FY19 Budget Development -Process -Outreach -Assumptions

Transcription

1 Los Angeles County Metropolitan Transportation Authority FY19 Budget Development -Process -Outreach -Assumptions February 12, 2018 Board Staff Briefing The Office of Management and Budget

2 Board Staff Briefing Agenda FY19 Budget Process and Schedule Stakeholder Outreach Plan Budget Assumptions Sales Tax Revenues Labor and Cost Inflation Budget by Program Overview Budget by Department to Program Next Steps 2

3 CEO Goals Targeting a balanced budget for FY19, the annual budget will align resources in a fiscally responsible manner to achieve the following goals: Advance safety and security for our customers, the public, and Metro employees; Exercise fiscal discipline to ensure financial stability; Plan and deliver capital projects on time and on budget while increasing opportunities for small business development; Improve the customer experience and expand access to transportation options; Increase transit use and ridership; Implement an industry-leading state of good repair program; Invest in workforce development; Promote extraordinary innovation; and Contribute to the implementation of agency wide and departmental Affirmative Action and Equal Employment Opportunity (EEO) goals. 3

4 FY19 Budget Process and Schedule Month February March April May June Topic Process and Budget Outlook Budget Development Process and Schedule Stakeholder Outreach Plan Sales Tax Forecast, Resources Assumptions Cost Inflation Estimate New Infrastructure Planning and Construction New Transit System: Rail, Bus Rapid Transit and Alternative Modes Highway Regional Rail Operating Budget and Regional Subsidy Metro Transit, including Bus and Rail Service Levels State of Good Repair (SGR) Subsidy to Regional Partners Other Agency-wide Programs FY19 Budget Adoption (Planned) Consolidated Agency-wide Expenses and FTEs Budget Proposal Public Hearing on May 16, 2018 Summary of Public Comment and Stakeholder Review Final Board Adoption on May 24, 2018 Prep Funds Availability for Metro Programs & Regional Allocations 4

5 Board Update and Outreach Outreach will be conducted throughout the budget process until board adoption Soliciting input with bottoms-up approach through key groups (transit riders, communities, key stakeholders, transit operators, and general public) Continue to utilize social media campaigns to deliver more information on the budget Online Budget Tool Telephone Town Hall Type Description Dates Board Updates Monthly Board Reports will provide status of budget process Finance & Budget Committees (Feb/Mar/Apr/May) Board Staff Briefings Meetings will be held on specific budget topics with Departments Focused briefings (Feb/Mar/Apr/May) Stakeholder meetings Public Technical Advisory Subcommittee Bus Operations Subcommittee Local Transit Systems Subcommittee Streets & Freeways Citizens Advisory Council Service Council Meetings Telephone Town Hall Meeting On-Line Budgeting Tool Blog posts on thesource Website to provide latest budget information Metro TakeOnes for public to provide comments Public Hearing Apr 4 Apr 17 Apr 19 Apr 19 Mar 21, Apr 25 Apr 4-13 TBD Mar/Apr/May Mar/Apr/May Mar/Apr/May Mar/Apr/May Mar/Apr/May May 16 Board and Deputy briefings Will be scheduled as requested with each of the Board offices May (as requested) 5

6 Extensive Marketing Efforts To ensure transparency, public participation/opinions and extensive marketing efforts are underway to notify, educate, and alert the public of these various events, forums and ways to contribute. Website, web banners: to convey the latest information on the budget development (Feb Mar) Take-ones: Notifying our riders on how, when, where to participate (Mar May) Message on hold: reminding our customers how to get involved (Feb Mar) East Portal Message Ticker-Union Station (Feb Mar) E-blasts: Driving public to Online budget tool and TTH Social Media (Facebook Ads): Driving the public to budget tool and TTH 6

7 Marketing Strategy and Efforts Audience Marketing Strategy Budget Tool Telephone Town Hall Workshops & Presentations Public Hearing Website Stakeholder Committee/Subcommittee Committees Bus Operators Subcommittee Technical Advisory Committee Streets & Freeways Committee Local Transit Systems Subcommittee Citizens Advisory Council Transit Stakeholders Service Councils San Fernando Valley Westside/Central Gateway Cities South Bay San Gabriel Valley General Public Transit Riders Take-Ones Newspaper East Portal Message Ticker (Union Station) E-blasts Notifications The Source/El Pasajero Social media (Facebook ads)

8 Participation and Feedback To generate public input throughout the County, our outreach events will encompass the entire county, with convenient forums available for everyone to share information and express their opinions and perspectives. 1. Service Councils to cover all regions, directly served by Metro San Fernando Valley Westside/Central Gateway Cities South Bay San Gabriel Valley 2. Telephone Town Hall Meeting - LA County residents 3. Online Budget Tool - LA County residents 8

9 Metro Take-One 9

10 Online Budget Tool Last year s Online Budget Tool was a success, with nearly 5,000 responses This year s survey, includes enhancements based on feedback from last year: - Additional background information on the types of programs in Metro s budget and our role within the LA County region - More explanations of the budgetary restrictions Metro faces on an annual basis 10

