FY15/16 DRAFT OPERATING

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1 FY15/16 DRAFT OPERATING AND CAPITAL BUDGET FEBRUARY 26, 2015 EMERGING AS THEMOST CUSTOMER DRIVEN ANDEFFICIENT PUBLIC TRANSPORTATION AGENCY IN VIRGINIA.

2 Budgetary Themes Constrain operating budget increases while investing in capital/rolling stock replacement Increase ridership across all modes of service Continue to ensure effective controls over grant and operating funds and programs Budgetary Objectives Prioritize transit operations Ensure current service levels are maintained across all modes Continue maintaining and revitalizing rolling stock Continue focus on passenger safety and amenities Ensure technology needs are addressed Prioritize capital projects Capitalize on the current State legislation for rolling stock capital purchases 2

3 Operating Budget 3

4 Funding Challenge: Operations How HRT Funds Operations Compared to Agencies Nationwide HRT faces a long term structural deficit in its operating budget. The agency strives to achieve greater operating efficiencies, and its overall operating cost per unit is already well below the national average. There are several revenue constraints: 1. No Dedicated Funding: Dedicated funding represents the largest share of transit operating revenue in the U.S., yet HRT receives no dedicated funding at either the state, regional, or local level. 2. Over Reliance on Federal Support: Federal transit funding is intended to support capital needs but agencies can divert federal funds to pay for eligible operating expenses, too. Federal funds form over twice as large a share of HRT s operating budget than the national average, robbing its capital budget of much needed revenue. 3. Overly Dependent on Annual Contributions from Local Partners: HRT is unusual in that local funding largely comes directly from the general funds of its partner jurisdictions. Hampton Roads cannot achieve the quality transit services the public wants, needs, and deserves while relying exclusively on local general funds for the local/regional share. 4. Lack of a Rainy Day Reserve Fund: With the loss of nearly $5M of Federal and State funding, HRT is faced with tough choices of passing the loss of revenue on to our local funding partners or modifying services. The Government Finance Officers Association suggests having a reserve fund of two times average monthly expenditures. HRT has zero. Having a reserve fund would allow for HRT to situations such as a material loss of revenue. 4

5 Funding Challenge: Operations How HRT Funds Operations Expense Revenue Total Service Fares Federal State = Local Funding Cost ($2M) $0 ($500K) ($4.5M) $3M 5

6 FY14/15 FY15/16 Incr(Decr) % Approved Proposed Prior Year Prior Year Total Operating Revenue $21.9 $22.1 $.1 0.6% Non Operating Revenue Local Funding $39.6 $40.6 $ % State Funding $20.9 $16.4 $ % Federal Funding $17.5 $17.0 $.5 3.0% Total Non Operating Revenue $78.0 $74.0 $ % Total Revenue $99.9 $96.1 $ % Major Changes Operating Revenue is projected to remain relatively level. State Funding is anticipated to decrease by $4.4M due to projected decreases in state wide revenues. Federal Funding isanticipated to remain relativelylevel level year over year. 6

7 Fees, Licenses & Misc $3.0 3% Casualty & Liability $5.2 6% Purchased Transportation $8.0 8% Utilities & Taxes $1.3 1% Materials & Supplies $ % Personnel Services $ % Contracted Services $9.4 10% FY14/15 FY15/16 Incr(Decr) % Approved Proposed Prior Year Prior Year Personnel Services $57.5 $55.9 $ % Contracted t dservices $8.3 $9.4 $ % Materials & Supplies $14.9 $13.3 $ % Utilities & Taxes $1.4 $1.3 $.1 4.5% Casualty & Liability $6.4 $5.2 $ % Purchased Transportation $9.1 $8.0 $ % Fees, Licenses & Misc $2.4 $3.0 $ % Total Operating Expenses $99.9 $96.1 $ % Major Changes Personnel Services sees a slight reduction due to revamping of our health insurance program from a traditional health insurance program to a health savings account (HSA). HRT also has implemented several programs to mitigate health insurance cost increases to include a wellness program and medical surveillance program. Maintenance and contractual cost increase related to general upkeep of new and additional bus stop shelters throughout the region and maintaining facilities, waste collection and disposal fees. Continued investments in safety and security initiatives to foster a safer and moresecure transit system. Purchased Transportation (Paratransit Services) costs are anticipated to decrease due to contractual renewal. However, eligible program participants are anticipated to increase based on current trends. 7

