In study session, Board discusses additional ways to close 2021 budget gap
RTD’s Board of Directors on Tuesday night asked staff to shorten the agency’s mid-range budget planning cycle to two years, reflecting the havoc the pandemic and its economic fallout have wreaked on the traditional six-year planning model.
A majority of the directors also asked for a reworking of a plan to close 2021’s $215 million projected deficit, seeking steeper pay cuts for high-level salaried workers and fewer layoffs of union-represented operators, mechanics and other hourly employees. Other directors said they wanted to hear more about potential savings from four-day work weeks, or the possibility of more optimistic revenue forecasts, before finalizing the 2021 budget.
It was clear during the four-hour Board study session that directors had heard pointed feedback from employees and the public about earlier proposals that would have cut more than 600 positions from the transit agency roster. One director proposed that the highest-level executives lose as much as 18 percent of their pay for 2021 to save more lower-paid positions.
“Employee cuts have to be more balanced between the two groups,” salaried and union-represented workers, said Director Doug Tisdale.
In normal years, RTD would be using September to put finishing touches on a “mid-term” budget plan for 2021-26, and preparing to lock in a detailed budget for 2021 by late fall. The pandemic and its various shutdowns, however, have drained both farebox and sales and use tax revenue faster than any year in RTD’s history.
The last pandemic-tainted forecasts accepted by the Board had put 2021 revenue $166 million below projected spending. But actual farebox collections in July and August indicate 2021 farebox revenue will only be 60% of pre-COVID-19 collections, along with other staff updates, put the deficit at $215 million, Chief Financial Officer Heather McKillop told the Board Tuesday.
McKillop said bond rating agencies watching over RTD’s debts for building out FasTracks have warned in blunter terms than she’s ever seen that the agency must close its deficits and rebuild reserves soon or risk credit downgrades. Lower credit ratings make it harder and more expensive to borrow money in the future.
To get there, part of the staff proposal suggests laying off a total of about 550 existing employees in full- and part-time positions, including 108 among salaried staff and 429 in union-represented jobs such as bus operators or engine mechanics. That proposal would also leave another 300 budgeted positions unfilled for 2021.
To close the rest of the $215 million gap, RTD would delay many capital projects, use existing reserve money to cover the 2021 budget, and stop setting aside money for remaining FasTracks projects. Route service levels would remain at 60% of pre-COVID-19 levels, and the regularly scheduled January service changes would move trips from underused lines and stops to more heavily used routes.
RTD Special Projects Director Bruce Abel said staff is continually working on the 2021 budget to minimize layoffs.
“We take this very seriously because we know these conversations are having an impact on peoples’ lives,” Abel said. “People chide us” for the personnel cuts, he acknowledged. “We are doing our utmost to continue to minimize the negative impact on people on the front lines and salaried support staff.”
Abel said the required levels of staff cuts are expected to change with each new forecast and each month of actual revenue experience, and that staff would continue to seek savings that would minimize layoffs.
RTD staff had also moved salary and benefit cuts from focusing on furloughs to instead proposing across-the-board percentage pay cuts, some as high as 7.5%. Some directors said the highest-level executives are overpaid, and that cuts to their salaries should be as high as 18%. McKillop said a consultant’s industry salary survey is due soon.
Though staff proposals closed the budget gaps in the first few years, the deficit widened again in 2024-26 plans, McKillop said. Multiple Board members said the uncertainty of solving the pandemic and restoring revenues was so volatile that six-year budget planning is no longer useful.
“We’re making projections based on bad facts that are going to change,” said Director Vince Buzek.