The SMART board voted unanimously on Wednesday to pass a $78.7 million budget with significant service cuts in response to financial pressures before and during the coronavirus pandemic.
Board members Judy Arnold, the Marin County supervisor representing Novato, and Gary Phillips, the mayor of San Rafael, were absent from the vote.
Further budget cuts might be needed once more reliable estimates on sales tax losses, farebox losses and expected stimulus funding are available in the coming weeks and months, staff said.
“We will need to be vigilant,” Erin McGrath, SMART’s chief financial officer, told the board on Wednesday. “And we do admit to a number of unknowns right now. We don’t know what the future holds.”
Among the cuts is a reduction of daily weekday train trips from 38 trips to 26 trips. Weekday trips will include six morning trips, one midday trip and six afternoon trips for each direction.
The board declined to cut any of the 10 weekend train trips or existing staff, but plans to revisit the budget in August and September to make changes where needed.
SMART will continue operating on a reduced schedule of 16 weekday trips and no weekend trips under the “shelter in place” order until further notice.
Mike Arnold, a Novato economist and SMART critic, questioned why SMART would continue to operate 26 weekday trips given the ridership declines caused by the pandemic, which some experts expect will continue well after the shelter orders are lifted.
Arnold called for a more conservative approach “because we really don’t know how long this virus is going to last, how long it’s going to be constraining ridership in all transit agencies, not just SMART.”
Other cuts approved by the board included eliminating onboard Wi-Fi service, ending contracts for customer service and North County bus service, and delaying equipment purchases and certain maintenance projects, among other changes.
In total, these reductions are expected to save SMART about $7.2 million annually.
Staff are also working to refinance the bond debt under the current terms to free up $1 million in annual payments.
The sales tax and farebox losses compound a projected $9 million deficit that SMART was facing before the pandemic due to rising costs.
To cover a portion of projected losses in fare and sales tax revenues, SMART is using $7 million from its $17 million operations reserve fund. Budget forecasts show SMART’s operational reserve fund will further shrink, to about $6.7 million, in 2021-22, and be depleted in 2022-23 unless more revenue is secured or cuts are made in the meantime.
In addition, the budget relies on the assumption that SMART will be receiving $16.9 million in federal stimulus funding through the Coronavirus Aid, Relief, and Economic Security Act, known as the CARES Act. But Farhad Mansourian, SMART’s general manager, said recent discussions indicate SMART may get $1.2 million less than expected.
If that occurs, Mansourian said, the district will likely need to consider staff cuts in August.
SMART has been approved to receive $10.4 million in the first round of CARES Act funding. The Metropolitan Transportation Commission, which is charged with disbursing the funds, has only disbursed about 70% of the $1.3 billion allocated for Bay Area transit agencies so far.
After hearing concerns about how the first round of funding was disbursed, MTC formed a committee to discuss how to disburse the remaining $507 million and make a recommendation. Mansourian said the committee appears to be in favor of the “worst” possible option, which would include the $1.2 million reduction in SMART funding.
SMART board member David Rabbitt, a member of the committee and the MTC, said the recommendation came as a surprise. Under the proposed disbursement plan, SMART would be experiencing “one of the larger decreases of any entity in the North Bay.”
SMART does anticipate $259,000 in savings in the 2020-21 budget after 48 non-union represented employees chose to forgo a 3% wage increase, according to McGrath. SMART had sought to negotiate with its 66.5 union-represented staff to forgo the 3% wage increase as well, which would save an additional $270,900, but received no response.
McGrath said typical policy is for SMART to extend these negotiated wage increases to non-union employees, but that would add another $327,500 in costs. In response, SMART plans to give the pay raise to 19 non-union employees with salaries below $100,000, with the 48 other non-union employees forgoing it. This reduces the cost to about $51,100.
Despite the financial hardships, SMART administrators reported two points of progress in the district’s northern expansion in Sonoma County.
One, the board approved a second Petaluma station following the expected closure of an $8 million land deal. Two, SMART, Sonoma County and the city of Santa Rosa are expected to be awarded a $25 million state grant for housing, trail and rail construction, according to Mansourian.
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June 18, 2020 at 08:01AM
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SMART approves 2020-21 budget, service cuts - Marin Independent Journal
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