8 Capital Budget 9

9 80% Transit Capital Projected State Matching Percentage 70% St tate Matching Perc centage 60% 50% 40% 30% 20% 10% 0% FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Tier 1 Rolling Stock Tier 2 Infrastructure Tier 3 Other The above chart depicts the drop in the state transit capital matching percentages from the projected 68% for Tier 1, 34% for Tier 2, and 17% for Tier 3 to 30/15/8 in FY 2020 after all of the bonds available under HB 3202, Chapter 896 of the 2007 Acts of Assembly are exhausted. The impact on transit in Virginia will be significant. 10

10 Project Project Cost Federal Share State Share Local Share 1 Ferry Dock Improvements $ 3,295,487 2,043,202 $ 1,120,466 $ 131,819 2 TVMs for Ferry Docks $ 483, ,000 $ 164,516 $ 19,355 3 ADA Bus Stop Access Upgrades $ 451, ,000 $ 153,548 $ 18,065 4 Bus Shelter Expansion Program $ 302, ,364 $ 102,748 $ 12,088 5 Real Time Systems (includes Website Upgrades) $ 242, ,244 $ 41,154 $ 9,683 6 LRT Station Maintenance $ 179, ,213 $ 60,988 $ ,175 7 HRT Paving Program $ 1,349, ,315 $ 458,697 $ 542,096 8 LRT SGR: Tier Two Investments (Facilities/ROW) $ 263, ,159 $ 89,474 $ 10,526 9 Newtown Road Park & Ride Maintenance $ 205, ,100 $ 69,700 $ 8, LRT Facility Maintenance & Energy Efficiency Upgrades $ 123,000 76,260 $ 41,820 $ 4, LRT Catenary Sectionalization & Auto Tension System $ 92,250 57,195 $ 31,365 $ 3, Ferries for Elizabeth River Service $ 7,428,571 2,080,000 $ 5,051,429 $ 297, Transit Bus Overhaul Project $ 2,868, ,269 $ 1,950,795 $ 114, Bus Lease Debt Servicing $ 2,091, ,619 $ 1,422,217 $ 83, Transit Bus Replacement $ 1,612, ,492 $ 1,096,481 $ 64, Transit Bus Overhaul Project $ 1,360, ,915 $ 925,079 $ 54, Ferry SGR Investments $ 314,160 87,965 $ 213,629 $ 12, Embedded Lights $ 449, ,817 $ 152,900 $ 17, Wayside Advance Warning Device $ 107,100 66,402 $ 36,414 $ 4, Upgrade the Video RecordingEquipment forlrt $ 105, ,417 $ 71,441 $ , Bus Technology Upgrade $ 826, ,336 $ 561,816 $ 33, HASTUS $ 713, ,640 $ 484,840 $ 28, Financials Information Software $ 609, ,204 $ 103,550 $ 24, Technology Business Continuity $ 276, ,394 $ 46,996 $ 11, IT Network ksecurity $ 122,400 96, $ 20,808 $ , LRT SGR: Light Rail Radio System Upgrade $ 15,375 4,305 $ 10,455 $ 615 TOTAL $ 25,887,477 $ 9,880,522 $ 14,483,324 $ 1,523, % 38% 56% 6% 11

11 Project Summary by Function Function Project Cost Local % of Total Contribution Capital Plan (ACC) Rolling Stock $ 15,675,925 $ 627, % Customer Amenities $ 4,954,627 $ 198, % Technology $ 2,562,542 $ 102, % Facilities $ 2,032,517 $ 569, % Safety $ 661,865 $ 26, % Total $ 25,887,477 $ 1,523,630 12

12 Moving Forward Identify Potential Areas to Close Funding Gap Aggressively seek cost containment strategies Explore new revenue opportunities Final Budget Presented at the May Commission i Meeting Continue Dialogue with Funding Partners 13