Public agencies like RTD receive only a portion of the cost of providing service through the fares and passes paid for by our passengers. Sales taxes are the main source of our funding and the economic recession has dramatically reduced our tax revenues. RTD’s operating revenues are derived primarily from two sources, sales taxes and passenger fares. Sales tax revenues account for 69% of those revenues while passenger fares account for 30%, with the remaining one percent coming from on-vehicle advertising and grants.
RTD’s Base System budget shortfall was projected to be $18 million in 2011. The budget shortfall is primarily due to the long term reduction in sales and use tax revenues, so our Transit Economics reality is in full swing.
RTD cannot adopt a budget where operating expenses exceed anticipated operating revenues. Sales tax revenues, which are the single largest source of operating revenue, continue to remain below what is needed to support current service levels. Since sales tax revenues are not within RTD’s control, RTD must consider alternative revenue enhancements and cost reductions in order to solve the projected budget shortfall. This has required the development of a fiscal action plan to address the projected deficit.
This fiscal action plan involves consideration of all of the following actions:
- Proposed fare increase
- Possible service reductions
- 3rd consecutive year of no salary increases
- Continuation of hiring limitations
- Using some RTD operating reserve funds
- Continuation of fuel cost hedging
- Voluntary staff furloughs
- Establishing the RTD Board Financial Stability Committee to work with regional stakeholders to determine the best course toward expanding resources for the future