The recent economic downturn is having far-reaching implications for Cuyahoga County, as well as RTA.

A significant reduction in Sales Tax revenue, cuts in State Transit Funding and employment-related loss of ridership and fare revenue require that RTA examine all available options to fulfill our mission "to provide the maximum amount of high quality service to our customers, with the revenue we receive".

The purpose of this web page is to keep RTA customers, employees and the public in general informed of financial challenges and the ways that the GCRTA is attempting to meet those challenges.

This information will be updated on a regular basis. If you have any questions that you would like us to respond to, or have any suggestions or comments that you would like to share with us, please contact us at public-comment@gcrta.org.

What are the causes for RTA's current budget challenges?

The reason for RTA's budget challenge is a significant drop in revenues.

RTA's revenues come from three primary sources:

1. Sales Tax
2. Government Subsidies and Grants
3. Passenger Fares

1. Sales Tax
   • RTA gets a 1% Sales Tax on goods sold in Cuyahoga County.
   • This is RTA's largest source of revenue, representing between 60% and 70% of RTA's Operating Budget.
   • Sales Tax is directly impacted by the local economy. Between 1990 and 2001, when the economy was stronger than it is today, the annual increase in the sales tax averaged approximately 5.6%. This was RTA's expansion period when the Waterfront Line was built, and when the Community Circulator and suburban Park-N-Ride Services were started.
   • Since 2001, the local economy has weakened. Between 2001 and 2008, the annual increase in the sales tax averaged only approximately 1%.
   • In 2009, unemployment, the tightening of the credit market, and the falling of consumer confidence caused by the national recession, have significantly impacted receipts from the Sales Tax.
     • After the first 11 months of 2009 (January thru November), the Sales Tax is $17,474,016 less than was collected in the first 101 months of 2008.
     • The current projection is that by year's end, Sales Tax collections will be $18.5 million below 2008 levels, from $173.5 million down to approximately $155 million.
   • If, beginning in 2010, sales tax receipts increase at a rate of 2%, which is twice the annual rate experienced between 2001 and 2008, it will take 6 years (until 2015) for the Sales Tax to once again reach the level collected in 2008.
   
   
   
2. Government Subsidies and Grants
   
   Federal Government - In the early years of this program, the Federal Government provided Capital Grants to assist in the purchasing of capital goods, such as buses, trains, train stations, transit centers, etc., and Operating Assistance to assist with expenses associated with operator and mechanic labor, health and retirement benefits, and for fuel and utilities.
   
   A change in the Federal Program in 1993 eliminated Operating Assistance to transit agencies. Because this change was so significant, it was phased in between 1993 and 1998.
   
   The Capital Grant portion of the Federal Program continues and provides funds by a formula to each qualifying transit system in the nation, based upon factors such as population and population density. For qualifying purchases, these grants can typically be used to pay for up to 80% of the cost of the Capital good.
   
   Over the years, the definition of Capital has been expanded and now includes labor costs expended to maintain capital goods purchased under the program.
   
   Although declines in population experienced in the Greater Cleveland area have impacted the relative amount of Federal funds allocated to RTA, by and large, this program has kept pace with inflation.
   
   State of Ohio Funding - The State of Ohio has never been an aggressive partner in funding public transportation when compared to other states. The typical State in the United States provides approximately 23% of the operating costs of its transit systems. For comparison, Ohio provides less than 3%.
   
   The State of Ohio invests only 0.77% of the total transportation spending on public transit, putting it 40th out of the 50 states in the nation. All the states in the nation that spend less on transit than Ohio are more rural states, with an average population of only 20% of the population of Ohio.
   
   In 2002, Ohio provided $43 million to the transit systems in Ohio. By 2007, that number dropped 63% to $16.3 million. If that wasn't bad enough, in the 2010/2011 State of Ohio budget just approved, funding was cut another 33% to $10.6 million.
   
   This represents a 75% cut in State of Ohio funding since 2002.
   
   
3. Passenger Fares
   
   Passenger fares cover approximately 20% of the operating cost of RTA's service. Over the past few years, RTA has increased fares several times in attempts to achieve a balanced budget, and preserve needed services for our customers.
   
   Passenger fares were increased again on September 1, 2009 to a base fare of $2.25. Each 25¢ increase represents approximately $4.5 million annually in revenue to RTA. If fares were not increased, more needed service would need to be eliminated.
   
   With the current recession, and the resulting drop in ridership that RTA is experiencing since April 2009, which is a direct result of rising unemployment, we are now projecting that passenger fares will be approximately $2 million under budget by 2009 year's end.
   
   It is important to note that although the one way cash fare is $2.25, the average per ride fare collected by RTA is approximately $1.00, due to discounts provides to senior citizens, persons with disabilities and to customers purchasing and using multi-ride passes such as the all-day pass and the monthly pass.

