Adopted Budget Tri-County Metropolitan Transportation District of Oregon

Transcription

1 Adopted Budget Tri-County Metropolitan Transportation District of Oregon

2 TABLE OF CONTENTS Page Overview Board of Directors... 1 Citizens Advisory Committee/Budget... 1 TriMet Officials... 1 Budget Message... 2 Financial Summary General Fund Resource Summary General Fund Requirement Summary Capital Program Resource Summary Capital Program Requirement Summary Light Rail Program Resource Summary Light Rail Program Requirement Summary General Obligation Bond Debt Service Fund Summary of Fund History Pass through Revenues and Requirements Resources (General Fund) General Fund Resources General Fund Resource Summary General Fund Resource Summary by Source TriMet Continuing Revenues and Calculation of Payroll Tax Debt Service Ratio Federal Grant (Non-State/Local) Summary State/Local (Non-Federal) General Fund Grant Summary Requirements (General Fund) General Fund Requirements General Fund Requirement Summary General Fund Requirements by Object Class General Fund Personal Services Schedule General Fund Materials & Services Schedule Summary of General Fund Employees Summary of Fixed Route and Accessible Transportation Service Summary of Fixed Route and Accessible Transportation Vehicles Page Debt Service Summary of General Fund Debt Service Summary of General Fund Debt Service Principal and Interest OPEB & Pension UAAL Office of the General Manager Division Division Summary Office of the General Manager Media Relations Government Affairs Diversity and Transit Equity Internal Audit Communications & Technology Division Division Summary Administration Operating Projects Organization Development Information Technology Marketing Customer Service Finance & Administration Division Division Summary Administration Financial Services Financial Analysis & Grants Administration Risk Management Procurement & Contracts Fare Revenue General Counsel/Human Resources Division Division Summary Administration Legal Services Human Resource Services

3 Page Operations Division Division Summary Administration & Support Operating Projects Safety & Security Bus Transportation Scheduling Field Operations Transportation Planning Accessible Transportation Programs-LIFT Accessible Transportation Programs-MTP Bus Maintenance Facilities Management Rail Transportation Rail Maintenance of Way Rail Equipment Maintenance Commuter Rail Streetcar Capital Projects Division Division Summary Administration Operating Projects Bus Stop Development Facilities Management Development & Operations Support Capital Program Capital Program Resource Summary Capital Program Requirement Summary Capital Program Detail Page Debt Service Fund General Obligation Bond Debt Service Fund Schedule of Future General Obligation Bond Debt Service Fund General Information Exhibit 1 Ridership and Service (Fixed Route) Exhibit 2 Fares and Passenger Revenue (Fixed Route) Exhibit 3 Employer Taxes (Unadjusted CPI-W) Exhibit 4 Expenses (Fixed Route) Exhibit 5 Fixed Route Financial Indicators Exhibit 6 LIFT Revenue, Ridership and Service Exhibit 7 Local Economic Trends Exhibit 8 Debt and Capital Investment Local Economic Trends Ridership Service Expense Revenue Appendices Notice of Budget Committee Hearing LB-1 Notice of Budget Hearing LB-2 Funds Not Requiring a Property Tax To Be Levied LB-3 Funds Requiring a Property Tax To Be Levied LB-50 Notice of Property Tax Levy Resolution Approving FY11-12 Budget Affidavit of Publication, Tax Supervising & Conservation Commission Hearing Tax Supervising & Conservation Commission Letter Resolution Adopting FY11-12 Budget Light Rail Program Light Rail Program Resource Summary Light Rail Program Requirement Summary Light Rail Program Requirements (Detailed By Project) Division Summary Wilsonville to Beaverton Commuter Rail Project South Corridor Project Milwaukie Light Rail Project Columbia River Crossing Project

4 BOARD OF DIRECTORS Rick Van Beveren, President (District #1) Tiffany Sweitzer, Vice President (District #2) Steve Clark (District #3) Consuelo Saragoza (District #4) Dr. T. Allen Bethel (District #5) Lynn Lehrbach, Secretary (District #6) Hakeem Olanrewaju (District #7) CITIZENS ADVISORY COMMITTEE/BUDGET Cynthia Chilton SHIBA Volunteer Medicare Counselor Luann Pelton Integra Telecom Paul Schlesinger Schlesinger Companies Sarah Dammen ECONorthwest Peter Lizotte ACME Business Consulting LLC TRIMET OFFICIALS Neil McFarlane, General Manager Beth dehamel, Budget Officer Mailing Address: TriMet 4012 SE 17 th Avenue Portland, Oregon Mailing Address: Board of Directors Office of the General Manager 4012 SE 17 th Avenue Portland, Oregon Staff to the Board: Kelly Runnion Telephone Facsimile Mailing Address: Office of the Executive Director Finance & Administration Division 4012 SE 17 th Avenue Portland, Oregon Staff to the Committee: Petra Churchill Telephone Facsimile Page 1

