RTD’s newest financial forecast shows improvement in projected 2021 deficit

New RTD budget forecasts show continued improvement in revenue collection for both the remainder of 2020 and all of 2021, the Board learned at a study session Tuesday night.

While farebox revenue continues to lag, in part because of a 60% decrease in ridership since the pandemic started, sales and use tax revenues have come back a bit stronger than previously forecasted by the University of Colorado Boulder’s Leeds School of Business.        

RTD’s financial staff reported to the Board on Tuesday that sales and use tax losses for 2020 would now likely be $101.8 million less than previously forecast in May. The forecast is a carefully calculated blend of actual collections through August, as well as predictions for the rest of the year.            

The forecast also showed an improvement in the projected sales and use taxes for 2021 by $83 million, meaning, along with other changes, RTD needs to find about $140 million in savings over previous versions of the 2021 budget. Staff had previously said the savings needed to amount to about $215 million.

The main impact of the improved projections is to restore some of the critically low reserves, evaluate critically necessary projects that were delayed and also allow for a smaller number of layoffs and position cuts among RTD’s salaried and union-represented employees. The Board has established designating any additional funding to be a priority. Under the new projection, about 484 full- and part-time positions need to be eliminated through layoffs. RTD staff and Board members said they continue to be concerned about the impact on families with this number, which is still high but represents a smaller number of cuts than the initial estimate of 635. The final number will continue to change as analysis continues.

Remaining non-represented employees with annual base wages of $60,000 or higher will face furlough days, with some employees at higher pay levels also experiencing salary cuts for 2021.

“For staff to wait to hear what is going to happen has been unbearable,” acknowledged Board Chair Angie Rivera-Malpiede.      

Rivera-Malpiede and others said that forecasts are likely to continue their broad swings in either direction, depending on success in containing COVID-19 and the economic fallout from expanding or shrinking restrictions that affect public behavior. RTD’s ridership has fallen considerably as commuting patterns change and social distancing rules limit passenger loads.       

The Board is scheduled to vote on the draft budget for 2021 in November.            

RTD Chief Financial Officer Heather McKillop told the Board that the additional projected revenue had allowed planners to restore projected budget reserves to three months of operating costs instead of the razor-thin one-month margin discussed in previous study sessions. A healthier financial picture has also allowed the agency to avoid, for now, borrowing from a savings account set aside for future FasTracks construction projects.

Some Board members urged financial staff to continue exploring creative revenue options for the future, including a possible fare structure charging out-of-town visitors or businesses more than local commuters, or exploring the sale of RTD buildings and land.