Metro. Board Report SUBJECT: FISCAL YEAR 2016 (FY16) BUDGET ACTION: ADOPT THE FY16 BUDGET RECOMMENDATIONS

Transcription

1 Metro Board Report Los Angeles County Metropolitan Transportation Authority One Gateway Plaza 3rd Floor Board Room Los Angeles, CA 1 File #: , Version: 2 SUBJECT: FISCAL YEAR 2016 (FY16) BUDGET ACTION: ADOPT THE FY16 BUDGET RECOMMENDATIONS FINANCE, BUDGET &AUDIT COMMITTEE PUBLIC HEARING - PROPOSED FY16 BUDGET May 20, 2015 Adopt the FY16 Budget as presented in the budget document (provided in a separate transmittal). Approve the Reimbursement Resolution declaring Metro's intention to issue debt in FY16 for capital projects (provided in Attachment A). Actual debt issuance will require separate Board approval. ISSUE State Law (Public Utilities Code Section ) requires Metro to adopt an annual budget to manage the revenues and expenses of the agency's projects and programs. The budget is the legal authorization to obligate and spend funds and to implement Board policy. It includes all operating, capital, planning and programming, debt service requirements, and general fund activities for the fiscal year. Budget detail is a management plan for financial activity and is prepared at the fund, project, department, and expenditure level. The legal level of control is at the fund level. Total annual expenditures cannot exceed the final appropriation by the Board except for capital expenditures, which are authorized on alife-of-project basis. Copies of the proposed budget document were made available to the public on May 5, 2015, both electronically at and through the Records Management Center (RMC) at RMC(c~metro.net. Printed copies of the budget document were made available at the RMC on the Plaza level of the Gateway Building on the same day. The public hearing is scheduled for May 20, Advance public notification of this hearing was issued through advertisements posted in over two dozen news publications. The FY16 Budget development process started in December 2015 with monthly updates to the Finance, Budget, &Audit Committee. Additionally, in that time, Metro staff have provided 22 budget briefings to Board staff and have answered all questions received from Board staff. Metro Page 1 of 6 Printed on 5/12/2015 powered by L2gistar~'s

2 File #: , Version: 2 DISCUSSION The proposed FY16 Budget is balanced at $5.6 billion in total agency expenditures with a small increase of $53.4 million, or one percent, from $5.5 billion in FY15. This year-over-year budget increase, which is less than half of the Consumer Price Index (CPI), demonstrates Metro's commitment to fiscal discipline to ensure continued financial stability for the agency while moving forward on the following transportation priorities: Safety and security Transit service quality improvement, including signal prioritization New bus and rail vehicle purchases Delivery of rail and highway projects Opening of Expo 2 extension to Santa Monica and Gold Line Foothill 2A extension to Azusa Construction of Regional Connector, Purple Line Extension Segment 1, and Crenshaw/LAX rail lines Bike programs Technology enhancements, WiFi, TAP mobile app State of good repair Union Station Other new initiatives such as first last mile and active transportation Further, in order to ensure that the FY16 Budget applied appropriate calculations on future costs and revenues, the following assumptions were used: CPI of 1.97%, which is the midpoint between Beacon and UCLA, the leading economic forecasts for the Los Angeles region. FY16 sales tax growth of 3.2%, based on FY15 year-to-date experience; this is conservative compared to Beacon, UCLA, and MUNI forecasts. Fare revenue is estimated at $376M based on the new fare restructure and boarding projections with the addition of new rail services. Expo 2 and Gold Line Foothill 2A extensions are projected to open in the fourth quarter of FY16. An additional 60 new FTEs to be added through the budget process, justified by new services or projects as directed. For SMART, ATU, TCU and AFSCME members, FY16 Proposed Budget salaries and fringe benefits grow by negotiated rates per the Union Contract terms; Non-Contract salary increase of 3% in line with negotiated union contracts. Expense consumables (e.g. fuel, parts) linked directly to service levels. Bus Revenue Service Hours to remain constant at 7,061,700 hours, with boardings to also remain constant. Rail Revenue Services Hours to increase by 66,700 hours (6.5%) due to the expansion, for a Metro Page 2 of 6 Printed on 5/12/2015 powered by LegistarT"'