5 BUDGET MESSAGE - FISCAL YEAR Overview The TriMet Adopted Budget for FY12 outlines a resource and expenditure plan for the period beginning July 1, 2011 and ending June 30, The FY12 Adopted Budget includes resources and expenditures of $ million, including $ million for operations and debt service $ million for rail construction $ million for General Fund capital programs $ million for rail project interim financing $ million for pass-through programs $ million in restricted and unrestricted cash and contingency TriMet s budget process begins with a ten year financial forecast of revenues and expenditures released in December. The forecast is the basis for budget decisions and long-term decision making. The financial forecast presents revenue and expenditure assumptions in detail both for transparency and to help coordinate decisions. After reviewing the forecast results, the General Manager decides which revenue and expenditure measures TriMet will pursue and the level of capital and operating expense in the upcoming budget year. The forecast is updated throughout the budget process and after budget adoption. Results are communicated to leadership and measures to reduce expenditures are taken if needed. The FY12 Adopted Budget reflects TriMet s spending priorities, as well as the realities of a constrained fiscal environment. It also incorporates a corrective action plan defined by TriMet Board policy when diesel fuel prices rise quickly, as they have done recently. In addition, the General Manager is initiating a near-term review of the TriMet administrative organization, with the aim of streamlining to focus on safety and excellent customer service and communication. To manage the challenges ahead, the Adopted FY12 Budget incorporates the following initiatives: Funding safety initiatives recommended by the TriMet Safety & Service Excellence Task Force. Safety is valued for its own sake. It is also a smart investment with high returns. Restoring a small amount of bus and MAX service to reduce overcrowding and maintain schedule reliability. Restore annual bus replacement to provide better customer service and control maintenance costs. Review of management positions with the goal to re-focus to better support safety and customer service Bring labor costs in line with a sustainable financial future. Sign Portland-Milwaukie Light Rail Project Full Funding Grant Agreement with the federal government. A critically important assumption upon which TriMet s financial forecast and the FY12 Adopted Budget are based is that TriMet enters into a Working and Wage Agreement (WWA) with the Amalgamated Transit Union, probably through the binding arbitration process, and that the wages and benefits are consistent with those contained in TriMet s July 2010 Final Offer, which was submitted to the Employee Relations Board and released to the public summer It is imperative that wage growth and benefits for active and retired union employees are in closer alignment with other public sector employees in Oregon, as that is essential to maintaining fiscal stability without additional service cuts. The continuation of current benefits levels and wage provisions found in the expired WWA would result in the need to cut service 10% in FY12, followed by Page 2

6 additional service cuts year after year. TriMet s operating revenues 1 simply do not keep pace with wage and benefit growth of the past. Between 2003 and 2009, the period of the last labor contract, payroll, pension and medical benefit expenses for active union employees increased 36%, while underlying growth 2 of payroll taxes was 29%. The number of active union employees in that period increased just 1%. Between FY00 and FY10, active and retiree medical benefits increased from 12% of underlying payroll tax revenues to 28%. If these trends continue, active and retiree medical expense as a percent of payroll tax revenues is projected to be 62% of underlying payroll taxes by FY20, undermining the financial stability of the District. TriMet has taken many actions over the last ten years to bring revenues and expenditures in balance before looking to the labor contract: TriMet obtained new revenues for new service Revenues from the increase in the payroll tax rate from.6218% to.7218% between 2005 and 2014, plus fare revenue from new service pays for the operating cost of WES, Green line MAX, additional LIFT service and Streetcar extensions. It also pays for TriMet s share of the capital costs of WES and Green line. These new revenues will also pay for TriMet s share of Portland to Milwaukie light rail operations and debt service. Fares were increased 35% more than inflation over the last 10 years. Service was reduced September 2009, December 2009, June 2010 and September TriMet collects 48% more operating revenue per capita ($258) than the average of this group of peer agencies: TriMet, Denver, Orange County, Sacramento, Salt Lake City, San Diego, Oakland, San Jose and Seattle. Only Seattle (King County) collects more operating revenue per capita ($284) than TriMet. Note that TriMet provides 61% more service per capita compared to its peer group, more than any of its peers. Service compared is revenue miles adjusted for rail capacity. Data is from the 2009 National Transit Database. 2 Underlying growth excludes revenues from increases in the payroll tax rate, which are dedicated to new service and capital investments 13% of bus service hours eliminated 10% service cuts on Blue, Red and Yellow line MAX Originally planned service on MAX Green line was cut by 33% Capital expenditures were reduced to the minimum necessary Growth rate of LIFT/ADA paratransit service has been reduced with in-person assessments and RideWise fixed route travel training Management staff has been reduced 13% A wage freeze for non-union employees has been in place FY09-FY11 Benefits for active and retired non-union employees were changed to reduce costs These last ten years encompass two deep regional recessions, during which underlying growth of payroll taxes was just 2.7% per year, about half the long term historical average. Continuing expenditures exceeded continuing revenues in eight out of the last eleven years despite TriMet s efforts to reduce spending and increase revenues to maintain fiscal stability. Over the next five years, even assuming management s offer is implemented, TriMet will continue to need to adjust trend spending down and increase revenues to maintain fiscal stability. Other factors also will impact the FY12 Adopted Budget. The cost of diesel fuel is now forecast to be $2.9 million over budget in FY11 and is projected to be $4.5 million over the December budget forecast for FY12. The FY12 budget plan as proposed constitutes the corrective action plan required by TriMet Board policy. The General Manager s expenditure and revenue recommendations for the FY12 Adopted Budget incorporate this and other new developments. Page 3

