response to the proposed service cuts in the Denver Post coverage from a recent RTD Board meeting:  “RTD staff backs bus, light-rail cuts to close budget deficit“.   Fundamentally, as I said in the article, the service reduction proposal is the “most powerful rationale for making (RTD’s) revenue stream more sustainable.”  That is why I spearheaded the effort to identify operating efficiencies and revenue enhancements through the Long Range Fiscal Sustainability Task Force.  The Task Force recommendations (which are available here: Sustainability Task Force Report) provide a host of options that the RTD Board and staff are assessing for implementation over the course of the next few years.

In the meantime, as RTD confronts an immediate $12 million funding gap, service cuts and fare increases are the only two significant budget-balancing options.  I have received a great deal of comments regarding the service cuts that RTD staff is proposing and share your concerns about protecting the Boulder area’s high performing local and regional routes.  We must ensure that RTD truly is making the best use of its limited transit dollars, as I explained in a recent Daily Camera article: “Boulder fears ‘profound impact on transit’ — including Skip, Jump routes –from RTD cuts“. 

In the coming weeks, I will be making the case for a more targeted focus on service optimization in the face of necessary service cuts.  I also will work with my RTD Board colleagues to identify funding which will help us maintain the most possible service during these challenging economic times.  Your continued input is appreciated during this analysis period.

This Monday, Sean Maher wrote an excellent piece in the Daily Camera, “FasTracks needs more fuel“.  While Sean wants to make sure that RTD is accountable for its commitments, he argues for a vote on the full 0.4% sales tax increase in order to finish the FasTracks buildout by 2018.  “2042 is just too long to wait,” he concludes, which is the time it will take to complete the FasTracks program without additional resources.

Meanwhile, the vast majority of mayors from around the region expressed similar support for the 0.4% sales tax increase.  They were responding to polling results that indicate higher public approval of a tax that will complete the FasTracks system in a reasonable time period.  According to a story in the Denver Post, which you can access here, pollster David Kenney found that voters just want to be told “what it costs to get it done while I’m alive.”

Finally, today I had the opportunity to sit on a panel during a meeting of the US36 Commuting Solutions organization with Louisville Mayor Chuck Sisk and Broomfield Mayor Pat Quinn, along with RTD Board Chair Lee Kemp, for a discussion regarding the potential FasTracks ballot initiative.  As the Broomfield Enterprise well captured in a story that you can read here, Mayors Quinn and Sisk did not shy away from their clear advocacy for a 0.4% increase.  In the words of Mayor Sisk, “Four-tenths is what we support . . . I will be critical of the (RTD) board if they don’t step forward and get this done.”

All of this is great input for me and my RTD Board colleagues as we weigh our desire to complete the full FasTracks system as soon as possible against the public’s appetite for a sales tax increase.  Getting that balance right is critical because, in the words of RTD Board Chair Lee Kemp, “We only get one shot at this.”

In summary, their initial recommendation is a modest increase in the FasTracks sales tax of 0.2%.  With public support of this tax in 2011, RTD staff anticipates that it could complete the full FasTracks program by 2027.  Unfortunately, due to operations costs associated with the Northwest Rail line, Boulder County’s rail system would bring up the rear under staff’s recommendation.  

As RTD’s representative for the Boulder County area, I find the timing for completion of the Northwest Rail under a 0.2% sales tax increase scenario quite troubling.  That is why I have been pushing staff for a full evaluation of the 0.3% percent scenario, which they failed to do in their initial analysis, and I also continue to consider the option of seeking a 0.4% increase.  I note that the FasTracks Committee of the Metro Mayors Caucus has expressed similar sentiments:  Metro Mayors Task Force Recommendation. 

The RTD Board is expected to make a final decision regarding allocation of the remaining FasTracks dollars and a potential future sales tax hike at the end of this month.  These are pivotal matters for the fate of the FasTracks program, so now is the time when I need to hear from you.  Please let me know where you stand on these issues so I can have the benefit of your opinion when I cast my Board vote.

I want you to be aware that RTD staff has offered their recommendations for distribution of the $305 million in remaining FasTracks dollars.  The full recommendation is available at the following link:  2011 Annual Program Evaluation.  The gist of the staff proposal is to allocate a majority of the funding in $90 million chunks, toward the Us 36 BRT system, the North Line and I-225.  The Northwest Rail Line would receive an infusion of $15 million to complete station improvements in Longmont that also will accommodate bus service.

