TriMet GM Neil McFarlane laid out a preview of the Fiscal Year (FY) 2014 budget in his State of TriMet presentation to the board of directors. The preview provides the framework for the upcoming budget that will be released in mid-March.

McFarlane said the agency continues to face financial hurdles and uncertainty, but with the arbitrator selecting management’s proposal for the just-expired contract, it provided some breathing room. It’s anticipated that there will be no service restoration or service cuts in the FY 2014 budget.

However, the Amalgamated Transit Union (ATU) is challenging the arbitration award, except for the retroactive wage increases. Depending on a ruling by the Oregon Employment Relations Board (ERB) expected this spring, it could mean additional service cuts if the ATU prevails.

The just-expired contract shifted union health benefits to a 90/10 plan and began to reduce what remains among the most generous health care benefits in the country. The family PPO plan premiums cost TriMet $30,000 a year and growing, while employees pay only 10% out-of-pocket costs up to the $1,500 out-of-pocket maximum.  Employees pay no premiums. The health care benefits continue through retirement and a surviving spouse continues to receive the benefit for another 16 years.

McFarlane noted that contract reform is needed to realign the agency’s cost structure.

“Our financial future and the future of transit in this region are directly tied to our ability to reform the contract,” said McFarlane. “It’s a choice between bringing health care benefits in line with the market and our peers, or face a future of continual service cuts to pay for these unsustainable benefits. It’s simply about the math.”

TriMet faces a service crisis beginning in FY 2017 that grows more extensive every year if no other contract reforms are made in the upcoming contract. The budget shortfalls amount to:

• $19 million in service cuts in FY2017, which equals an 11% cut in bus service over FY2013 service levels of 1.750 million bus vehicle hours

• $48 million in service cuts in FY2020, which equals a 34% cut in bus service over FY2013 service levels

• $142 million in service cuts in FY2025, which equals a 70% cut in bus service over FY2013 service levels

McFarlane said that if the arbitration award remains in place, TriMet is taking the following approach for the FY2014 budget: “Fix what we have and pay what we owe.” This means continuing to work toward a fair and reasonable labor contract, work to preserve service by looking at one-time investments that help us reduce ongoing costs and look at ways to improve service.

TriMet continues to invest in new buses as they are cheaper to maintain and provide a better ride for customers. In addition to the 55 new buses recently put into service, TriMet is accelerating the next bus order, with 70 new buses expected to start arriving in July.

Transfer printers will be installed on all buses by this summer. Riders will receive a transfer valid for two hours from the time of purchase, which matches the time stamp printed on MAX 2-hour tickets.

The agency is moving toward an electronic fare system with the launch of mobile ticketing this summer.

With the arbitrator’s award, ATU members continue to have among the most generous health benefits in the country. But the difference between the plan awarded by the arbitrator for 2009 to 2012 contract and the one actually enjoyed by union employees resulted in $6.8 million due TriMet. The ATU instructed its members not to comply with TriMet’s efforts to implement the arbitrator’s award. TriMet is awaiting a ruling from the ERB requiring the ATU and its members to comply with the arbitrator’s award.

The proposed FY2014 budget will be released on March 13.

View The State of TriMet Powerpoint presentation here.