7 Revenues Revenues in the FY12 Adopted Budget reflect an emerging economic recovery characterized by slow job growth. Employment is not expected to return to pre-recession levels until 2014 or later. Approximately 55% of TriMet s continuing operating revenues 3 come from the employer payroll tax, the self-employment tax and the state-in-lieu payroll tax. In FY11, underlying employer payroll revenues are forecast to increase 4.7%, higher than the 3% budgeted. Consistent with other state and local forecasts, TriMet is projecting year over year regional wage growth will be 4% in FY12, 5% in FY13 and 4.7% in FY14. By comparison, the Oregon Executive Department, in its May 2011 forecast, is estimating Oregon wage growth to be 6.0% FY12, 5.3% FY13 and 5.4% FY14. Tri-County wages and employment trends historically are similar to statewide trends, except that the tri-county area has exhibited somewhat deeper wage and employment losses during and higher gains after, the last two recessions. The length and depth of recessions are difficult to predict. If payroll tax revenues do not materialize as projected, TriMet will need to make expenditure reductions. Self-employment tax revenues are forecast to be flat in FY11 and up 3.5% in FY12. State-in-lieu tax revenues are forecast to be flat in FY11 and FY12. At approximately 25% of continuing operating revenues, passenger fare revenue is TriMet s second largest source of operating funds. Passenger revenue has been growing at a faster rate than payroll tax revenue. Between FY00 and FY10, passenger revenues grew at an 3 This figure is calculated by excluding one-time revenues such as American Recovery and Reinvestment Act (ARRA) revenues, intergovernmental fund exchange revenues and Medical Transportation Program pass-through revenues from total operating revenues. average annual rate of 7.2% while underlying employer payroll tax revenues grew at an average annual rate of 2.7%. To keep revenues and expenditures in balance the FY12 Adopted Budget incorporates a fare increase September Adult cash fares are increased $.05. Youth and Honored Citizen cash fares are not increased. Adult pass fares are increased $4.00 and Youth pass prices are increased $1. TriMet traditionally has increased adult pass fares $2.00. The increase of $4.00 will generate an additional $1 million to help offset the cost of needed bus service improvements. In FY12, MAX ridership is projected to increase 3.5%, and bus ridership is projected to increase 2.6%. The FY12 Adopted Budget also incorporates the General Manager s recommendation to increase the Americans with Disabilities Act (ADA) complementary paratransit (LIFT) fare from $1.85 to $3.00 over the next four years. The FY12 Adopted Budget assumes the LIFT fare will increase to $2.15 per LIFT trip January 1, Both Lane Transit District in Eugene and Salem Cherriots offer a $3.00 one way paratransit fare, with no pass discount. The Americans with Disabilities Act permits transit agencies to charge fares for complementary paratransit service that are double the fixed route cash fare, or $4.10 for a two zone trip and $4.70 for an All Zone trip in the case of TriMet today. The proposed $3.00 one way fare will pay for about 10% of the operating cost per LIFT ride in four years. The proposed LIFT fare increase helps offset the additional costs of diesel fuel for LIFT and helps maintain both fixed route and LIFT service. Most elderly and people with disabilities use TriMet s fixed route service. Fixed route buses and MAX provide 11 million trips annually for the elderly and people with disabilities, compared to 1 million trips annually on LIFT door-to-door paratransit service. With the proposed fare changes, FY12 passenger revenue is forecast to be $104.5 million; a 6.7% increase over FY11 estimated passenger revenues. Page 4

8 Federal and State operating grants account for about 14% of continuing operating revenues (excluding ARRA and other one-time revenues). TriMet s FY Urbanized Area formula funds increased $2.5 million due to the addition of WES commuter rail operating statistics in the distribution formula. In FY12 TriMet s Section 5307 Urbanized Area formula funds are projected to decrease 13%. Section 5309 Rail Modernization funds are projected to decrease 25%. These are the annual reductions in the federal Mass Transit Program needed to bring program expenditures in balance with revenues generated by the 2.86 cent Mass Transit gas tax while also spending down the balances in the Mass Transit Trust Fund over the next three years. If Congress funds the FY12 Mass Transit Program at FY11 levels, transit agencies will face cliff reductions in FY13. Congress may find replacement revenues for the program in the general fund, or increase taxes to support the program, but neither scenario appears likely in the near future and TriMet cannot depend on it happening. $29 million of FY11 federal formula funds are recorded in the FY12 Adopted Budget. This artificially lowers FY11 funds and increases FY12 funds by $29 million. The reason for this is that Congress did not appropriate FY11 funds in time for TriMet to receive and draw down in FY11. Also included in the FY12 budgeted operating grants are: $13 million of MTIP funds 4 to pay annual debt service for the regional rail program, including Portland Mall I MTIP is the Metropolitan Transportation Improvement Program. Administered by Metro, the program distributes federal highway Surface Transportation Program (STP) and Congestion Mitigation and Air Quality (CMAQ) formula funds to regional transportation projects. Metro has committed to paying TriMet a stream of CMAQ and STP funds through FY27 to pay debt service on bonds issued for the regional rail program and other transit related projects. Page 5 construction, WES construction, Portland-Milwaukie Light Rail and other transit related projects. $4.68 million of federal funds provided by Metro to TriMet to administer a fund exchange for Metro s Transit Oriented Development Program ($2.88 million) and to repay Lake Oswego for its $1.8 million loan to Lake Oswego Streetcar project planning. These transactions have no adverse impact on the TriMet General Fund. American Reinvestment and Recovery Act (ARRA) reprogrammed funds. The ARRA program has been completed. TriMet projects came in $5.3 million under budget. $4.3 million of the savings were reallocated to onetime initiatives in the FY11 budget and $1.5 million of the additional savings will be invested in FY12 capital projects, as allowed by ARRA. The re-programmed funds are included in FY11 and FY12 estimated federal operating grants. Shown on its own line are $6.00 million of MTIP bond proceeds issued to fulfill certain provisions of the Revised and Restated Intergovernmental Agreement to Provide Regional Flexible Funds for the Milwaukie Light Rail Project, Commuter Rail, Portland-Lake Oswego Transit and Southwest Corridor Projects. The $6.00 million of MTIP bond proceeds will pay for Southwest Corridor Project planning. Metro is the lead agency on the Southwest Corridor Project. TriMet is the lead on the next phase of Lake Oswego Transit, should it progress. TriMet will issue the bonds and expects to release $6 million of the proceeds to Metro soon after the bonds are issued, creating an operating expense in FY12. The operating budget includes a like amount of expense that offsets the revenue, thus there is no impact on the General Fund.