The 2011 Annual Program Evaluation also features three sales tax increase options, each with different implications for the completion of all transit lines in the original FasTracks program.  An increase of 0.4%, for example, will complete the full program by 2019, whereas we will have to wait until 2035 to see the full system build-out if we only get a 0.1% increase.  Staff will offer a more detailed explanation of these packages at a Board meeting on January 25 along with their preferred alternative.  Obviously, though, the voters will have the final say on this matter, assuming the Board decides to pursue one of the proposed sales tax increase options.  

So, the initial recommendations and options are on the table.  Please continue to offer your input.  In the meantime, I will leave you with one other interesting item which is driving some of my thinking on future FasTracks planning . . . a map that the US 36 Mayors and Commissioners Coalition prepared that highlights the severe inequity between transit infrastructure investments in the southern part of the Denver region as opposed to the north, including Boulder County: Funded and Unfunded Transit Corridors.  Have a look at this yourself and you can probably understand why I will be fighting even harder to secure financial support for the BRT System and the Northwest Rail Line.

In total, RTD’s base annual bus service hours have dropped about five percent since 2008, from a high of 2,823,000 to the current level of 2,682,000 hours.  The situation is worse if you consider that these cuts would have been graver without some significant reductions in other operations expenses, like delayed maintenance and staff salary freezes, that can not continue much longer.  The upshot is that there is less transit service on the street to meet growing regional demand.

The major culprit in these base service cuts has been the reduced revenue RTD’s sales and use tax is generating.  The ”Great Recession” certainly has played a role in the sales and use tax revenue decline.  However, there are other factors, such as the consumer trend toward nontaxable internet commerce, the aging metro-Denver population, and slowing regional development.  All have taken a bite out of a revenue source that comprises roughly 60 percent of RTD’s operations budget. 

The full dimensions of the financial challenge RTD faces hit home for me this year as RTD’s financial team presented data which identified a projected hole in RTD’s budget of $34 million in 2012, rising to $112 million by 2016.  Of course, RTD can not run with an annual operations deficit.  Thus, the huge future budget gap represents the potential of major additional cuts, rising from about 9 percent in 2012 to 26 percent in 2016, in RTD operations expenses (i.e. further reductions in transit service).

Staring this monstrous financial hole and the implications for regional transit service in the face, I set out in partnership with Chair Lee Kemp and other concerned RTD Board members to begin righting RTD’s financial ship.  The following is a memorandum that we presented to RTD staff and our Board colleagues which outlines the challenges and institutes a Long Range Fiscal Sustainability Task Force: Long Range Fiscal Sustainability Task Force.  In summary, the goal of the Task Force is to overcome the financial hurdle I outlined above through recommendations that include both operations efficiency measures as well as potential sources of future revenue.  One ground rule: Nothing is sacred in the Task Force deliberations, as we will explore every possible solution, from the conventional to the most creative.

With approval of the RTD Board, the Task Force has been meeting since early November.  The group is anchored by a mix of citizens with a broad range of public and private financial experience, as well as individuals with backgrounds in the transportation and business sectors.  RTD Board members and staff round-out the Task Force group.  Together, there is a broad diversity of perspectives that the Task Force is bringing to bear toward addressing RTD’s financial challenges.

To date, after just three meetings, the focus has been getting the entire Task Force on the same page with respect to the problem we are attempting to address.  Below I have attached some of the excellent RTD staff presentations that outline the dimensions of the financial challenges RTD faces, along with the agency’s basic expenditure and revenue profile.  Also, to put RTD’s situation in context, RTD staff made clear that we are not alone amongst national transit agencies in our financial difficulties, with some being in much worse shape.  So, the successes we have in our Task Force work likely will help to shape similar problem-solving efforts across the country. 

With that, I invite you to stay tuned to this blog for updates on the work of the Long Range Fiscal Sustainability Task Force.  I believe the Task Force, with support and engagement of the RTD Board, is taking a critical step forward on behalf of a strong transit system for the Denver region.  As ever, your input on these Task Force efforts is appreciated.

Transportation Financial Overview

RTD Expenditures

RTD Revenue

First, the Board needs to allocate an anticipated $305 million in remaining funds from the innovative public-private financing, construction and operations arrangement for the two new rail lines that will serve Arvada, Wheat Ridge and Denver International Airport.  One scenario involves completing the U.S. 36 high occupancy vehicle lanes which will build out the bus rapid transit (BRT) system between Denver and Boulder. I urge you to review the table of possible investment options that you can access here, FasTracks – Completing the Vision, and let me know your thoughts on the best use of the remaining FasTracks dollars. 