11 Board Staff Briefing Schedule Provide comprehensive look at the development of the budget Cover all significant assumptions and major deliverables planned Highlighting specific areas that are of interest to the Board Date Day Time Location Topic 2/12 Mon Board Conference 2/28 Wed Board Conference 3/7 Wed 11-1 Highland Park Conference 3/28 Wed Board Conference 4/4 Wed Board Conference Budget Kick-Off (Schedule, Process, Outreach, Revenues/CPI Escalation) Revenues (continued) New Infrastructure Construction and Operating Budget Operating Budget and Regional Subsidy (continued) Agency wide Expenses and FTEs 5/2 Wed OMB Conference Board Staff Follow-up 5/9 Wed Board Conference FY19 Proposed Budget Only information that has been provided to the Board and Board staff will be released to the public. 11

12 FY19 Budget Assumptions A Chart of Metro s Expected FY19 Resources Operating & Other Revenues (8%) Grant Reimbursements (17%) Bond Proceeds (Repaid with Sales Tax Revenues) (13%) Sales Tax, TDA & STA Revenues (62%) Sales tax revenues are the foundation of Metro s budget. Along with bond proceeds repaid by them, estimated to be about 75% of Metro s FY19 resources. 12

13 Correlated Sales Tax Revenue Drivers CPI and Payroll Employment are the most significant drivers of taxable sales Consumer price changes lead directly to sales tax changes on each transaction. Payroll employment is highly correlated with the number of individuals with disposable income. It is roughly additive, so a 2.3% increase in CPI and a 1.1% increase in payrolls should correspond to approximately 3.4% taxable sales growth. * Estimated figure ** Charts above include statistical data for the Los Angeles Region 13

14 Other Factors Influencing Sales Tax Revenue How money is spent changes over time The share of income spent on taxable sales has been falling for 40 years due to increases in the service sector of the economy, Internet sales, higher housing costs, etc. Perceived Wealth effects encourage people to spend more in good times and cut back or defer purchases in bad times, magnifying swings. Population growth is weakly correlated jobs and income matter more The new tax law and cannabis sales impacts are unknown at this point Taxable Sales as a Percentage of Total Personal Income (Los Angeles Region) E-commerce Sales Percentage of Total Retail Sales (National) 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%

15 FY19 Budget Assumptions Sales Tax Revenues Growth has been stable and positive since FY14, with annual rates in a narrow range between 2.4% and 4.4% 15

16 FY19 Budget Assumptions Sales Tax Revenues Annual Change in Sales Tax $ in Millions (for each Sales Tax Ordinance - Propositions A, C, Measures R and M) FY15 Actual FY16 Actual FY17 Actual FY18 Estimated Actual FY19 Assumption $ $ $ $ % Change 4.0% 2.4% 3.4% 3.4% 3.4% * Re-forecasted budget ** Projection is based on the previous 5 years average Q1 actual receipt percentage from State Board of Equalization. 16

17 FY19 Budget Assumptions Labor and Cost Inflation Assuming all programs are continuing as usual the two major cost drivers are labor and cost inflation. Labor costs will adhere to existing contracts. Wage for represented (union) staff will increase by 4.0% from FY18 in FY19 per the Collective Bargaining Agreements Salary increases for Non-Contract TBD. Cost inflation, as measured by CPI, is projected to increase to 2.25%. CNG fuel, propulsion power (electricity) is forecasted to stay at FY18 levels. For construction costs inflation, Metro is relying on the Building Material Index (BMI), which is in line with CPI growth rate in FY19. Annual Change in Consumer Price Index (CPI) Forecast Source FY15 FY16 FY17 FY18 FY19 Actual 0.94% 1.73% 2.10% 1.75% * - Metro 2.30% 1.97% 1.85% 1.75% 2.25% UCLA 2.81% 2.25% 2.70% 2.78% 2.42% Beacon Economics 1.97% 1.57% 1.98% 2.00% 2.15% * Preliminary based on FY18 adopted budget 17

18 FY19 Preliminary Budget by Program Overview *FY19 Preliminary Budget subject to change as budget becomes finalized 18

19 Budget by Department to Program The budget is comprised of 16 departments which contribute to various Metro Programs Support departments in particular leverage the same resources across multiple Metro Programs resulting in economies of scale and efficiencies Metro Programs Budget by Department Transportation Infrastructure Metro Transit Operations Planning Metro Transit - SGR & Other Asset Improvements Program Management Subsidy Funding Regional Rail Operations Congestion Management General Planning & Programs Support Departments (Audit, CEO Office, Civil Rights, Board of Directors, Security, Human Capital, Risk/Safety, OEI, Congestion Red, Communications, Finance & Budget, IT, VCM) Debt Oversight & Admin 19

20 Next Steps Monthly Board Status Update until Targeted May Budget Adoption Ongoing Board Staff FY19 Budget Briefings Itemized review of revenues and expenses Detailed program/project listing and operation assumptions Analysis of highlighted programs Public hearing of the proposed budget will take place on May 16 th Final board adoption expected on May 24 th Board adoption legally required before fiscal year start 20