9 Expenditures State operating grants are dedicated to elderly and disabled transportation programs. FY12 s $446,731 represents expected revenues from the on-going Special Transportation Fund (STF) program. The FY12 Adopted continuing operating requirements budget, after adjusting for programs like the Medical Transportation Program, fund exchanges, and other expenditures that are offset with a like amount of revenues, is increasing approximately 5.8% percent from the FY11 Budget and 6.3% from FY11 estimated operating requirements. This rate includes additional costs of building leases, utilities and diesel fuel, electricity for propulsion, and security, all of which increase at rates greater than inflation. It also includes capital and operating project carryover and the $7.8 million MBIA lease payment. As discussed above, the expenditure growth rate also incorporates the wage and benefit costs of Management s offer to the ATU, and benefits inflation for non-union employees. Major changes to expenditures and new programs in the FY12 Adopted Budget are: Diesel fuel. The world price of fuel has increased dramatically due to wide spread regime instability in the Middle East. The price today for untaxed diesel is around $3.25 per gallon. Based on the Energy Information Agency s 2011 and 2012 forecast of diesel fuel prices, we are budgeting for a FY12 price of $3.40 per gallon diesel and $4.25 per gallon for bio-diesel (TriMet uses blended fuel with 5% biodiesel, pursuant to City of Portland biodiesel requirements). This will increase annual costs approximately $4.5 million over the initial budget forecast. Safety investments. $1.2 million of continuing expense is added to the FY12 Adopted Budget to provide annual recertification training for all bus and rail operators and transportation supervisors. This was a key recommendation from the TriMet Safety & Service Excellence Task Force. Service adjustments. The FY12 budget addresses needed improvements to bus schedule reliability and to reduce bus overloads with about $1.0 million in additional bus service (about a 1% increase). In addition, small adjustments to low performing service are budgeted, reducing costs about $.3 million. Security and fare inspection. The FY12 Adopted budget includes additional contracted Transit Security Officers to provide security presence late-nights in Washington Park, to support Rose Quarter and Timbers Soccer events and safety protection for Skidmore Fountain MAX platforms when Saturday Market is open. The FY12 Adopted Budget also provides for the deployment of 6 additional fare inspectors. Two additional light rail vehicle apprentices are added to the budget to address the increased overhaul requirements of the Type 1 and Type 2 light rail fleets. This investment will help insure a forty year replacement cycle of the light rail fleet as well as maintain daily service reliability. Four more apprentices are forecast to be needed over the next two years for the same reasons. Health benefits costs for retirees (Other Post Employment Benefits or OPEB) are budgeted to be $20.1 million in the FY12 budget, an increase of $3 million over FY11 estimated costs. The FY12 expense reflects a projected 19 additional non-union retirees and an additional 120 union retirees in FY12. Costs also assume the management s labor offer is implemented and benefits rate increases of 8% January 1, The FY12 Adopted Budget reflects pay as you go funding of OPEB costs for retirees, and an initial deposit to an OPEB trust to begin funding future retiree OPEB benefits. The FY12 Adopted Budget Page 6

10 sets aside the value of the retiree medical benefit earned each year for new union employees hired to replace retired union employees or who are hired to operate additional service beginning in FY12. New non-union employees will not receive a retiree medical benefit when they retire. TriMet s retiree medical benefit began in the 1970 s. At that time the union defined benefit ( DB ) pension plan provided a replacement ratio of 25% of a bus operator s salary at retirement. In 1993, the union DB pension was improved for active and retired employees to today s 45%-50% replacement ratio, but the retiree medical benefit remained the same. In the meantime, retiree-medical disbursements have increased at an average annual rate of 18.3% per year, from $2.5 million in FY99 to $15.9 million in FY10. TriMet s retiree medical benefits are not affordable. TriMet fully recognizes that implementation of the measures below, needed to bring retiree-medical costs in line with a sustainable financial future, directly involve negotiations with the ATU. If no agreement can be reached, the parties will be bound by the outcome of binding interest arbitration. TriMet seeks the following objectives: 1. Reduce the cost for benefits for both current and future retirees. 2. Stem the future growth of the liability by funding the benefits earned each year (the normal cost) in a trust for new union employees who replace retirees or who are hired as TriMet adds service. The costs of this solution have been included in TriMet s financial forecast and the FY12 Adopted Budget. The proposed retiree medical benefit is highly competitive and exceeds those that are provided by other employers, public or private, in Oregon. The FY12 Adopted Budget reflects flat expenditure growth for LIFT complementary paratransit. Ridership demand is expected to be down in FY12 and FY13. Debt service for payroll tax bonds as well as MTIP bonds is budgeted at $38.5 million in FY12. Debt service will increase in FY12 as TriMet begins to make interest and principal payments on approximately $141 million of new MTIP bonds, but the increased cost is offset by a like amount of MTIP revenue provided to TriMet by Metro for debt service payments. Additionally, TriMet anticipates borrowing on its line of credit to fund FY12 bus replacement, farebox replacement and communications system replacement. The line of credit borrowing is expected to be replaced with long term payroll tax backed bonds sold in FY13. Finally, in FY12 TriMet has budgeted for a lease payment of $7.85 million. Payments due on this obligation are in irregular amounts over time. $550,000 is included in the FY12 budget for eastside Streetcar (Loop) startup expenses. 50% of these startup costs will be covered by the City of Portland. The Streetcar Loop extension is scheduled to open in FY13, so is not reflected in the 2012 budget. TriMet will participate in the operating costs of the extension of the Streetcar to OMSI and has committed $1.23 million in FY13 to fund a share of the operating cost. TriMet s funding participation, which was a commitment made before the recession, is the amount the service would cost if operated with buses at policy and demand driven headways. TriMet is funding its share of the operating cost of Streetcar to OMSI with revenues from the increase in the payroll tax rate from.6218% to.7218%. Page 7

