Further decline in BART revenues reported in fiscal shortfall update

Even with major spending cuts, higher fares effective July 1, and planned labor cost savings from BART employees, BART’s fiscal situation is growing more dire. The main problem is that our primary sources of operating revenues lag even lowered expectations. Ridership accounts for about 60% of operating revenues and sales taxes account for an additional 30%. A precipitous drop in both has opened another $60 million hole in BART’s four-year fiscal outlook.

BART has already set into motion approximately $150 million in spending cuts, savings, and increased fares, and BART unions are voting on another $100 million in labor contract savings this week.  The fare increase raised passenger fares by 6.1% (0.5% less than inflation), bumped the minimum fare to $1.75, and tacked on an extra $2.50 surcharge for trips to SFO.  Also, parking fees will be introduced at eight more East Bay stations.

The spending cuts include $27 million in electric power savings, cutting 100 positions, and reducing night and weekend service so the maximum wait time between trains is 20 minutes instead of 15 minutes.  The labor savings, if approved by the unions, would save $100 million by reducing health and pension costs and eliminating inefficient work rules.  On average BART union workers make $114,000 a year in wages and benefits, and work rules hamper productivity.

Despite all the budget measures BART has taken though, BART’s financial picture is increasingly bleak.  The economic storm that’s swept the country continues to take a terrible toll on businesses and governmental agencies across the Bay Area including BART.  Newly released state figures now show BART suffering the worst decline of sales tax revenue in its 37-year history.  Sales taxes have dropped 20% from the same period in 2008. That alone translates into a loss of nearly $10 million next year.

To make matters worse, ridership is dropping off at a rapid pace, and has fallen far below even the lower forecast included in the FY10 budget just adopted in June.  The budget assumed a 4% ridership drop, but the number of daily BART riders in June fell to an average of 335,500, a 9% drop from June 2008.  Moreover, July ridership to date is down a whopping 12% from the same period last year.

BART is carrying fewer commuters because fewer residents are able to find work.  With unemployment now at 10% in the BART service area, the hope for a quick BART ridership turnaround is grim.  More than 85,000 jobs have been lost so far, and both the UCLA Anderson and Beacon Economics forecasts show employment continuing to contract.  Beacon Economics forecasts unemployment growing to 13% statewide.

In summary, despite some serious budget cutting and fare increases already in place, BART is not out of the woods yet.  To sustain service for the public, BART will not only need to achieve the initial target of $100 million in labor savings, but will also need to find an additional $60 million to make ends meet over the next four years.  And that won’t be an easy matter in this economy.

To view charts illustrating patterns in sales tax revenue, ridership and unemployment, and for more information, visit www.bartlabor.com