ST kicks off project and service realignment in response to recession impacts

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Proposals for bridging $3.9 billion funding gap emphasize efficiencies, top priorities, equity

When the Sound Transit Board began work today on the 2011 budget, it signaled the kickoff of a process that will realign agency project and service priorities in response to the national recession's impact on local tax revenues.

The good news: current revenue forecasts will still result in a robust regional transit system with major expansions benefitting the Puget Sound economy, environment and quality of life. However, revenues currently expected through 2023 are $3.9 billion, or 25 percent, lower than forecasted in 2008, requiring difficult choices during the 2011 budget process.

"No organization can confront an expected 25 percent reduction in revenues without asking - and answering - hard questions about priorities," said Sound Transit Board Chair and Snohomish County Executive Aaron Reardon. "It is important that we address these issues now and continue to move forward with expanding the region's mass transit system as rapidly as we can."

Fortunately, the Sound Transit 2 Plan included provisions that offer t flexibility for responding to an economic downturn. Over the coming months, the Board will map priorities for major investments and consider options that achieve maximum public benefit and maintain regional equity.

Sound Transit CEO Joni Earl today presented the Board with her proposed agency budget for 2011 and recommended steps to address the revenue shortfall.

"Last year when our forecast was down $3.1 billion, or 20 percent, we remained cautiously optimistic that strict cost controls and strong project management could enable us to deliver the full ST2 program by 2023," Earl said. "While we are well positioned to make major transit investments in the years ahead, it is no longer possible to complete the entire program in 15 years."

Under Sound Transit's subarea equity framework, each of Sound Transit's five geographic subareas faces a different financial picture. Revenues collected within each area's boundaries must be used for projects that have been identified to benefit that subarea's residents. The recession impacts are worst in the South King County subarea, where forecasted revenues are down about 31 percent. Projected revenues are down 26 percent in East King County, 28 percent in Snohomish County, 26 percent in Pierce County and 16 percent in north King County, which includes Seattle.

The Proposed 2011 Budget and staff presentation summarizing the proposed project and service adjustments are available at: About-Us/Financial-Documents.xml

On Sept. 30 the Board will conduct a budget workshop to begin shaping priorities for 2011 and beyond. The workshop will also include discussion of public meetings that will take place in October. A final 2011 budget is scheduled for adoption in December, along with a Transportation Improvement Plan and Service Implementation Plan that guide investments beyond 2011.

In crafting the recommendations, staff applied lessons learned from past challenges, closely examined underlying assumptions, and focused on the agency's core mission. The recommendations use the toolkit included in Appendix B of the voter-approved ST2 plan, which states that the Board shall respond to the revenue reductions by taking one or more of the following actions:

• Correct the shortfall through use of such subarea's uncommitted funds and/or bonding capacity which is available to the subarea; and/or

• Scale back the subarea plan or projects within the plan to match a revised budget; and/or

• Extend the time period of completion of the subarea plans; and/or

• Seek legislative authorization and voter approval for additional resources.

Consistent with these policies, the Proposed 2011 Budget reflects an initial staff review to start the process of realigning the overall program. The recommendations for each subarea give priority to projects and services that:

• Best achieve the stated goals of the voter approved regional transit plans;

• Are necessary to maintain the existing system in a state of good repair; and

• Are already under or near construction.

Staff is also recommending projects and services for delay, deferral (suspension) or reductions based on the following:

• Lowest projected ridership;

• Lowest utility in achieving the stated goals of the voter-approved plans, including undefined discretionary programs not critical to build-out the capital infrastructure or daily operation of the regional high capacity system;

• Reserves or contingencies for projects near completion that are no longer necessary; and

• Projects contingent on funding or commitments from other partners where funding is not currently included in any partner plans.

Sound Transit receives the bulk of its funding through sales tax revenues and a smaller percentage from the Motor Vehicle Excise Tax (MVET) and car rental tax within the Sound Transit District, which covers the urban areas of King, Pierce and Snohomish Counties. Sound Transit's revenues have been impacted to the same degree as every other agency that relies on sales taxes. The cumulative impact is large for a multi-year program like Sound Transit 2 because it is projected to take a long time for annual revenues to return to previously assumed levels.