Bus Riders Union of Austin, Texas | El Sindicato de Pasajeros

Facing shortfall, with savings depleted, transit agency faces serious belt tightening for first time in its quarter century.

By Ben Wear
Austin American-Statesman
Tuesday, June 23, 2009

Capital Metro fares could go up sooner than planned, and there might be fewer chances to catch a ride.

Transit officials, looking at a draft 2009-10 budget dripping red ink, on Monday began mulling a variety of cuts in order to balance the budget and begin to rebuild Capital Metro's virtually exhausted savings account.

The menu of possible changes, discussed at a Capital Metro board meeting on the agency's strapped state of affairs, includes quarterly worker furloughs, trimming bus service hours by 3 percent or more, moving up the date for approved fare hikes and possibly increasing them, and outsourcing more bus routes to contractors who pay drivers and mechanics less than regular agency employees.

The agency staff will continue to work on the numbers, and the board won't vote on the 2009-10 budget until Sept. 28. But the mere existence of Monday's unusual board meeting, accentuated by the grim numbers and uncomfortable options on the table, illustrates the severity of the agency's financial bind.

"Serious" is how board member John Trevino described the situation. "We're going to have to make some tough decisions."

Based on Monday's cost and revenue figures, the agency would spend $2 million more next year than it takes in. But Capital Metro officials in addition hope to add $10 million to a reserve account expected now to be down to a negligible $4 million by the end of the year. The agency will spend the next three months choosing ways to cut costs or raise money to erase that deficit and rebuild reserves.

This is a relatively common exercise for the City of Austin, which even in flush times typically enters the summer months with a wish list larger than its expected income for the next year. But it is unique for Capital Metro, which in its nearly quarter-century existence has always had more revenue than it needs to operate, sometimes tens of millions of dollars more, from its 1 percent sales tax, fares and federal grant revenue.

The agency finds itself caught between a recession that has cut its sales tax revenue this year by $13.6 million, or almost 9 percent, and a series of spending decisions that over six years have drained a reserve account of $214 million to virtually nothing. Capital Metro, in short, finds itself in a deluge with no rainy-day-fund umbrella.

The agency is far from alone in this predicament, agency officials argue. According to a recent survey, about 90 percent of U.S. transit agencies are raising fares, cutting bus or train service, or both.

In August the agency increased bus fares for the first time, adding 50 percent to its base fare but increasing other ticket prices by much more than that. A second step of that fare increase, doubling the original 50 cent base fare to $1, is scheduled to take effect in August 2010. Monday agency officials said they could increase next year's revenue by almost $2 million by moving that up to January. They also raised the possibility of charging 25 cents a ride, or even 50 cents, to disabled riders, who currently can qualify for a card that allows them to ride for free. They also discussed increasing express bus and rail fares, as well as the cost of monthly discount cards, and charging more for shuttles to UT football games and the Trail of Lights at Zilker Park.

Chief Financial Officer Randy Hume told the board that cutting bus service hours by 1 percent would save almost $480,000. At least two board members said they would be comfortable with a cut of up to 3 percent, which would be accomplished by starting routes later or ending them earlier, eliminating or combining routes, or reducing the frequency of bus runs.

Another option: furloughing the agency's 340 or so administrative workers for a day or two each quarter. The budget in its current incarnation already assumes no raises next year for those workers.

Union workers covered by a contract signed last year would get 1.5 percent raises July 1 and another 1.5 percent Jan. 1.

The union has shown little interest in a proposal to set aside those raises in exchange for a management promise to refrain for a year from assigning more bus routes to contractors who pays drivers lower wages.

At Monday's presentation officials said that they could save an additional $580,000 next year by outsourcing an additional 5 percent of bus service.

bwear@statesman.com, 445-3698