Resolution 13-03-19 Approving the Proposed Fiscal Year ... - TriMet

Date: March 27, 2013To:From:Board of DirectorsNeil McFarlaneSubject: RESOLUTION 13-03-19 OF THE TRI-COUNTY METROPOLITANTRANSPORTATION DISTRICT OF OREGON (TRIMET) APPROVINGTHE PROPOSED FISCAL YEAR 2013-14 ANNUAL BUDGET FORSUBMISSION TO THE MULTNOMAH COUNTY TAX SUPERVISING ANDCONSERVATION COMMISSION1. Issue or Purpose of Item.The purpose of this resolution is to request that the TriMet Board of Directors (“Board”) approvethe proposed 2013-14 Fiscal Year Budget for submission to the Multnomah County TaxSupervising and Conservation Commission (TSCC).2. Reason for Board Action.Oregon Budget Law requires Board approval before a budget may be submitted to the TSCC.3. Background.Budget Process. TriMet must propose and adopt a balanced budget where revenues are equal toexpenditures.Oregon Budget Law requires a process that all local governments must follow to adopt budgets.The first step required by Oregon Budget Law is for the Board to approve the Proposed Budgetfor submission to the TSCC. The TSCC will then hold a public hearing on TriMet’s ApprovedBudget on April 24, 2013 immediately prior to the Board’s April 24 meeting. The FY14Approved Budget will be returned to the Board for final consideration and adoption at the May22, 2013 Board meeting. Amendments to the Approved Budget may occur up until Boardadoption of the final Budget May 22. TriMet must adopt a budget before the July 1 start of thefiscal year.The FY14 Proposed Budget includes $485 million for operations and debt service, $92.5 millionfor General Fund capital programs, and Total Requirements of $1.2 billion including light railprograms, pass through requirements, contingency and ending fund balances.TriMet's successful arbitration award of last summer and stronger revenue growth provide ashort window of financial stability allowing TriMet to advance four key priorities:• Stability for riders – the budget assumes no fare increases this year and no service cuts;

• State of good repair – the budget advances TriMet’s state of good repair, substantiallyincreasing bus replacements and using new federal funds to rehabilitate older portions ofour rail system. These investments are more fully described below.• Services fixes – TriMet is able to fix a limited number of service problems, such asovercrowded lines, poor connectivity, access to new job centers, and schedule delays dueto increased congestion.• Increase union defined benefit pension plan funding, which is just 52% funded.Revenues. The FY14 Proposed Budget includes the following revenue assumptions:• Employer payroll tax growth of 6.6% in FY13 (underlying growth of 5.1%, 1.5% fromthe increase in the payroll tax rate) and 8.6% in FY14 (underlying growth of 7.2%, 1.4%from the increase in the payroll tax rate)• No fare increase. In FY14, passenger revenue is budgeted to increase 5.6% over FY13estimated results. Ridership is projected to increase 3% in FY14. The average fixedroute fare is projected to increase approximately 2.6% due to the final two month phasein of the September 2013 fare increase in July and August of FY14.• FY14 5307 federal Urbanized Area Formula funds are in the budget at amounts authorized forTriMet by MAP-21which are the same as forecast last year for FY14. FY14 Fixed GuidewayModernization (named State of Good Repair in MAP-21) funds are $9.5 million a year higherthan projected last year. The projected increase in State of Good Repair funds will fundaccumulated on-going light rail maintenance that had not been addressed in the forecastpreviously.Expenditures. The FY14 Proposed Budget incorporates the following operating and capitalexpenditure proposals:• Service: $1.6 million of additional bus service needed to maintain schedule reliability,reduce peak crowding and solve persistent service problems.• Fare Levels: The $1.3 million low income fare program is retained. TriMet'scontribution to the student pass program is included, as agreed to in an MOU betweenTriMet, the City of Portland, and the Portland School District.• Union DB Pension: The funding of the union defined benefit (DB) pension is increased$4 million a year in FY14 and an additional $2 million on-going in FY15. The fundingincreases in FY14 and FY15 will put the plan on a path to full funding by 2031.• Safety: Eleven bus operators are added to prevent excessive consecutive hours of service($956,000 annual cost). We continue annual safety focused training for all operators andsupervisors, and will extend implementation of the safety management system. We willalso add contracted security for events and on board presence.• Capital repair and replacement: To maintain service levels, TriMet cut back investment incapital replacement and repair significantly over the last ten years. This has resulted in an

