Major planning, engineering and construction progress on tap for 2013 as Board kicks off budget process
Sluggish economic recovery increases pressure to deliver projects with less revenue
The Sound Transit Board today began work on a 2013 budget that moves forward on major light rail expansions while positioning the regional transit system to carry more than 28 million riders next year. The budget process will also require a continuing agency-wide focus on managing the impacts of reduced tax revenues.
"In 2013 Sound Transit's major capital projects will continue to play an important role in the region's economic recovery at the same time we provide fast, stress-free commutes to more riders," said Sound Transit CEO Joni Earl. "As more projects move into heavy construction, we will see more of Sound Transit 2's expected 100,000 direct and indirect jobs. While the recession's aftermath continues to pose big challenges, we will make 2013 a year of big progress."
The proposed 2013 budget includes $754.7 million in capital investments for work to extend light rail to the north, east and south. A proposed $211.8 million budget for service delivery includes a 5.3 percent increase primarily focused on covering higher fuel prices and costs of extending Sounder commuter rail service to Lakewood and South Tacoma. The budget does not propose any reductions or delays affecting services or capital projects.
The 2013 budget process will continue the multi-year process to realign system expansions and revenues that the Sound Transit Board launched in 2010 in response to the impacts of the national recession. The region's economy has not rebounded as quickly in 2012 as earlier predicted, with agency revenues growing only 2.2 percent over the last year. The fact that 2012 revenue growth has been significantly less than the 3.4 percent earlier forecasted has led the agency to further reduce its long-term revenue forecast.
Uncertainties on long-range revenues
As a result of the updated revenue forecast, local tax revenues are expected to be $700 million lower through 2023 than forecasted last year. When compared to the original 2008 Sound Transit 2 financial plan, revenues are now estimated to be an additional five percent lower, for a total reduction of 30 percent or $4.7 billion through the 15-year plan.
Staff has already identified $79 million in proposed long-term cost reductions and will work to identify additional efficiencies in the capital program for Board review in October. The budget process will include a detailed assessment by the Sound Transit Board Executive Committee of risks in the financial plan at its current revenue and expenditure levels.
"We will need to be very sober and transparent regarding the risks now inherent in the program. We will use the realignment tool throughout the budget process to manage and communicate our program risks," Earl said.
In addition to finding additional cost efficiencies, Earl said staff will work with the Board to redouble efforts to supplement agency resources through approaches including aggressive grant applications, potential public-private partnerships, and innovative procurement methods. The agency is actively investigating a federal Transportation Infrastructure Finance and Innovation Act (TIFIA) loan for its capital program that could supplement local resources.
"While we continue to face uncertainties, the good news is that we are still well positioned to deliver major system expansions. By keeping a rigorous focus on controlling project costs, we still have a high level of confidence about delivering all but a couple of the 36 miles of Sound Transit 2 light rail extensions by 2023 or soon thereafter," Earl said. "The economic performance we see in the next couple years will determine how much further the realignment process we started in 2010 needs to go."
Each of the agency's five geographic subareas faces a different financial picture under Sound Transit's subarea equity framework. Revenues collected within each area's boundaries must be used for projects that have been identified to benefit that subarea's residents. The impact of reduced revenues continues to be greatest in the South King subarea, where the previous forecast of a 32.4 percent reduction through 2023 has worsened to 40.7 percent. The impacts are 33 percent in East King, 32.4 percent in Snohomish, 26.6 percent in Pierce, and 19.6 percent in North King.
The proposed 2013 budget outlines four major themes for the coming year:
- Deliver capital projects on time and within budget
- Increase ridership
- Reduce capital and operating costs
- Maintain nimble, efficient business processes
In 2013 the agency will break ground on an expedited extension of light rail south from the airport to South 200th Street under a design-build contract. The project, which will open in 2016, will offer South King County increased light rail access, including a 700-stall parking garage and up to 400 interim surface spaces, while planning for extending further south moves forward. $86.6 million in work is planned for 2013.
Major Link light rail investments in 2013 include:
- Nearly $198 million to continue construction of the extension from downtown Seattle to the University of Washington
- $103.3 million for Northgate Link Extension design and construction
- $91.9 for East Link final design
- $87 million for design-build work to extend light rail from Sea-Tac Airport to South 200th Street
- $8.1 million for ongoing environmental review and public involvement to identify a route southward from South 200th Street to Highline, Kent/Des Moines and Federal Way
- $10.4 million for ongoing environmental review and public involvement to identify a route for the Lynnwood Link Extension from Northgate to Lynnwood
- $55 million to fund the City of Seattle's ongoing construction of the First Hill Streetcar connector linking that community with Seattle's Capitol Hill to International District/Chinatown Station