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Home My WebLink About2009-05-12; City Council; 19809; Receive Budget Presentation by NCTDCITY OF CARLSBAD - AGENDA BILL 15 AB# 19.809 MTG. 05-12-09 DEPT. CM Receive Presentation by NCTD DEPT. HEAD CITY ATTY. x^J? CITY MGR. //CL- RECOMMENDED ACTION: Receive a presentation from North County Transit District (NCTD). ITEM EXPLANATION: The City Council provides an opportunity for citizens and organizations to have an item placed on a City Council Agenda by submitting a letter to the City Manager. Attached is an email request (Exhibit 1), from North County Transit District requesting that the City Council receive a budget presentation. FISCAL IMPACT: N/A ENVIRONMENTAL IMPACT: N/A EXHIBITS: 1. E-mail from NCTD requesting to present at the May 12th Council Meeting. DEPARTMENT CONTACT: Kimberly Dillinger 760-434-2959 kdill@ci.carlsbad.ca.us FOR CITY CLERKS USE ONLY. COMMISSION ACTION: APPROVED DENIED CONTINUED WITHDRAWN AMENDED D D D D D CONTINUED TO DATE SPECIFIC CONTINUED TO DATE UNKNOWN RETURNED TO STAFF OTHFR _ QFF MIMIITF<5 Dno ., IPK Xe. • .-d/rfA*X^ '++*& From: Jill McNaughton [mailto:JMcNaughton@nctd.org] Sent: Wednesday, April 22, 2009 4:10 PM To: Marilyn Strong Subject: NCTD presentation Marilyn - would you be able to confirm, or send me to the right person, if NCTD is on your May 12th City Council agenda? Barb had started to set up these meetings and I'm not sure where she left off before she retired. Our Board had requested Matt Tucker do our budget presentation at each of their city councils, and Carlsbad was slated for May 12th at 6 pm. Thanks. Jill McNaughton Clerk of the Board North County Transit District 810 Mission Avenue Oceanside, CA 92054 760/967-2808 jmcnaughton@nctd.org "We move people" NCTD Budget Update Background The transit business model is best described as a public service similar to library and schools. Transit systems are mandated by federal law and local/state policies to provide certain services and discount customer fares that the private sector would not do. Operating costs for transit systems in California are largely derived from local sales tax and customer revenue. Capital costs for transit systems in California are derived from federal, state, and local sources. Sufficient operating funding represents the largest challenge for sustainable transit service. Transit Schizophrenia NCTD’s FY 09 Ridership and Revenues projected to be highest in last decade. The Sprinter began operations in March 2008. Total system ridership has increased by more than 12% over the previous year. In FY 09, the State significantly reduced transit funding and has now permanently eliminated funding at least for the next 5 years. In FY 09, NCTD reduced FTEs by 10%, raised fares, and cut services including FAST. Loss of State Transit Assistance and declining sales tax represent an economic tsunami for NCTD and transit operators across the state. Headlines Show Statewide Impacts Despite stimulus money, Bay Area transit faces “Armageddon”(San Jose Mercury News, Feb. 23, 2009) County transit agency to slash bus service (Orange County Register, Feb. 23, 2009) RTA to discuss service cutbacks (Riverside Press- Enterprise, Feb. 25, 2009) Budget woes force BBB to make cuts (Santa Monica Daily Press, Feb. 4, 2009) Stimulus still falls short of state cuts (San Francisco Examiner, Feb. 26, 2009) 5# Cost of Doing Business Five Year Financial Outlook Shows Growing Deficits $0 $20 $40 $60 $80 $100 $120 FY2009 Estimate FY2010 Draft Budget FY2011 Est.FY2012 Est.FY2013 Est.MillionsOperating Revenues Operating Expenses & Debt Service Federal funding for Sprinter start-up ends after FY 2010 Annual deficit grows from $15 million in FY 2011 to $20M in FY 2013 Key Factor in NCTD Projected Deficits State Diverted $63 million of Transit Funds STA Funding $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 Million $STA Funding Diverted STA Funding Received STA Funding Diverted 3.5 2.3 0 5.2 9.4 10.5 10.8 10.9 11.1 63.7 STA Funding Received 5.0 5.3 9 4.3 1.1 0 0 0 0 2005 Actual 2006 Actual 2007 Actual 2008 Actual 2009 Y/E Estimate 2010 Draft Budget* 2011 Estimate* 2012 Estimate* 2013 Estimate* Cumulative Diverted $63 million *Note: FY2010 - FY2013 estimates assume comparable levels in STA and spillover funding as of FY 2009 Key Factor in NCTD’s Projected Deficits Declining Sales Tax Revenue FY 2010 Estimates - 10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 Transnet 11,367,000 13,315,000 11,418,000 10,865,000 TDA 38,694,000 38,879,000 33,385,000 30,586,000 Estimate Issued Feb 2006 Estimate Issued Feb 2007 Estimate Issued Feb 2008 Current Estimate Key Factor in NCTD’s Projected Deficits Flat Sales Tax Revenue Estimates for Future Years $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 TransNet 10,600,000 10,807,000 10,807,000 10,915,070 11,133,371 TDA 30,800,000 30,586,000 30,586,000 30,891,860 32,127,534 FY 2009 Projection FY 2010 Draft Budget FY 2011 Estimate FY 2012 Estimate FY 2013 Estimate Note: FY09 and FY10 based on SANDAG projections. FY2011 –FY 2013 based on NCTD projections and assumes no increase in FY 2011, 1% increase in FY 2012 and 2% increase in FY 2012 Sizing up NCTD’s Projected Deficits NCTD’s funding challenge is not episodic-it’s structural. The FY 13 deficit of $20.5 million represents 22% of the FY 09 adopted budget. Loss of state revenues is permanent and current revenues are not keeping up with expenses. NCTD would have to lay off all 263 of its bus operators and 66 of its 75 fleet maintenance workers to balance its 2013 budget. NCTD’s alternatives to further cut costs are limited given capital maintenance obligations for our rail services. Key Budget Development Assumptions The current budget process is not just about FY 2010. FY 2010 is a transition year. NCTD must live within existing public funding streams. First priority is to deliver transit services. All options are on the table to balance our budget. How are we responding to this fiscal crisis? Innovate and Reshape NCTD’s Business Model through development of Business Plan Conducting financial and performance analysis of NCTD and its business units-will explore all options to reduce costs while mitigating impacts to customers Re-engineering NCTD’s service delivery plan to provide market segmented services through a Comprehensive Operations Analysis/Mobility Plan Exploring opportunities to increase and diversify revenues through joint development Transit Funding Lessons Learned Santa Clara County Valley Transportation Authority sales tax revenues went from $184 million to $133 million in 2 years (2001-2003) Service was cut by 16%, significant fare increases, staff was reduced by 23% (646 positions), and Board authorized $80 million bonding authority to cover budget shortfall Implemented a Business Improvement Plan that included Comprehensive Operations Analysis and overhauled business model to reduce costs and improve efficiency One-time and episodic funding is good and may be a viable alternative but results in transit schizophrenia if a long term solution is not ultimately implemented. Both the state and the federal government have clearly indicated that they are not interested in funding transit operating costs. Transportation funding like our personal finances; requires a diversified funding and investment strategy. Need long term funding solution that is reliable and grows commensurate with cost of doing business. Future funding initiatives should only proceed if the costs of meeting today’s and tomorrow’s needs are included with a sufficient reserve to better withstand fluctuations in the economy.