Six months ago, SMART faced an uncertain financial future with major service cuts and a slump in ridership from the pandemic. Now, the North Bay passenger rail agency expects to have an extra $20 million at its disposal.
The Sonoma-Marin Area Rail Transit district attributed this financial boost to better-than-anticipated sales tax revenues, particularly from online shopping, as well as savings from several service cuts it approved last year.
“The good news is the particular counties of Marin and Sonoma are holding up quite well from a sales tax perspective,” Heather McKillop, SMART chief financial officer, told the agency’s board of directors on Wednesday.
SMART plans to set aside $7 million of the funds to leverage state and federal grants to continue building out its rail and path farther north into Sonoma County.
“You spend a little money to get a lot more done for your community, so I think that it is very smart for us to be very forward-looking in that regard,” SMART board member Chris Rogers of Santa Rosa said of the idea.
Farhad Mansourian, SMART’s general manager, said this funding could be key under President Joe Biden’s proposed $2 trillion climate and infrastructure plan. Mansourian told the board that Secretary of Transportation Pete Buttigieg would be looking for “shovel-ready projects.”
In April, the SMART board plans to review what projects it should prioritize in the coming years.
“One of your options is pick some of your top projects and maybe that’s the direction we go, that we start designing them, getting them environmentally certified,” Mansourian told the board. “To walk in on a federal competitive project and having the design and environmental clearance and saying ‘I can award the contacts in two months’ will earn you a lot of points.”
SMART has completed 45 of the 70 miles of rail planned to run between Larkspur and Cloverdale. Following the completion of the Larkspur extension in December 2019, SMART began construction on its $65 million extension from Santa Rosa to Windsor. After that project, it intends to build north to Healdsburg and Cloverdale thereafter.
Eris Weaver, executive director of the Sonoma County Bicycle Coalition, said if SMART’s reserves build up to a point where it has more than necessary, some of those funds should be shifted toward completing more sections of the multi-use path on its rail corridor.
With SMART’s rosier financial outlook, Rogers suggested the board potentially revisit its elimination of onboard Wi-Fi service and decide whether to direct funding toward completing more of the path.
In response, Mansourian urged the board to be cautious of a potential “$40 million headache” looming before the California Supreme Court.
SMART is slated to receive close to $40 million for its Windsor extension from Bay Area bridge toll revenues approved by voters in 2018 through Regional Measure 3. However, the funds are in limbo because of a legal challenge filed against the measure. The case is being considered by the state Supreme Court. If the measure is struck down, SMART will need to come up with $40 million to complete the project, Mansourian said.
The project on hold until a decision is rendered in the case, according to SMART chief engineer Bill Gamlen.
SMART expects to receive about $6.1 million more revenue from its quarter-cent sales tax by the end of the fiscal year in June compared to what was budgeted, for a total of $39.1 million. McKillop told the board there is still some uncertainty on whether that will be sustained when more people spend money on services that aren’t taxed.
Additionally, SMART projects savings of about $10.3 million from service cuts it approved last year, including reducing the frequency of train trips, cutting frozen staff positions and eliminating services such as onboard Wi-Fi. In the wake of plummeting ridership, SMART cut weekday service from 38 daily trips to 16 and eliminated weekend service altogether. When the pandemic ends, SMART intends to resume 26 daily trips on weekdays and 10 daily trips on weekends.
Last year, SMART refinanced its $160 million in construction bond debt used to build the initial 43 miles of rail between San Rafael and Santa Rosa. SMART expects to save an average of $3 million per year on debt payments.
Mike Arnold, an economist who lives in Novato, urged the SMART board to be wary of potential long-lasting changes to transit ridership from the pandemic, including more people working from home.
SMART’s fare revenues are expected to be down 84% compared to what it had budgeted in June, dropping from $2.6 million to about $655,500 for the entire fiscal year, according to staff.
The latest ridership data from December shows SMART averaged about 340 passengers per day, an 86% decline from December 2019, when it was averaging about 2,400 passengers per day.
From the budget revisions and his estimate of ridership for the fiscal year based on fare revenues, Arnold said Marin and Sonoma taxpayers are paying about a $330 per rider subsidy.
“This is a performance metric that I think the agency ought to produce and report on its website on a regular basis,” said Arnold, who helped lead the campaign to defeat SMART’s attempted sales tax extension in the March 2020 primary election. “I think taxpayers deserve to know how much are taxpayers paying to take each rider.”
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February 04, 2021 at 09:30AM
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SMART forecasts $20M budget boost - Marin Independent Journal
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