TriMet kicked off its Fiscal Year 2013 budget process three months ahead of schedule to begin developing options to respond to a projected $12 million to $17 million shortfall.

The shortfall is a result of the continued recession and slow recovery, an anticipated cut in federal operating grants and costs associated with a new labor contract.

The shortfall is part of the agency's FY13 operating budget that begins July 1, 2012. The agency's FY12 operating budget is $444 million.

With employment and wage growth stagnant, the agency 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 transit system 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 mid-January 2012. A recent Employee Relations Board (ERB) decision, which TriMet is asking ERB to reconsider, has eliminated potential wage and retiree benefit savings from the current labor arbitration. The ERB decision adds $5 million to $10 million to the FY13 budget shortfall, an amount that grows significantly in future years. There are also additional outstanding items related to the labor contract that could increase the shortfall further.

TriMet will create a Budget Task Force with community members to provide the GM with recommendations on how to balance the budget. The task force will consider internal efficiencies, fare increases and service reductions.

Over the next two to three months, the agency will develop specific options to close the budget gap. In the meantime, it is inviting the public to offer suggestions or comments.