RTD Board of Directors considers changing revenue forecasts to determine budget moving forward

RTD may face a somewhat less severe budget-cutting scenario for 2021, after the Board of Directors approved a new revenue forecast Tuesday that predicts the agency may have more funds for next year than previously suggested in the May forecast. 

At the July 28 study session, the Board heard the revised July revenue forecasts for the rest of 2020 and coming years, and discussed whether to continue the 2021-2026 budget planning process using the new medium-range scenario or a more pessimistic forecast. After discussion with Chief Financial Officer Heather McKillop, the board adopted the middle range – but also requested that staff have a more pessimistic revenue and budget-cut plan ready to substitute in case the revenue forecast declines again.

The Board also discussed possible tools to address the shortfalls that we will be expecting over the next several years. They include reducing administrative costs, utilizing reserves, use of the FasTracks Internal Savings Account, as well as service reductions.

The latest revenue forecast from July, in the middle-case scenario, estimates RTD will take in $565 million in revenue for all of 2020, an improvement from the May forecast of $503 million. Analysts have said that in some areas, sales and use taxes that RTD relies on for much of its revenue have rebounded more quickly from the COVID-19 shutdowns than previously estimated. 

For 2021, the new middle estimate puts RTD revenue at about $571 million, up from the May forecast for next year of $485 million. While that leaves a 2021 budget gap of $166 million, that deficit is an improvement from the $251 million gap predicted in May. Although, the July forecast was better, the agency is still anticipating a shortfall of $848 million between 2021 and 2026.

Many of the new July revenue forecasts are down slightly from the forecast updates in June, but more importantly, according to RTD Board members speaking last night, they offer a more positive outlook than the May forecasts. 

More than one Board member urged McKillop and her staff to have a more pessimistic set of revenue projections and levels of budget cuts needed so that the Board can act quickly if necessary. 

“It would help to have another, darker analysis in our back pocket to use quickly if things go south again, as well they might,” Director Judy Lubow said. 

The Board will be reviewing all of the information regarding revenues and costs reductions over the next several months in Board study sessions and committee meetings and will be adopting a new mid-term financial plan in the September/October timeframe.