3 File #: , Version: 2 total of 1,094,500 hours in FY16. Since FY10, Metro's total budget has increased by 44% from $3.9 billion to the proposed $5.6 billion in FY16, reflecting $1.7 billion in growth, mainly due to increased capital programs for improving deferred maintenance, increasing safety and security measures, and constructing Measure R Transit and Highway projects. FY10 Total Budge: $3.9B FY16'' Total Budget: $5.6B.... "Proposed Subsidy Funding WMetro =_ and Debt Service Operations -- 51,397M (3S%) 51,192M (31 /a},..:.,. ~,~.: _ Gen Adn~m ^~ ~,'' -', ~,~ &Agency Gen Admits ~ ~g~j~ Oversight &Agency j73m(7%y.~ :'j1,1418m(29%).fir.. Oversight..z ' ~k ~ s?;; ii;z: S104M(3%1 a ~f~~r,,r General Ptannin9, ~ ~y ff%`', Programs General Planning, ~%' ~i,~% f`~j~'~~~ S100M(2%} Programs534M(t%) ~ Freeway Freeway ~ Services Services ~ ^~~ "'~-~~.,.,,,", ^~ S94bt~2%) Subsidy Funding and Debt Service S1,707M (31 ~) Metro [Sme~t'~ne.~ The proposed FY16 Budget of $5.6 billion provides the resources necessary to maintain existing service levels; to continue Metro's emphasis on safety; to integrate, test, and operate two new rail line extensions opening in the fourth quarter of the fiscal year; and to escalate construction activities for the Crenshaw/LAX line, Regional Connector, and Purple Line Extension Phase I. It further reduces debt expenditures $6 million annually for the 30-year life of the refinanced debt. Additionally, the FY16 Budget delivers funding for the commencement of heavy rail vehicle procurement and the purchase of 350 new buses and 78 new light rail vehicles, expected to arrive over the following few years. The FY16 Budget provides increased subsidies to Municipal operators, local cities, and the County of Los Angeles; increases in Highway subsidies to subregional projects; increases to Highway spending on I-5 and I-605; and an anticipated doubling in ExpressLanes toll revenues - to $62 million -which will enhance transportation and transit services along and near the I-110 and I-10 ExpressLane corridors. Overall, the budget includes additional spending on increased agency support to carry out its core mission of planning, constructing, and operating amulti-modal transportation system. Attachments B (Summary of Agency Resources) and C (Summary of Agency Expenditures) provide Metro Page 3 of 6 Printed on 5/12/2015 powered by LegistarT"'

4 File #: , Version: 2 a high-level summary showing the agency's FY16 expenditures and resources. FTEs As shown in Attachment D, the FY16 Budget proposes to add an additional 60 FTEs, which includes 5 Contract FTEs in Communications for the Xerox call center transition plus 55 Non-Contract FTEs in the following departments: Office of the Inspector General - 3 FTEs for additional oversight of construction projects; Equal Employment Opportunity Office - 1 FTE to meet Federal EEO regulation requirements; Enterprise Risk &Safety Management - 7 FTEs for construction safety monitoring and evaluation; Labor/Employee Relations - 2 FTEs to oversee the additional work load supporting agency recruitments and improve hiring processes; Program Management - 4 FTEs for project management, budget and cost estimates for the Purple Line Extension; Congesli~r~ Reciuctiar~ - 3 FTEs for ExpressLane master planning and management and improved traffic systems data-sharing coordination; Engineering &Construction - 15 FTEs for SCRIP, Highway projects on the I-605 and I-5, and seed positions to allow the start of recruitment of Metro personnel to replace construction management consultant positions in Transit Project Delivery; Finance and Budget - 8 FTEs due to support need increases for staff, TAP Munis, public engagement, and TIFIA loan management; Information Technology - 3 FTEs for payment card industry (PCI) and cyber security, payroll systems and increased server maintenance and security; Planning &Development - 3 FTEs for Eastside Phase II study, Joint Development, and market research and community outreach; and, Vendor/Contract Management - 6 FTEs for Measure R transit construction contract management and contract labor compliance. Since the FY15 Budget was approved by the Board, an additional 319 positions were added for the Gold Line Foothill 2A and Expo Line Phase 2 extensions, initially for systems integration and prerevenue operations, and thereafter for ongoing operations and maintenance. Taking into account these 319 and all other positions previously authorized by the Board of Directors, the total FY16 FTE request is 9,717 FTEs, which includes the 60 new FTEs described above. Communications' FY16 budget and FTE requests will be discussed under separate cover once a new Chief Communications Officer is on board. Public Engagement A focus in the development of the FY16 Budget was increased engagement of the public. In addition to presentations to citizens' Advisory Committees and Regional Service Councils, this year included Metro Page 4 of 6 Printed on 5/12/2015 powered by LegistarT""

