HomeMy WebLinkAbout05/02/2006, BUS 4 - FY 06-07 TRANSIT FUNDING ISSUES AND RTA c o u n a l m c m o iza n b u m
Date: April 24, 2006
TO: City Council MEET AGENDA
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TEM #VIA: Ken Hampian, City Administrative Officer
FROM: Jay D. Walter, Director of Public Works
Timothy Scott Bochum, Deputy Director of Public Works
SUBJECT: FY 06-07 Transit Funding Issues and RTA
On April 19`s, 2006, RTA, the regional transit provider for the county, released its proposed
budget for upcoming FY 2006-07. As part of that budget proposal, substantial increases in
certain costs, including fuel, labor and insurance caused a significant increase in the funding
request being asked of the City to support RTA operations. Although many of these costs are
"uncontrollable", the RTA is also strongly considering new evening service and Sunday service–
costly service level increases that could, ironically, reduce our own ability to provide such
service. This level of service was not considered when the City entered into the Joint Powers
Authority that created the RTA and the "off-the-top"funding arrangement.
However, because RTA is funded "off the top" of the county's transit funding pool, the proposed
increase, if approved, would likely have negative effects on local transit service provided by SLO
Transit. Because the City of San Luis Obispo allocates all of its annual transit revenue to transit
service each year, any significant increase in regional transit funding would result in less money
for our local transit services (in some cities, transit revenue also goes for street work, and thus
less money to these cities may not necessarily impact transit, as it would in SLO).
Staff has not yet had the time to analyze the net effect of this proposed budget on City operations
but will be doing so in the next few days along with other budget issues that will affect the SLO
Transit budget for FY 2006-07. We will also be requesting meetings in the next week with RTA,
SLOCOG and other jurisdiction representatives to explore funding alternatives that may lessen
the burden on local transit funding. The Mayor, who represents the Council on SLOCOG and the
RTA, and who shares the staffs' concerns, will also participate in this meeting.
The RTA Board is scheduled to consider the proposed budget at its May Std meeting. Due to the
serious implications to SLO Transit, a Council agenda item to discuss this issue has been placed
on the May 2°d agenda. If issues can be resolved prior to that meeting the item may be removed.
Further communication on this issue will be forwarded to the Council prior to the May 2°d
meeting.
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FROM: Jay D. Walter,Director of Public Works IJ�CLERK/ORIG rr POLICE CH
Prepared By: Timothy Scott Bochum,Deputy Director of Public Wor Dc HEADS ka HEC DIR
Austin O'Dell,Transit Manager lfTlL DIR
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SUBJECT: 2006-07 Regional Transit Authority.(RTA) Budget and the 2006-07 Unmet
Transit Needs Process
CAO RECOMN ENDATION
1. That Council, through Mayor Romero, request the RTA Board take no final action
on the proposed 2006-07 RTA Budget at its scheduled May 3, 2006 meeting, and
that the Board direct its staff to determine within the next 30 days if further cost
reductions, new revenue sources or alternative funding strategies may be possible to
reduce or remove the potential service loss to affected jurisdictions.
2. That the Council request that the RTA Board and SLOCOG Board establish funding
and service.recommendation policies that modify the process of funding regional
versus local transit service so that basic transit service levels are met for both
regional and local systems.
DISCUSSION
2006-07 RTA Budget
On April 190i, 2006, RTA, the regional transit provider for the county,released its proposed Budget
for 2006-07. Included in the RTA's 2006-07 Budget proposal are substantial increases in certain
costs, including fuel, labor and insurance. These increased costs will cause significant increases in
the funding required from all participating cities to support RTA operations. In addition to these
"operational" costs, the SLOCOG Board last month approved new evening service and Sunday
service for RTA riders. As a result of the approval of these new services, staff anticipates a
reduction in SLO Transit's ability to provide these same services to its riders because of the funding
reduction necessary to pay for the new regional service:
Discussion of RTA Funding and Impacts on SLO Transit
RTA service is funded "off the top" of the county's transit funding pool. Therefore the proposed
2006-07 RTA Budget, if approved, would likely have negative.effects on the local transit service
provided by SLO Transit. Because the City of San Luis Obispo allocates all of its annual transit
revenue to transit service each year, any significant increase in regional transit funding would result
in less money for our local transit services (in some cities, transit revenue also goes for street work,
and thus less money to these cities may not necessarily impact transit, as it would in San Luis
Obispo). At present, staff is in the process of finalizing our own transit budget. Similar to RTA, we
are facing significant increases in fuel, insurance and contract costs. However, until the recent
i
RTA Transit Funding Issues Page 2
release of the proposed 2006-07 RTA Budget, we believed that we could accommodate our
increased costs without service reductions. Unfortunately, in light of the proposed increases in the
2006-07 RTA Budget, that may no longer be possible.
This added level of service was not considered when the City first entered into the Joint Powers
Authority (JPA) that created the RTA and the "off-the-top" funding arrangement. Staff is presently
researching JPA language to determine if it provides a mechanism for reconsideration of
SLOCOG's action, and we will report on our finding during the Council meeting.
At this point, the City is in the untenable position of having to react to decisions that are for the
most part, beyond our control. As reported by Mayor Romero, at it's March meeting the SLOCOG
Board determined that implementing countywide Sunday service was an unmet transit need that
was reasonable to meet even though the City strongly voiced our opinion that the full criteria of the
unmet needs process were not being met. This new regional service, along with the increased costs
for fuel, are the two most significant causes for the proposed increases to the 2006-07 RTA Budget.
Additional Concerns
There are two other significant staff concerns regarding RTA funding at this time. SLOCOG in
approving the Sunday service proposal funded both Morro Bay and San Luis Obispo's first year
costs using regional STA (State Transit Assistance) monies. That funding would disappear in 2007-
08 and the City would need to fund this additional amount (estimated to be $35,000) off the top
with our TDA funding.
Secondly, RTA is in the last year of their existing transit service contract and will need to bid the
service contract this upcoming fiscal year unless an additional extension of the contract can be
negotiated. Under either scenario, staff believes the contract costs for services will rise similarly to
the contract cost increase we have experienced and as such, increase the likelihood that even more
"off the top" funding will be needed to provide regional transit service next year. All of these
increases will come at the expense of our local transit system.
When taken together, the added service levels and the increases to the RTA operating budget pose a
problem that will be compounded in future years when the full amounts must come out of the
City's transit allocation. The City remains vulnerable to future budget increases as the regional
service gets the first call on available funds, leaving what's left to the member jurisdictions.
Ironically, by meeting marginal transit needs at the regional level, greater unmet needs may be
created overall with fewer riders served.
What can be done about it?
Staff met with representative of SLOCOG, RTA and the City of Morro Bay to discuss the impacts
of the proposed budget and various issues associated with potential service reductions. Itis difficult
at this time to say what the immediate, exact impact to SLO Transit might be since in addition to
the proposed RTA budget, the RTA Board will also be considering a new evening transit service
countywide to address complaints they have received.
Staff believes that identifying and maintaining basic transit services levels, both at the regional and
local levels, is one of the most significant and fundamental decisions any local or regional board
r
.RTA Transit.Funding Issues Page 3
should make. Unfortunately, the current process of funding the regional service needs first on the
backs of the local providers causes the local service levels to have a less stable ability to fund their
basic service levels.
Staff believes that it is important that the SLORTA Board not approve the 2006-07 RTA Budget as
submitted but delay action, for at least 30 days, to allow the City (and other cities), SLOCOG and
RTA staff to come up with possible options to help mitigate the cost increases in the short and long
term.
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