11 Capital and Operating Project Budgets The FY12 Adopted Budget emphasizes the need to continually invest in the maintenance and replacement of capital assets. Major capital and operating project replacement expenditures include: $22.5 million for foot fixed route new buses to replace buses purchased in Funding sources are: $13.3 million of MTIP bond proceeds, FTA grants of $7.4 million and TriMet General Funds $1.8 million. 81 LIFT vehicles will be replaced, approximately 30% of the fleet. 64 of the 81 vehicles were purchased in 2001 and 17 were purchased in The replacement cost is $7.2 million. It is funded with $6.5 million of state elderly and disabled discretionary grant funds. TriMet will provide $700,000 of required match funds from TriMet General Funds. Light rail track and structures is fully funded at $402,000 in FY12. This expense includes maintenance, replacement, repair, inspection of embedded and ballasted light rail track. It also includes track switch maintenance, rail expansion joint replacement, rail lubricator replacement and expansion joint installation. Costs vary from year to year based on projected repairs, with costs averaging $800,000 a year. Track is maintained based on standards established by the industry. Expenses maintain the safety of the operation and the maintain track infrastructure in continuous good condition. Light rail infrastructure has a long life if properly maintained. Rail Vehicle Maintenance and Maintenance of Way staff forecast annual operating and capital maintenance requirements as the system ages and expands. These values have been incorporated in the financial forecast through TriMet s 25 year old bus farebox fleet will be replaced over the next three years. Total cost of the project is approximately $12 million, with $850,000 budgeted in FY12. The new fareboxes will be configured to be compatible with electronic fare collection, which TriMet hopes to implement in the next ten years. 120 Type 3 Ticket Vending Machines originally purchased for Westside MAX and Interstate MAX will be refurbished in FY12. Bill acceptors will be replaced, mechanical printers will be replaced with lower maintenance thermal printers and the operating system will be updated. This $3 million project will extend the useful life of the TVMs for 10 more years when it is expected that all of our current TVMs will be eventually replaced by simpler, smaller TVMs as part of implementing electronic fare collection system. The replacement of the bus and rail communications system (CAD/AVL project) continues. Total project cost $40 million, and the FY12 Budget includes expenditures of $21 million paid from bond proceeds. The majority of the project s cost is the replacement of vehicle radios, most of which will be 25 years old at replacement. Major capital and operating project improvements include: $2.5 million for four forty-foot hybrid buses, funded with a $2.0 million Federal Transit Administration grant. $170,000 for drywell upgrades. This multi-year DEQ mandated project will retrofit drywells, which discharge water from paved areas to groundwater, to standard. Total costs will be $2.5 million. The FTA awarded TriMet $4.2 million to install and test new technology on-board light rail vehicle energy storage units. That project is budgeted in FY12. The FTA grant will allow TriMet to install 20 energy storage units on light rail vehicles, capturing much of the energy generated by the trains braking systems and storing Page 8

12 that energy for immediate and future use. This method uses 70 percent of the energy produced. Lake Oswego Streetcar Draft Environmental Statement. $727,000 of expenses related to Lake Oswego Streetcar Project planning is budgeted in FY12. These expenses will be funded by three sources (City of Portland, City of Lake Oswego and MTIP bond proceeds). Rail Construction Program Portland-Milwaukie Light Rail. TriMet expects to enter into a Full Funding Grant Agreement (FFGA) with the Federal Transit Administration June 2012 or earlier. The project will cost a total of $1.49 billion, with 50% of the cost provided by the Federal New Starts program. The project is expected to open September Operating costs are projected to be $6.3 million a year in 2010 dollars. Duplicative bus service into Portland will be eliminated at opening, saving $2.0 million a year in 2010 dollars. New passenger revenue generated by ridership is projected to cover 50% of operating costs. (Estimated new passenger revenue does not count fares from former bus riders who switch to the Portland-Milwaukie service.) Cost per ride net of fares in 2010 dollars is projected to be nearly as low as Blue line MAX, TriMet s most productive light rail line. TriMet is funding the cost of operation after fares with revenues from the increase in the payroll tax rate from.6218% to.7218%. The funding plan for the project is: PMLR Funding Sources Section 5309 New Starts Funds $ Oregon State Lottery Bond Proceeds $ Metro MTIP Bond Proceeds $99.90 TriMet Bond Proceeds $60.00 City of Portland* $55.00 In-Kind Property Contributions (non-cash) $50.30 Clackamas County $25.00 Oregon Transportation Funds $13.50 ODOT CMAQ Grant $10.00 City of Milwaukie $5.00 Metro Grant $0.30 Local Funds for Net Finance Costs for Local $ Match (non-cash contribution) Total Funding (in millions) $1, *Includes property donations PMLR expenditures are expected to be $293.2 million. Funding for Portland-Milwaukie Project construction costs in FY12 is provided by $184.5 million of State Lottery Bond proceeds, $99.9 million of MTIP bond proceeds, and $8.8 million of other ODOT grant funds. As shown above, TriMet has secured commitments for the entire local match from its funding partners, including Metro, the Cities of Portland and Milwaukie, Clackamas County, and ODOT. TriMet s share is funded through the increase in the payroll tax rate from.6218% to.7218%. TriMet is carrying its $60 million contribution to the project in its financial plans. TriMet plans to issue payroll tax backed revenue bonds in FY13 and FY15 to provide its contribution to the project. The finance plan calls for the contribution to the project of several parcels of land in the South Waterfront. A portion of the Willamette Shore right-of-way, which is owned by a consortium of governments, will be used for the Portland-Milwaukie LRT alignment and will be granted to the project. In the South Waterfront Page 9