5 File #: , Version: 2 the addition of (a) posts on Metro's The Source online weblog and (b) a Public Forum, held on Saturday, April 25. Attachment E provides a summary of public comments received to date and considered during the FY16 Budget development process. A complete list of areas of discussion from public comment collected from all sources will be provided under separate cover. Reimbursement Resolution Federal tax law requires that bond proceeds can only be used for expenses incurred after the issuance of bonds. In order to be reimbursed for expenses incurred before the bond issue, Metro must pass a resolution indicating the intent to issue bonds at a later date for the expenditures described in the reimbursement resolution. The attached resolution (Attachment A) is included in the budget board report as a matter of course, to tie expenditures anticipated in the budget to proceeds from future bond issuance, and it must be approved as an item separate from the budget document. DETERMINATION OF SAFETY IMPACT The proposed budget continues to make safety a primary goal and provides funding for new and ongoing safety programs lhr~ugl~out Metro. FINANCIAL IMPACT The proposed FY16 Budget (provided in a separate transmittal) is $5.6 billion. The budget includes expenditures and appropriates the resources necessary to fund them. The proposed budget demonstrates Metro's ongoing commitment to meeting its capital and operating obligations, which is a requirement necessary in order to continue to receive subsidies from the state and federal governments and to administer regional transportation funding to local cities and Municipal Operators. NEXT STEPS Implement and monitor the FY16 Budget, modify the budget at midyear as required based on the vision and priorities of the new CEO, identify areas for improvement, develop multi-year financial forecasts, and regularly update the Board on the agency's ongoing financial performance. ATTACHMENTS Attachment A - Reimbursement Resolution of Metro for Fiscal Year 2016 Attachment B - Summary of Agency Resources Attachment C - Summary of Agency Expenditures Attachment D - FY16 FTEs Attachment E - FY16 Budget - Summary of Public Comments Received Prepared by: Luke H. Klipp, Budget Analyst, (213) Melissa Wang, Executive Officer, Finance, (213) Metro Page 5 of 6 Printed on 5/12/2015 powered by LegistarT"'

6 File #: , Version: 2 Nalini Ahuja Executive Director, Finance & B Phill. Washi n Chief Executive C7fficer Metro Page 6 of 6 Printed on 5/12/2015 powered by LegistarT"'

7 ATTACHMENT A REIMBURSEMENT RESOLUTION OF THE LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY FOR FISCAL YEAR 2016 WHEREAS, the Los Angeles County Metropolitan Transportation Authority (the "Metro") desires and intends to finance certain costs relating to (i) the design, engineering, construction, equipage and acquisition of light rail lines including the Exposition Line Phase II Project, (ii) the design, engineering, construction, equipage and acquisitions for the Southwestern Rail Maintenance Yard, (iii) the design, engineering, construction, equipage and acquisitions for the Rail Deferred Maintenance Project, (iv) the design, engineering, construction, equipage and acquisitions for the Foothill Operating Maintenance Yard, (v) the design, engineering, construction, equipage and acquisition of various segments of the Universal City Pedestrian Bridge, (vi) the design, engineering and construction of Metro Blue Line Pedestrian Swing Gates, (vii) the design, engineering, construction, equipage and acquisition of the Patsaouras Transit Plaza Improvements, (viii) the design, engineering and other related close out costs of the I- 405 Car Pool Lanes project, (ix) the engineering, construction, renovation, maintenance, and/or acquisition of various capital facilities and equipment, including buses and rail cars, related to service operation, (x) design, engineering, construction, equipage and acquisition of various highway projects including soundwalls and carpool lanes, and (xi) to other transit related projects (each a "Project' and collectively, the "Projects"); WHEREAS, to the extent that federal and/or state grant funding budgeted to be received during FY16 is delayed or reduced, the Los Angeles County Metropolitan Transportation Authority desires and intends to finance certain costs relating to the Projects. WHEREAS, Metro expects to issue debt through the issuance of tax-exempt bond issues to pay for these expenditures, which bond issues will have three separate security sources, Proposition A, Proposition C and Measure R sales tax revenues, respectively, or grant revenues to finance the costs of the Project on a permanent basis (the "Debt'); WHEREAS, Metro expects to expend moneys of the Enterprise Fund (other than moneys derived from the issuance of bonds) on expenditures relating to the costs of the Projects prior to the issuance of the Debt, which expenditures will be properly chargeable to a capital account under general federal income tax principles; WHEREAS, Metro reasonably expects to reimburse certain of such capital expenditures with the proceeds of the Debt; WHEREAS, Metro expects that the amount of Debt that will be issued to pay for the costs of the Projects will not exceed $261 million for Proposition A, $143 million for Proposition C, and $160 million for Measure R; WHEREAS, at the time of each reimbursement, Metro will evidence the reimbursement in writing, which identifies the allocation of the proceeds of the Debt to Metro, for the purpose of reimbursing Metro for the capital expenditures made prior to the issuance of the Debt;

