Cap Metro anticipates gloomy economic picture, more riders

Capital Metro board members have approved a budget with $215 million in revenues for 2009 that includes a small increase in sales tax revenues combined with a sizeable projected increase in ridership.  The budget projects expenditures of $182 million, more than half of that going for labor and benefits.

 

The transportation agency – with a history of a full bank account and empty buses—faces increased ridership at a time when a faltering economy promises to level off if not cut sales tax revenues, which account for three-fourths of Capital Metro’s funds.

 

None of the budget figures account for any changes that might come from ongoing talks between union drivers and mechanics and StarTran, the Capital Metro subsidiary that manages them. Talks are currently underway, but the union has been working for more than a year without a signed contract.

 

Capital Metro Budget Director Peggy McCallum told board members Monday that her office is planning on holding up to 20 percent of sales tax revenues in reserve to cover any budget shortfalls that might occur next year. That concerned Board Member Brewster McCracken.

 

“I’m concerned that we are using one-time funds to balance this budget,” he said. “A lot of this is driven by the fuel situation. And we’re already cutting back on new bus purchases. There’s not a lot of room for expansion in this budget.”

 

McCracken was referring to the agency’s plan to spend some $15 million in capital funds to purchase new buses, rather than using sale tax revenues for the purchases.

 

The 2009 budget is based on the agency’s fixed route services growing 6.11 percent, with UT Shuttle service expected to decrease 2.57 percent. Other draws on the budget will include the start-up of MetroRail in the spring and a decrease in revenues from providing service for special events due to changes in federal regulations.

 

Capital Metro officials are projecting a 7.67 percent increase in ridership to a projected 1.27 million riders in 2009.

 

Projected revenues include $161 million in sales tax revenues and $10.3 million from passenger fares. Other income comes from freight rail (7 percent), grants (9 percent) and investment income (1 percent).

 

Passenger fare revenues are projected to increase from about $13 million to close to $20 million, mostly due to the fare increase to 75 cents. Sales tax revenues, which have grown steadily since 2003, are expected to be flat, with only a 3 percent increase.  

 

On the expense side, fixed route direct costs will total $124 million and MetroRail operations will cost $6.7 million plus an additional $600,000 for fuel costs.

 

Beyond salaries and benefits, Capital Metro will pay $29 million for services, $22 million for purchased transportation services, $24 million for fuel and $9 million for materials and supplies.

 

One of the major drivers in cost increases is diesel fuel, which has grown from a little more than $1 per gallon in 2003 to a projected $3.60 per gallon in 2009, a 360 percent increase.

 

In addition to the $15 million for vehicle purchases, capital projects for 2009 include $4.4 million for freight rail improvements, $2.5 million for transit oriented development and rapid transit projects, and $3 million for accessibility improvements to bus stops. All of the agency’s capital projects are funded with grants and other non-tax income.

 

Board members approved the budget on a 7-0 vote.