13 area, portions of the alignment are on land owned by OHSU and Zidell Realty that will also be contributed; OHSU will contribute other land during the construction period that otherwise would have to be leased for construction staging. In the aggregate these in-kind contributions are anticipated to be valued at $50.3 million. Columbia River Crossing. TriMet continues to participate in the Columbia River Crossing (CRC) Project, which has been in preliminary engineering since December The FY12 budget includes expenditures of $.821 million for TriMet staff dedicated to the project. These expenses are paid for by the State of Washington and the State of Oregon, who are jointly funding the project. The CRC Project address I-5 highway and bridge safety, capacity, connectivity, freight mobility, interstate travel and commerce with highway, bridge and transit improvements, including the extension of MAX to downtown Vancouver. Pass-through Projects Pass-through projects appear in TriMet s budget as both a revenue and an expense, in equal amounts. TriMet s FY12 Adopted Budget includes several Federal Transit Administration projects owned by the City of Portland. These projects are the Streetcar Loop, under construction now and Portland s Innovation Quadrant Project on SW Moody Street. For both projects, TriMet is the grantee for the Federal Transit Administration funds, passing the federal construction funds through to the City of Portland, which will manage the construction and own the improvements. The Streetcar Loop project extends the Streetcar line across the Broadway Bridge, along Martin Luther King Boulevard to the Oregon Museum of Science and Industry. The total federal share of the $152 million project is $75 million, with remaining shares provided by a Local Improvement District, the Portland Development Commission, the State of Oregon and the City of Portland. TriMet is not participating in the capital costs of the Streetcar Loop, but does apply for funds on behalf of the City of Portland and passes the funds through to the City for construction expenses. The Innovation Quadrant Project reconstructs SW Moody Avenue in the South Waterfront area. The project will elevate the roadway by 14 feet to cap contaminated soils. It will include three traffic lanes, dual streetcar tracks and pedestrian and bicycle facilities. Other pass-through capital projects in the FY12 Adopted Budget include: Federal Transit Administration funds for the Hillsboro Intermodal Transit Facility, funds for the Portland Streetcar Prototype, and funds from the State of Oregon for elderly and disabled transportation. FY12 Ending Fund Balance and Conclusions The FY12 Adopted Budget adheres to the following principles of good budgeting and financial planning: Revenues and expenditures are in balance. One-time-only revenues are used to support one-time-only expenditures. Continuing revenues are used to support continuing expenditures or one-time expenditures. 5 5 When continuing revenues fall short of continuing expenditures continuing expenditures are reduced. Repeatedly using one-time revenues to offset a continuing revenue-expenditure imbalance leads to fiscal instability. One-time revenues include cash reserves, federal capital grants and other revenues that cannot be counted on in the future. Continuing revenues primarily include payroll tax, passenger revenues and federal formula assistance. Continuing expenditures are the expenses needed to operate the agency and provide service. One-time expenditures include expenditures such as capital plant additions (not capital replacement, which is a continuing expenditure), startup costs, one-time maintenance campaigns, or early debt retirement. Page 10

14 As budget decisions are made, they are incorporated into the forecast and the results are reviewed by the General Manager so that the budget also incorporates a long term perspective. The forecast is continually updated as economic results, including payroll tax growth and the cost of diesel fuel, are known. The most recent inputs indicate that TriMet must reduce the growth of future expenditures in order to keep revenues and expenditures in balance over the next few years. Continue to negotiate with the ATU ways to reduce the growth in active and retiree medical insurance costs and flexible and responsive work rules. TriMet s FY12 ending fund balance provides very little cushion if revenues are lower than forecast or expenditures are higher than forecast. Fund balance includes both restricted and unrestricted cash. Restricted funds include funds set aside to pay debt service and resources specifically designated for capital projects. The ending fund balance fluctuates throughout the year as revenues are received in unequal monthly amounts. The lowest months are usually January, March and April before federal formula grant assistance is received. A higher unrestricted fund balance is needed prior to the receipt of federal funds in order to meet monthly cash flow requirements during the year without short-term borrowing. As the region comes out of the recession, TriMet needs to improve its financial position in the following areas: Cash reserves must be restored and maintained, requiring tight control of expenditures over many years. TriMet will make every effort to return to a consistent capital replacement program--specifically buses. Capital replacement is a cost of service. Over time, TriMet will need to increase annual pension fund contributions in order to achieve 75% or higher funding of the defined benefit pension plans. TriMet must increase annual contributions to the retiree-medical trust in order to fund already-incurred but unfunded retiree medical benefit liabilities. June 2011 Page 11