8 WHEREAS, Metro expects to make reimbursement allocations no later than eighteen (18) months after the later of (i) the date on which the earliest original expenditure for the Project is paid or (ii) the date on which the Project is placed in service (or abandoned), but in no event later than three (3) years after the date on which the earliest original expenditure for the Project is paid; WHEREAS, Metro will not, within one (1) year of the reimbursement allocation, use the proceeds of the Debt received by way of a reimbursement allocation in a manner that will result in the creation of replacement proceeds of the Debt or another issue (e.g., Metro will not pledge or use the proceeds received as reimbursement for the payment of debt service on the Debt or another issue, except that the proceeds of the Debt can be deposited in a bona fide debt service fund); and WHEREAS, this Resolution is intended to be a "declaration of official intent" in accordance with Section of the Treasury Regulations. NOW, THEREFORE, BE IT RESOLVED, that (i) all of the foregoing recitals are true and correct and (ii) in accordance with Section of the Treasury Regulations, Metro declares its intention to iss~ie ~eht in an amount not to exceed $261 million for Proposition A, $143 million for Proposition C, and $160 million for Measure R; the proceeds of which will be used to pay for the costs of the Projects, including the reimbursement to Metro for certain capital expenditures relating to the Projects made prior to the issuance of the Debt.

9 TTACHMENT B Summary of Agency Resources ($ in millions) 1 Sales Taxes (Props A, C, and Measure R) 2 Federal, State, and Local Grants 3 TDA and STA 4 Passenger Fares 5 ExpressLane, Advertising, and Other Re~,enues 7 Prior Year Carryo~+er 8 Total Resources $ 2, % /a % % 1, % $ 5, /a Expresslar Advertisii and OthE 3%

10 ATTACHMENT C Summary of A~encV Expenditures millions 1 Metro Operations $ 1, % 2 Metro Capital 2, % 3 Subsidy Funding Programs 1, % 4 Congestion Management % 5 General Planning and Programs % 6 Debt Service % 7 Total Expenditures $ 5, % General Planning and Programs - 3% Congestion..: f. ~~ ~~~~~~~.~~.:..~.~,~.~~.:~~.:~~~.~,. Management.~ Iry > ~ ~e} ~~ :~.:~x:~~~:,~~.~..~,.~.~.~.~.:~.~.:~;~. ~. ~ {. ~:~~~~~t,~~:~,~~.,~,~,.~.:kk:~;~:. y:' : i4:'v~~~.~^tk.~1~4:kk:'~5a.'' :4k:'v~k"' :'i~'.~'ti l'. 2 /... ~. ~~,'~!{~., ^ O,t+~ :~ -~: : ~.\'tom*,\^~.~.'w.~:kk:,\`:'kti:t':';t~','~.` : ~ ;{;., f, ~ v :'titi.~ti'4~ti 4~4~ :M~k:\k:4 kk:4~.~' :tk.~~h.~'iti } ~.~'~.k.~'ti1k.'ti~~ :kk:'~.k.~ti 4~~~'4~4.~ti 4~*:'44:'~~t~'~.~'ti? } }.,44,x.:1'*.. ~ ~. ~. ~ ~. ~ }. v,:'~.~k~ :'1"^~.~~4~tilk:'t'k"'ti~.k ~'ti~k~~.'4k:4k ~ :4` : :. ~. ~ :S:ubsidy:F:unding::.:. ~> :.~~.:~k:~,~:~;.~.,,~~.:~ti:,..~.:~~:~~~.~.~,k~~~ :. ~ :. ~. ~ :Programs ~ : ~ : ~ : ~. ~ ~ ~.~~:~:~.:~~.:~;~:~.:~~:.h~.:~. `;.r`r i''s ~~4 ~ +..

