Budget scenarios bring RTD’s financial picture into focus

While operating conditions and the economic fallout from COVID-19 change rapidly, RTD’s budget picture for the rest of 2020 and into 2021 is starting to come into focus. 

The revenue hit to RTD from fare losses and the metro area’s steep plummet in sales and use taxes during stay-at-home orders are daunting, at an estimated $255 million drop in 2020, according to middle-case scenarios developed by Chief Financial Officer Heather McKillop and her staff. Though every public budget planner in the state has said COVID-19 makes the future highly unpredictable, even month to month, McKillop told the RTD Board last week that her staff estimates aligned closely with a highly respected economic forecast provided to RTD by the University of Colorado Boulder’s Leeds School of Business. 

Much of the 2020 gap will be filled by emergency appropriations from the U.S. Congress under the CARES Act passed earlier this spring. RTD is entitled to $232 million of CARES Act funding for 2020, intended to cover revenue losses and extra operating costs attributed to keeping the system safe during the COVID-19 pandemic. 

RTD does not, however, get to deposit a $232 million check in the bank and hope that other forms of revenue return, leaving CARES Act money in the bank for future projects or needs. The $232 million stays with the federal government, as RTD accounts for its COVID-19 losses each month and receives corresponding reimbursements from that total. RTD has to spend its own money before it can be reimbursed with the new federal funds, McKillop noted. 

Even with the $232 million available for the 2020 RTD budget, the most likely budget scenarios still indicate unplanned losses by the end of the year, McKillop told the Board. The budget scenarios include best-case, middle-case and worst-case categories, depending upon when fare collection resumes and metro-area consumer spending comes back as stay-at-home orders are lifted. 

In both the middle-case and worst-case budget scenarios, which McKillop believes are more likely than the best-case, RTD needs to cut spending for the rest of 2020 in order to meet its mandate for a balanced budget. 

The middle-range revenue loss for the rest of 2020 shows a $16.9 million RTD deficit, if nothing is done to cut costs. The worst-case revenue forecast shows a $42.9 million deficit. 

Some members of the RTD Board this week favored moving quickly to approve staff-recommended budget cuts for the rest of 2020, and getting ahead by including the forecasts in 2021 budget planning. The new budget forecasts include potential furlough days for all RTD employees for the remainder of 2020 to trim personnel spending, and most Board members agreed that staff should recommend a precise furlough proposal for quick consideration. Denver and Boulder have both announced civic employee furloughs for this year. 

The budget cutting is widespread. The Board agreed this week to trim personal expense budgets for travel and other costs, and some Board members said they should soon consider giving up some of their $1,000-a-month compensation. A statute change would be required for this change to occur.