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16 GENERAL FUND RESOURCE SUMMARY Line Actual Actual Budget Estimate Budget % Change % Change % of Total No. Revenue Category 08/09 09/10 10/11 10/11 11/12 Budget Estimated Resources 1. Beginning Fund Balance-Restricted and Unrestricted* $ 341,452,910 $ 188,255,518 $ 195,316,790 $ 202,623,972 $ 131,297, % % 13.15% Operating Revenue 2. Passenger $ 90,016,772 $ 93,729,019 $ 95,432,977 $ 97,920,615 $ 104,472, % 6.69% 10.46% 3. Advertising 4,542,833 4,839,508 5,042,425 5,041,850 5,376, % 6.64% 0.54% 4. Accessible Transportation Contract 3,870,738 3,138,234 3,241,849 3,595,893 2,500, % % 0.25% 5. Service Contracts 22,275,365 18,646,765 23,174,261 23,207,261 22,321, % -3.82% 2.24% 6. Total Operating Revenue $ 120,705,708 $ 120,353,526 $ 126,891,512 $ 129,765,618 $ 134,671, % 3.78% 13.49% Tax Revenue 7. Employer Payroll** $ 198,864,145 $ 194,241,445 $ 203,933,000 $ 207,286,676 $ 218,751, % 5.53% 21.91% 8. Self-Employed** 7,742,633 10,164,596 10,764,000 10,518,000 10,886, % 3.50% 1.09% 9. State "In Lieu"** 2,482,251 2,676,196 2,530,000 2,676,000 2,676, % 0.00% 0.27% 10. Total Tax Revenue $ 209,089,029 $ 207,082,237 $ 217,227,000 $ 220,480,676 $ 232,313, % 5.37% 23.27% Other Revenue 11. Federal Operating Grants $ 61,495,272 $ 83,140,893 $ 71,684,209 $ 39,247,282 $ 91,589, % % 9.17% 12. State Operating Grants 2,194,612 2,927,115 1,593, , , % -5.00% 0.04% 13. Interest 1,674, , , , , % 0.00% 0.07% 14. MTIP Bond Proceeds 6,000, % % 0.60% 15. Miscellaneous 2,081,382 9,247,727 4,217,951 5,290,618 6,406, % 21.09% 0.64% 16. Total Other Revenue $ 67,445,845 $ 96,018,037 $ 77,945,433 $ 45,678,143 $ 105,112, % % 10.53% Total Operating Resources 17. (Excluding Beginning Fund Balance) $ 397,240,582 $ 423,453,800 $ 422,063,945 $ 395,924,437 $ 472,097, % 19.24% 47.28% 18. Capital Program Resources $ 23,768,018 $ 39,484,690 $ 31,674,143 $ 20,861,314 $ 64,081, % % 6.42% 19. Light Rail Program Resources 43,188,384 55,402, ,756,061 51,965, ,198, % % 29.36% 20. Other Non-Operating Resources 4,199,096 30,379, ,938,176 53,168,879 37,859, % % 3.79% 21. Resources to Retire Interim Financing 78,497,470 72,770, % % 0.00% 22. Total Resources $ 888,346,460 $ 809,746,182 $ 866,749,115 $ 724,543,968 $ 998,532, % 37.82% % * Restricted funds include funds set aside to pay debt service and resources specifically designated for capital projects. Unrestricted funds provide cash for operations as needed for cash flow. ** Budgeted payroll tax revenues are an estimate of fiscal year cash receipts. Page 13

17 GENERAL FUND REQUIREMENT SUMMARY Line Actual Actual Budget Estimate Budget % Change % Change % of Total No. Division/Department 08/09 09/10 10/11 10/11 11/12 Budget Estimated Requirements Office of the General Manager Division 1. Office of the General Manager $ 794,434 $ 867,704 $ 957,729 $ 957,729 $ 1,011, % 5.64% 0.10% 2. Media Relations 298, , , , , % 1.37% 0.03% 3. Government Affairs 620, , , , , % 3.35% 0.07% 4. Diversity and Transit Equity 219, , , , , % -1.52% 0.02% 5. Internal Audit 218, , , , , % 1.36% 0.02% 6. Total Office of the General Manager $ 2,151,083 $ 2,308,563 $ 2,436,145 $ 2,436,145 $ 2,517, % 3.36% 0.25% Communications & Technology Division 7. Administration $ 496,375 $ 487,581 $ 492,321 $ 490,171 $ 671, % 37.00% 0.07% 8. Operating Projects 458, , , , , % 50.26% 0.06% 9. Organization Development 403, , , , , % 2.62% 0.04% 10. Information Technology 7,464,075 6,875,675 6,625,102 6,501,601 6,800, % 4.59% 0.68% 11. Marketing 4,891,061 4,338,648 4,317,523 4,317,523 4,344, % 0.63% 0.44% 12. Customer Service 2,907,937 3,018,714 2,896,916 2,896,916 2,943, % 1.61% 0.29% 13. Total Communications & Technology $ 16,622,055 $ 15,576,032 $ 15,293,676 $ 15,011,425 $ 15,780, % 5.12% 1.58% Finance & Administration Division 14. Administration $ 2,365,334 $ 1,324,403 $ 1,224,440 $ 1,221,503 $ 1,368, % 12.05% 0.14% 15. Financial Services 1,605,416 2,845,755 3,265,246 3,257,246 3,726, % 14.41% 0.37% 16. Financial Analysis & Grants Administration 2,339,947 2,371,554 2,369,962 2,305,596 2,451, % 6.33% 0.25% 17. Risk Management 541, , , , , % 1.73% 0.05% 18. Procurement & Contracts 1,002,408 1,084,598 1,051,902 1,052,902 1,021, % -3.01% 0.10% 19. * Fare Revenue 3,897, % 0.00% 0.00% 20. Total Finance & Administration $ 11,752,366 $ 8,159,724 $ 8,408,461 $ 8,336,167 $ 9,075, % 8.87% 0.91% General Counsel/Human Resources Division 21. Administration $ 863,031 $ 814,394 $ 820,113 $ 815,773 $ 847, % 3.84% 0.08% 22. Legal Services 1,700,537 1,657,497 1,615,959 1,615,959 1,784, % 10.41% 0.18% 23. ** Human Resource Services 14,738,606 16,356,171 1,441,739 1,188,330 1,155, % -2.73% 0.12% 24. Total General Counsel/Human Resources $ 17,302,174 $ 18,828,062 $ 3,877,811 $ 3,620,062 $ 3,787, % 4.62% 0.38% Operations Division 25. *** Administration & Support $ 1,534,485 $ 1,647,047 $ 4,660,672 $ 4,678,500 $ 5,102, % 9.06% 0.51% 26. Operating Projects 5,843,730 5,184,544 5,581,025 3,500,955 4,269, % 21.95% 0.43% 27. *** Safety & Security 14,609,453 13,856,880 10,595,278 10,438,174 11,260, % 7.88% 1.13% 28. Bus Transportation 109,945, ,981,742 97,097,132 95,009,187 97,346, % 2.46% 9.75% 29. Scheduling 1,499,486 1,602,917 1,239,306 1,238,106 1,074, % % 0.11% 30. * Field Operations 12,188,067 14,044,321 11,800,754 11,483,833 12,319, % 7.28% 1.23% 31. Transportation Planning 1,770,900 1,440,636 1,436,922 1,328,235 1,465, % 10.36% 0.15% 32. Accessible Transportation Programs-LIFT 31,168,331 30,817,890 30,308,806 31,050,183 30,966, % -0.27% 3.10% 33. Accessible Transportation Programs-MTP 15,270,088 15,253,933 16,605,371 16,605,371 16,730, % 0.75% 1.68% Page 14

