Metro improves budget forecast for FY13
Customers, jurisdictions could see less-than-expected increase
Citing further expense reductions and an improved ridership outlook, Metro General Manager and CEO Richard Sarles expects that the Authority will need $16 million less than anticipated to balance next year’s operating budget.
“This significant budget improvement enables the Board to consider more modest fare adjustments and lower subsidy requests of the jurisdictions,” said Metro Board Chair Catherine Hudgins.
The General Manager’s proposed operating budget originally projected a $119 million increase over FY12 to fund $116 million in safety, reliability, and service improvements; as well as a projected $3 million shortfall in passenger revenue. The increase includes $55 million in labor-related costs, slightly more than half of which are additional pension expenses.
With the benefit of three quarters of actual FY12 expenses and additional cost reductions identified by management, Metro has reduced its costs for next fiscal year by $7 million. Also, Metro expects base revenues to be $9 million higher than original projections, based on updated economic and jobs forecasts. Combined, these revised projections lower Metro’s additional operating need to $103 million.
When the Board Finance Committee meets Thursday, it will discuss a number of options to amend the General Manager’s original fare proposal.
“This good news allows the Committee to consider a range of options that reduce the burden on both riders and taxpayers,” said Board Finance Committee Chair Marcel Acosta. “Informed by the public input we received, we will look at how we can improve on proposals including MetroAccess fares, rail paper fares, bus cash fares, and pass products.”
The lower-than-expected costs include certain bus service improvements approved by the Board last month, to be expended from existing surplus funds, which reduces the FY13 budget requirement by $2 million. Further, Metro has identified MetroAccess contract savings (based on FY12 actuals) and administrative cost savings of $4 million.
Metro’s improved forecast calls for 11 million more passenger trips than originally projected in November and $9 million in additional revenue prior to any fare change. Of the additional revenue, $8 million is expected to be generated by rail customers.
The Board is expected to consider fare changes and the FY13 budget at its meeting on April 26. The revised FY13 proposed operating budget is $1.576 billion.
Metro’s operating budget will fund NTSB and other safety improvements, rebuilding work, and important service enhancements such as increased preventive maintenance of escalators, Rush+ rail service, and preparations for Silver Line service. There is no new funding for wage increases in the FY13 operating budget, as the General Manager has said any wage changes for employees will depend upon employees identifying further cost savings.
News release issued at 1:44 am, April 8, 2012.