Revenues for transit construction down sharply

The COVID-19 crisis is greatly reducing the revenues Sound Transit relies on to expand our regional transit system. As businesses remain closed and people stay home, sales tax revenues critical to funding transit construction have declined rapidly.

We don't know how long or damaging the current recession will be. Economists are projecting a recession that could be worse than the Great Recession of 2008-2009. We estimate that cumulative fiscal impacts over the next two decades will range between $8 billion and $12 billion, or 12% to 18% less revenue than previously assumed.

Realigning project schedules to meet lower revenues

With greatly depleted revenues, Sound Transit will not be able to deliver many expansion projects on their original timelines unless we receive alternative revenue from federal or state sources.

Through a process called realignment, the Sound Transit Board of Directors is working to determine which plans and timelines for voter-approved projects will need to change due to lower revenue projections, absent receiving alternative revenue.

At their June, 2020 meeting, the Board set a process for this capital program realignment that will move forward between now and summer 2021, providing time for the financial impacts of the recession to become clearer while we pursue additional funding opportunities. The realignment will establish clear expectations about project delivery timelines by summer 2021 after gaining input from the public and partner organizations.

Based on agency contractual commitments already in place, Sound Transit will focus future realignment actions on projects that are not already in construction or under contract. Major projects that are still moving forward right now, contributing to our region’s economic recovery, include but aren’t limited to light rail extensions to Northgate, Lynnwood, Bellevue, Redmond, Federal Way and the Tacoma Link Hilltop Extension.

Key strategies and principles for the realignment include:

  • During the remainder of 2020 we will advance projects in a fiscally prudent manner while monitoring the financial impacts of the recession and continuing to pursue additional funding opportunities.
  • At its June 25 meeting the Sound Transit Board directed staff to prepare scenarios identifying what negative impacts might be avoided by identifying additional tools which could include but are not limited to securing additional federal funds, state funds, and/or increased debt capacity.
  • The Board will use criteria adopted June 25 as a framework to assist in making both near-term and long-term realignment decisions. These include the criteria the Board used in shaping the Sound Transit 3 measure that voters adopted in 2016.
  • In developing its annual budget for 2021, the Board will continue to fund early design work, environmental review processes and work to identify property requirements, even though many projects’ completion timelines will need to be revised. This strategy will keep projects “shovel ready” for delivery as quickly as possible, particularly if the agency’s financial situation improves.
  • During the upcoming months we will engage contractors, consultants, and project stakeholders to help identify cost savings opportunities.
  • By the end of this year, staff expects to develop potential realignment scenarios the public and Board can consider. These scenarios will illustrate potential schedule and other project adjustments doable within the agency’s finances. We will engage with the public, key stakeholders and our agency partners to gain input on these scenarios for Board consideration, including scenarios that seek to avoid delays through identifying additional funding options.

This page will be updated as more information becomes available.

Transit construction will help our economy recover

Sound Transit is currently building more than 40 miles of new light rail track and 28 new stations. This construction as well as future advancement of other major projects under the realignment plans that take shape will help our region's economy recover from the COVID-19 recession, just as transit construction fueled our recovery from the Great Recession.

When most of construction went dormant a decade ago, Sound Transit was one of the few players hiring tradespeople off the bench. In advancing projects Sound Transit puts particular focus on equity considerations in creating opportunities for local residents.

Family-wage jobs offered by Sound Transit's construction projects will help thousands return to the workforce, and in turn will support even more retail and service jobs in the community. As the economy recovers, investments in these new transit infrastructure projects could help deliver tens of thousands of daily riders to work.

Sound Transit will join other agencies and allies in urging that federal recovery efforts and potential actions at the state level provide funding support for transit infrastructure so we can deliver our planned projects on schedule and maintain our place at the center of our economic recovery.