Portland, Ore.-based TriMet unveiled a proposal to close the $17 million shortfall in its upcoming Fiscal Year 2013 budget. The shortfall had been projected to be between $12 million to $17 million, but the agency is budgeting for the higher amount as arbitration on the union contract has been delayed again. The shortfall results from the continued recession and slow recovery, an anticipated cut in federal funding and costs associated with an unresolved labor contract.
The shortfall is part of the agency's Fiscal Year 2013 operating budget that begins July 1, 2012. TriMet's Fiscal Year 12 operating budget is $444 million. With employment and wage growth stagnant, TriMet expects to receive about $3 million less in payroll tax revenues than previously anticipated.
TriMet receives $40 million to $45 million in federal funds for annual preventive maintenance. There is significant uncertainty in the federal budget, including the continuation of that funding level. TriMet is estimating a cut of $4 million.
The agency is working to bring the union contract in line with revenue growth and make it financially sustainable. The contract expired in 2009 and both parties are now heading to interest arbitration scheduled for May 2012. A recent Employee Relations Board (ERB) decision removed certain cost-saving proposals from the agency’s final offer. The ERB decision adds $5 million to $10 million to the FY13 budget shortfall, an amount that grows significantly in future years.
TriMet GM Neil McFarlane launched the FY 2013 budget process in late October, three months ahead of schedule, to have more time to develop options to deal with the shortfall. This included creating a Budget Task Force to provide him with recommendations on budget choices and creating an online survey to solicit feedback from the public. The feedback from the Budget Task Force and the online survey helped the agency narrow down its options for closing the budget gap.
The initial proposal totals $17.7 million in savings, including $500,000 in internal efficiencies (program cuts and layoffs). The proposal also includes fare increases and changes to the overall fare structure, the elimination of the Free Rail Zone and service cuts. Any changes to fares and service would take effect in September 2012.
TriMet is proposing to eliminate the fare zones and move to a flat fare system, generating $9 million. The zone system was created 30 years ago to charge for distance-based trips that typically started in the suburbs and ended in downtown Portland. It kept fares lower for minority and low-income riders who lived in the central city. Since that time, travel patterns have shifted from downtown to throughout the region, and demographics have also changed with most minority and low-income riders living further away from the central city and making longer trips.
The benefit of a flat fare system makes it simpler for riders and makes the bus and train transfer times the same (currently a train transfer is valid longer than a bus transfer). Riders would purchase either a One-Way 2-Hour Ticket or a Round-Trip Day Pass that provides unlimited trips on buses, MAX and WES Commuter Rail. This change will also help low-income and minority riders who typically buy single fares that are not discounted, and who ride more in off-peak hours and transfer more often.