Another decision the RTD Board will again wrestle with is whether to ask voters to approve additional financial support to overcome the roughly $2 billion funding gap to complete the full FasTracks system within a reasonable time period. The various options under consideration, which are included in the document I posted above, include sales tax increases ranging from .1% to .4% (10 cents to 40 cents on a $100 purchase). Each tax increment has a significant impact on the speed of our future build-out plans, so it is important for me to hear how aggressive you want RTD to be in its pursuit of additional tax dollars to accelerate FasTracks construction.

RTD staff will present its recommendations in early January and will be seeking final action at the RTD Board meeting in February.  I will update this blog as new information becomes available.  But, again, please make sure to share your thoughts with me throughout the course of deliberations during this critical phase in the FasTracks program.

The way things are falling into place, though, it is clear that heading to the ballot box this year would severely handicap a favorable voter response.  It is unlikely that public confidence in the economy, a key success factor for votes on infrastructure initiatives, will turn around by the end of the year.  This also does not appear to be a good time to secure financial contributions toward another successful FasTracks campaign.  

In a signal that others recognize these same barriers, the Denver Post covered the comments of my fellow Board members regarding a potential 2010 election, http://www.denverpost.com/ci_14290768?IADID=Search-www.denverpost.com-www.denverpost.com, and followed-up with a editorial the next day, http://www.denverpost.com/ci_14306877?IADID=Search-www.denverpost.com-www.denverpost.com.

Delaying a future FasTracks vote likely will lead to increased costs for the program, as we will not be in a position to capitalize on the low construction rates available during this recessionary period.  Phil Washington also reports that there is a risk RTD will lose some of the talented staff it attracted due to the excitement of the FasTracks program.  These are all negative consequences of a delay in going to the voters, giving further weight to the gravity of this difficult decision.

The RTD Board is scheduled to make a formal decision regarding a 2010 vote in the next two months.  In the meantime, you can see the balance of issues at play and how I am leaning.  It would be great to hear your perspective on this matter as I move toward a final position.

That is the best you can probably say about the 2010 Annual Program Evaluation (APE).  This document, which RTD prepares annually for the Denver Regional Council of Governments, provides the most recent snapshot of the financial picture and technical adjustments to the FasTracks program. 

You can access a summary of the 2010 APE document at the following link: http://www.rtd-fastracks.com/media/uploads/main/1_5_10_APE_Presv_Final.pdf. 

Most critically, the new APE finds that costs for the entire FasTracks program have dropped $400,000, to a total of $6.5 billion.  This cost reduction is due primarily to lower material prices and more refined system designs. 

Unfortunately, sales tax revenue continues to drop, as well.  The new estimates for the life of the program fell another $1.3 billion.   The resulting gap between revenue and costs for the FasTracks program is about $2.4 billion, $200 million more then previous estimates.

What makes this year’s APE particularly noteworthy is the great effort RTD staff made to test its financial numbers.  Specifically, you may remember that I previously advocated for a new look at RTD’s sales tax projections.  Staff responded by recruiting groups of subject-matter experts, in both construction cost inflation and sales tax revenue modeling, to scrutinize RTD figures.  As a result, this year’s APE numbers reflect the input from some of the area’s best forecasting minds.

So, as you can see, we still have a difficult financial hurdle to overcome as we work toward build-out of the FasTracks system . . . but at least there is reason for greater confidence that this is the hurdle, as we now have much greater confidence in the financial picture for the full program.

Specifically, proponents of the beltway are asking the Denver Regional Council of Governments (DRCOG) to add a significant roadway link to the Regional Transportation Plan (RTP), the Jefferson Parkway.  Getting the Jefferson Parkway in the RTP is the green light the project needs to begin moving toward implementation.  This includes securing the necessary financial support for what is designed to be a privately funded toll road.

You can learn more about the Jefferson Parkway proposal, including the many concerns communities like Golden and Boulder are raising, at the following links:  http://blogs.westword.com/latestword/2009/12/jefferson_parkway_a_weird_disc.php and http://www.denverpost.com/search/ci_13895972.  It was many of these same concerns that drove me to testify at the DRCOG public hearing regarding this matter.  Most troubling to me, the Jefferson Parkway will create the need for about $1 billion in additional roadway improvements, beyond what the private sector is offering to handle.   These are unfunded transportation needs that will compete with other critical projects, such as the HOV lanes for US 36 that are the foundation of bus-rapid-transit service between Boulder and Denver.

You can read my public hearing testimony at the following link:  Jefferson Parkway Comments.  The DROCG Board will issue a final decision regarding the proposal to add the Jefferson Parkway to the RTP at its meeting in January.  I am hopeful that they will send the beltway proponents back to the drawing board.