As the North Bay’s passenger rail system searches for $6 million in budget cuts, it must decide whether it wants to be a commuter train focused on weekday service or an option for weekend visitors, but it can’t afford to be both.
Either way, the cuts will be significant and come at the sacrifice of staff and service, SMART’s lead executives confirmed to their board of directors Wednesday. Failure of the agency’s sales tax extension in March, compounded by economic uncertainty related to the coronavirus pandemic, offers no path forward but making hard choices.
“We see a lot of reluctance, and we feel the same way as you about service cuts,” General Manager Farhad Mansourian told the SMART board during the virtual meeting. “We don’t want to lose people. It’s drilling a hole in our heart, but we don’t know what else we can do given the financial present and the future, and not knowing how fast the economy will recover.”
The 12-member board must now consider cost-saving measures that entail eliminating SMART’s limited weekend routes, or reducing its weekday service by more than 40%. Since January, the 2½-year-old rail system has run a more robust 38 trips per weekday, to go with 10 weekend trains.
Cutting the weekend, which SMART suspended in mid-March in response to the stay-at-home order, would save the agency an estimated $1.6 million per year, according to Erin McGrath, SMART’s chief financial officer. Dropping the weekday schedule down to 22 trips centered around morning and evening commuter travel, meanwhile, would offer $3.2 million in annual savings, she said. SMART is currently making 16 daily trips during the health order.
Layoffs are factored into each cost-cutting decision. They include 14 full-time workers tied to weekend service, and 31 more employees by removing 16 weekday trips. If both are approved, the loss of 45 employees would be a one-third reduction to SMART’s full-time workforce.
“It just hurts my heart,” said Windsor Councilwoman Deb Fudge, one of SMART’s longest-serving board members. “This is not what we want to do to our SMART family.”
A mix of one-time savings and ongoing expense reductions unrelated to salaries that totaled more than $6 million are also on the table. Use of one-time savings, however, is a temporary solution, McGrath said.
Board members delayed giving their preferences, opting to seek more public input before taking positions. Decisions will be due by the end of June as the agency looks to pass a budget expected to take a revenue hit of 15% to 25% as a result of the impacts of the public health crisis.
Measure I, SMART’s 30-year sales tax extension, was designed so the rail agency could refinance rising bond debt, saving $12 million per year. But voters in Sonoma and Marin counties largely rejected the measure, lending just 54% support toward the two-thirds majority it needed to pass.
In the meantime, the SMART board voted unanimously Wednesday to accept staff recommendation to realize more immediate cost savings, by dumping onboard train wireless internet, which costs the agency more than $530,000 a year. The free service will be gone within a month, while Wi-Fi at stations will go unaffected because there is no cost to SMART.
Agency staff will also work to avoid anticipated spikes in insurance premiums next year due to what McGrath said was market volatility by reducing coverage levels. SMART will continue to explore a short-term debt refinancing plan as well that could result in $1 million savings each year, but includes a $150,000 consultant fee to assist in that process.
The bigger decisions about the train’s future could come as soon as the board’s next meeting on May 20, or by no later than its two scheduled meetings in June to finalize next year’s budget.
“We have challenges ahead of us no matter what data we get, and it’s tragic,” said Barb Pahre, SMART’s board vice chairwoman. “There’s no other way to put it.”
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May 07, 2020 at 11:19PM
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SMART weighs eliminating weekend service, 40% of weekday trains to cut $6 million from budget - Petaluma Argus Courier
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