11 FY16 FTEs 2 Board of Directors Office of the Inspector General - Construction Oversight 3 Chief Executive Office 4 Chief Executive Office EEO 5 Chief Policy Office Enterprise Risk &Safety Mgmt for Construction Safety Inspection, 3 for Crenshaw Line Safety 7 Labor/Employee Relations HR Increased Recruitment Volume 8 LA Metro Protective Svcs Program Management Purple Line Extension Budget and Cost Management 10 Chief Executive Office Total Communications Congestion Reduction RIITS, 2 ExpressLane Master Plan &Management 13 Engineering &Construction 14 Highway Project Delivery I-605, I-5 15 Regional Rail SCRIP 16 Transit Project Delivery Transit Construction 17 Engineering &Construction Total ATTACHMENT D 18 Finance &Budget Billing, Pens/Benefits, TIFIA, TAP Munis, Online Budget, NTD, ACCESS 19 Information Technology Payroll, PCI, Increase Server Maintenance, Security 20 Operations Planning &Development Eastside Phase II, Joint Development, Market research 22 Vendor/Contract Mgmt DEOD, 4 Measure R Transit Construction Contract Managers 23 Non-Contract Total 1, , Contract Total 8, ,258 5 for Xerox cal I center transition 25 Aeencv Total INon-Contract

12 ATTACHMENT E FY16 Budget Summary of Public Engagement Efforts and Comments Received Public Engagement Efforts Strategy Action Summary/Recap Stakeholder Service Councils (SC) Comments meetings Citizens Advisory Council (CAC) Service Councils: 22 Streets and Freeways CAC: 8 Subcommittee (SFS) SFS: 4 Bus Operations Subcommittee BOS: 1 (BOS) Technical Advisory Committee (TAC) Website Public access to budget details Page views: 605 On-line survey comments: 16 Budget Survey: 41 Social Media Podcast, blog posts Blog hits: 385 Podcast views: 302 Source comments: 11 Facebook likes: 19 Twitter: 14 re-tweets E-blast >24,000 s Messages on-hold On-hold message began April 1 Publications Notification of public forum/hearing Video views: 323 (multi-language) 60 publications Take-ones Distribution of >81,000 throughout Phone calls: 2 (English/Spanish) system and at stakeholder events Budget Public Attendance: 18 Forum

13 Comments Received Comments received from the public during Metro's FY16 budget outreach process are summarized below. Feedback was received from the following sources and groups: Budget Public Forum Service Council Meetings Citizens Advisory Council Streets and Freeways Subcommittee Bus Operations Subcommittee Technical Advisory Committee Online budget survey Written comments received via mail and Social media outreach, including podcasts and blog posts Key Topics Synopsis of Comments Transit More routes, more frequent service, better on time performance, 24 Service hour service - F~o~cus on mass transit, especially light rail; accelerate these projects Rail construction causes inconveniences because many bus stops are temporarily out of service Existence of short lines makes it inconvenient to travel the longer route because headways are longer Increase budget for maintenance on older buses There is no need to buy 350 new buses with rail lines opening; this will cause duplicative service Monitor the growth of the capital program as a percentage of the total budget Minimize subsidies by having companies bid competitively for the right to run bus lines Many comments or complaints about specific routes and specific transit service; specific services cited include: o Add or improve bus service: near the Crenshaw Line construction, to La Habra, to Disneyland, the new Valley Express bus, on Lincoln through Westchester to the Palisades o Improve North Hollywood station and Red Line, including bus connections o Increase budget for Green Line station refurbishments o Add a train to Woodland Hills o Do not lengthen the Orange Line buses o Convert regular buses to trolleybuses to decrease pollution o More ticket vending machines and benches at transit stations o Upgrade the Orange Line to light rail service Alternative Partner with private companies to build housing and open more Revenues retail stores at transit stations Charge for parking in order to generate additional revenues

14 Ke Topics S nopsis of Comments ADA Bike and pedestrian projects can actually make travel for the Comments disabled more difficult Metro has an obli ation to follow accessibilit requirements Technology TPIS screens are not accurate Improve the communication of service alerts to Metro customers (i.e. add alerts on new bus cameras) Expand TAP program to be used for goods purchase, similar to Visa or MasterCard Introduce automatic fare caps on the TAP card Coordinate with other agencies to create a regional transit mobile phone app Safety Complaints about lack of LASD presence and ineffectiveness of law Security enforcement Find ways to control fare evasion Visit other cities such as New York, London or Tokyo to learn from their security model and apply those lessons to the Metro system Permanently staff transit stations with law enforcement officers Highway Some suggested expanding the ExpressLanes project to other Programs highways; conversely, others stated that charging for usage of these lanes is not fair to low income drivers Cancel the 710 North project and use the funds to build the Gold Line out to the LA County border No room to widen the 5 freeway between the 605 and Downtown LA Install cameras on Freeway Service Patrol vehicles to protect drivers Numerous suggestions to reduce or eliminate freeway funding Customer Customer service should be a top priority Service Customer Service should be open longer; should be easier for the public to give feedback and get a response Customer Relations should provide faster responses Fares Decrease the base fare and decrease the monthly pass to $50 Preference for alternative fare structures, such as distance based