accumulation of capital replacement and repair that had been minimally addressed in priorfinance plans. This budget turns that around:• Buses: Because of the increase in payroll tax revenues TriMet is increasing busreplacement purchases from 40 per year FY13 to FY16 (160 buses) to 70 buses in FY13,60 in FY14, 64 in FY15 and 60 in FY16 (254). The entire fleet will be low-floor, lowemission and air conditioned, and at the desired 8 year average age by FY16, four yearsearlier than previously expected.• Rail: Additional State of Good Repair funds will help pay for the additional labor andmaterials for Type 2 light rail vehicle progressive overhauls, Blue Line station safety andrenewal improvements (“Renew the Blue”), improvements to the Steel Bridge to restorelight rail speeds to 15 miles per hour, and other projects. All are improvements thataddress the safety and reliability of service.• Operating Facilities: The FY14 Proposed Budget funds an accumulation of operatingfacilities replacement and repairs. These include replacing bus maintenance hoists thatare approaching 40 years of age, and end of life maintenance for the Center Streetoperating facility.• Customer Facilities: The FY14 Proposed Budget provides funds to refurbish damagedplatform and station finishes, particularly at the Hollywood, Washington Park and SunsetTransit Centers.With 96% of construction funding provided by our federal, state and local partners, $440 millionis budgeted for Portland-Milwaukie Project Light Rail Transit Project in FY14.The FY14 Proposed Budget is balanced and complies with Oregon budget law.It must be emphasized that TriMet’s cost structure is unsustainable due to the high and increasingcosts of health insurance benefits for union employees, retirees and dependents. The FY14Proposed Budget assumes TriMet’s current contract proposal and TriMet sustains the July 2012binding arbitration decision. Should TriMet lose either case, we will need to plan broad budgetreductions in all budget areas in FY15.4. Options.The Board may choose to amend the 2013-14 Fiscal Year Proposed Budget before sending it tothe TSCC. The deadline for submission to the TSCC is May 1.5. Recommendation.The General Manager recommends adoption of the Resolution approving the FY13-14 ProposedBudget for submittal to the TSCC.DA/CP/PC

RESOLUTION 13-03-19RESOLUTION OF THE TRI-COUNTY METROPOLITAN TRANSPORTATIONDISTRICT OF OREGON (TRIMET) APPROVING THE PROPOSED FISCALYEAR 2013-14 ANNUAL BUDGET FOR SUBMISSION TO THE MULTNOMAHCOUNTY TAX SUPERVISING AND CONSERVATION COMMISSIONWHEREAS, TriMet develops and approves its Budget pursuant to Oregon Revised Statutes(ORS) Chapter 294; andWHEREAS, pursuant to ORS 294.423, TriMet’s Board of Directors constitutes TriMet’sBudget Committee (Committee); andWHEREAS, pursuant to ORS 294.331, TriMet’s Chief Financial Officer serves as BudgetOfficer and primary liaison with the Multnomah County Tax Supervising and ConservationCommission (TSCC); andWHEREAS, ORS 294.428 provides that the Committee shall approve the Budget assubmitted by the Budget Officer or as revised by the Committee; andWHEREAS, ORS 294.431 requires TriMet to submit its Budget to the TSCC;NOW, THEREFORE, BE IT RESOLVED:That the proposed fiscal year 2013-14 Budget as submitted, including technical correctionsand revisions, is approved and shall be submitted to the Multnomah County Tax Supervisingand Conservation Commission.Dated: March 27, 2013Presiding OfficerAttest:Recording SecretaryApproved as to Legal Sufficiency:Legal Department