18 GENERAL FUND REQUIREMENT SUMMARY Line Actual Actual Budget Estimate Budget % Change % Change % of Total No. Division/Department 08/09 09/10 10/11 10/11 11/12 Budget Estimated Requirements 34. Bus Maintenance $ 61,286,360 $ 58,480,687 $ 50,042,635 $ 51,662,332 $ 53,551, % 3.66% 5.36% 35. * Facilities Management 16,372,425 15,101,118 15,536,708 14,164, % -8.83% 1.42% 36. Rail Transportation 16,069,244 17,533,377 15,843,498 15,376,359 16,116, % 4.81% 1.61% 37. Rail Maintenance of Way 12,100,766 15,893,890 14,134,763 14,154,993 15,073, % 6.49% 1.51% 38. Rail Equipment Maintenance 17,010,834 18,329,553 18,415,524 18,053,716 18,660, % 3.36% 1.87% 39. Commuter Rail 3,073,153 6,125,184 5,757,214 5,907,335 6,240, % 5.65% 0.63% 40. Streetcar 6,520,137 6,593,314 6,027,108 6,027,108 6,061, % 0.57% 0.61% 41. Total Operations $ 309,890,571 $ 338,158,340 $ 304,647,128 $ 302,051,097 $ 310,404, % 2.77% 31.09% Capital Projects Division 42. Administration $ 552,529 $ 467,987 $ 403,524 $ 403,524 $ 405, % 0.60% 0.04% 43. *** Operating Projects 2,891,640 11,072,756 4,742,025 4,735,272 2,431, % % 0.24% 44. *** Bus Stop Development 546, ,698 2,455,312 1,152,937 2,111, % 83.11% 0.21% 45. * Facilities Management 15,141, % 0.00% 0.00% 46. *** Development & Operations Support 4,638,016 6,504,278 5,400,641 6,346,890 15,006, % % 1.50% 47. Total Capital Projects $ 23,770,861 $ 18,359,717 $ 13,001,502 $ 12,638,621 $ 19,954, % 57.88% 2.00% 48. OPEB & Pension UAAL** $ 42,147,706 $ 43,069,665 $ 44,351, % 2.98% 4.44% 49. Debt Service**** $ 8,546,379 $ 22,833,425 $ 27,541,603 $ 27,291,603 $ 38,534, % 41.20% 3.86% 50. Total Operating Requirements $ 390,035,489 $ 424,223,863 $ 417,354,032 $ 414,454,786 $ 444,406, % 7.23% 44.51% 51. Capital Programs $ 25,635,401 $ 20,099,902 $ 35,359,137 $ 24,392,430 $ 71,299, % % 7.14% 52. Light Rail Programs 194,427,022 55,402, ,056,061 54,502, ,932, % % 29.74% 53. Pass Through Requirements 4,199,096 30,379, ,938,176 53,168,879 37,859, % % 3.79% 54. Project Interim Financing 85,793,929 77,016,271 43,728,425 43,728,425 41,890, % -4.20% 4.20% 55. Contingency 10,600,000 10,000, % 0.00% 1.00% 56. Ending Fund Balance Restricted & Unrestricted***** 188,255, ,623, ,713, ,297,305 96,144, % % 9.63% 57. Total Requirements $ 888,346,460 $ 809,746,182 $ 866,749,115 $ 721,543,968 $ 998,532, % 38.39% % * In FY09-10, Fare Revenue transferred from Finance & Administration Division to Field Operations in Operations Division and Facilities Management transferred from Capital Projects Division to Operations Division. ** Prior to FY10-11 OPEB (retiree medical) was in the General Counsel/Human Resources Division. Prior to FY10-11 payments to fund the DB pension unfunded liability were incorporated in departmental costs. *** In FY11-12, Safety & Security reflects organizational structure from FY06, FY07 and FY08. Non-Safety & Security positions in Safety & Security Department transferred to Administration & Support Department. *** In FY11-12, Bus Stop Development Department costs transferred from Development & Operations Support and Operating Projects Departments. **** Includes all debt service payments, except light rail construction interim finance debt, which is on line 54. ***** Ending Fund Balance FY11 includes $40 million of New Starts funds to retire interim finance serial bonds May Also, $3 million G.O. bond property tax revenues attributed to General Fund transferred to G.O. Bond Fund Page 15

19 EXTERNAL CAPITAL PROGRAM RESOURCES Line Actual Actual Budget Estimate Budget No. 08/09 09/10 10/11 10/11 11/12 1. State, local government & private contributions $ 270,165 $ 1,982,353 $ 4,586,459 $ 4,586,459 $ 1,500, Federal Transit Administration grants 5,392,990 11,376,899 14,457,684 14,221,927 20,660, Revenue bond proceeds and short term financing* 19,384,788 12,630,000 2,052,928 41,920, Operating resources required for Capital Program 18,104,863 6,740,650 3,684,994 3,531,116 7,218, Total external capital program resources $ 23,768,018 $ 39,484,690 $ 35,359,137 $ 24,392,430 $ 71,299,490 * FY10 includes $13 million of proceeds from the 2009 Series bonds to repay TriMet for the FY09 bus order. Page 16