1. RTA Has Reduced Expenses
   • RTA began last year taking aggressive steps to reduce expenses. At the end of 2008, RTA eliminated 5% of all salaried positions, and informed the salaried staff that there will be a wage freeze for 2009.
   • Restrictions were put on overtime and travel, and a hiring freeze was imposed on all non-critical positions.
   • After getting the Ohio Law changed to allow it, RTA began to purchase fuel through the futures market at significant savings. As a result, it is anticipated that our cost of fuel for 2010 will be $8 million less than it was in 2009. We currently have all our fuel purchased for 2010 and have 60% of our needed fuel purchased for 2011, at very favorable prices.
   • With the impact of the recession being worse than anticipated, RTA went one step further in May than the wage freeze for the salaried staff, by reducing salaries of the salaried staff by 3% effective June 1, 2009.
   • In July, RTA announced an additional elimination of staff positions by 3%, no later than November 1, 2009.
   • RTA is even deferring the issuance of the last paycheck of 2009 until January 1, 2010, for non-union salaried staff, to assist in balancing the 2009 budget.
   • RTA is currently working closely with its two unions on strategies to reduce costs, retain positions and minimize service cuts. Our contract with the Amalgamated Transit Union (ATU) expired on July 31, 2009, and both sides are actively negotiating. RTA's contract with the Fraternal order of Police (FOP) will expire on February 28, 2010.
   
   
   
2. Identified New Funding Sources
   • RTA has been aggressively trying to identify supplemental funding to help balance the 2009 budget, and with some success:
     • RTA was able to get funding to pay for the operating costs of the Downtown Trolleys for 2009 in the amount of $783,000. This funding may also be available for 2010 and 2011.
     • RTA was able to use a portion of its ARRA Stimulus funds to assist the operating budget. The amount RTA can use for this purpose is $3.456 million for 2009. These are one-time funds and will not be available in 2010 or beyond.
     • RTA was able to secure $3 million of CMAQ funds to help offset the operating costs associated with the HealthLine. RTA is trying to secure up to $7.3 million for this purpose in 2010.
     • RTA is actively working with ODOT and NOACA on other possible funding sources to help balance the 2010 budget.

• Effective September 1, 2009, an increase of 25¢ in the base fare was imposed, generating an additional $1.5 million in revenue by 2009 year end.
• Effective September 20, 2009, all 12 Community Circulator routes were eliminated, and service will also be cut on 15 big bus routes. These service cuts will save approximately $1.6 million by 2009 year end.

• In 2000, RTA had 3,086 employees
• As of June 30, 2009, RTA had 2,475 employees
• It is anticipated that at 2009 year's end, RTA will have approximately 2,375 employees.

• Population is a major factor in the development of Federal funding formulas.
• If there are less people, there are less people for RTA to serve
• If there are less people, there are less people to support RTA with their contribution to the countywide Sales Tax.

• Sunday/Holiday Service - which can reduced expenses by approximately $5 million annually, and reduce staffing by 66 positions.
• Saturday Service - which can reduce expenses by approximately $7 million annually, and reduce staffing by 93 positions.
• Elimination of Saturday and Sunday/Holiday Service - which can reduce expenses by approximately $12 million annually, and reduce staffing by 159 positions.
• Other low ridership routes.

• November 9, 2009 - The staff will present their proposed 2010 budget at Board of Trustees Finance Committee Meetings.
• November 17, 2009 - RTA proposed Service Plan for 2010 will be presented to a joint Finance and Operations Committee meeting.
• December 1, 2009 - RTA proposed capital Improvement Plan for 2010 will be presented to a joint Finance and Planning and Development Committee meeting. Also, a Public Hearing on the budget will be held at the RTA Offices.
• December 15, 2009 - A second Public Hearing on the budget will be held at the RTA Offices, followed by the planned approval of the 2010 budget at the regular Board of Trustee Meetings at the RTA Offices.

• December 2008: RTA reduced salaried positions by 5% (complete)
• September 2009: Layoff of 53 bargaining unit employees (85 total positions) as a result of elimination of Community Circulator service (complete)
• November 2009: RTA reduced salaried positions by an additional 3% (complete)

• January 2009: Salaries of RTA's salaried staff were frozen (complete)
• June 2009: Salaries of RTA's salaried staff were reduced by 3% (complete)
• Deferral of last pay in 2009 to early 2010 for salaried staff (in process)
• RTA has proposed to achieve significant labor cost reductions through collective bargaining with unions representing its bargaining unit employees (pending)

• RTA has proposed to achieve health care cost savings through collective bargaining with unions representing its bargaining unit employees (pending)

• RTA has proposed to cost savings through collective bargaining with unions representing its bargaining unit employees (pending)

I am writing to update all employees on the status of the RTA 2010 budget, which I know is of much interest to you, our customers, and which will certainly attract much media attention over the next several weeks.

Based upon 3rd quarter 2009 results, it is now anticipated that RTA will end 2009 with a positive balance of approximately $879,000. Although far less than our goal of an ending balance equivalent to one month's operating expenses, which would be approximately $20 million, it certainly represents an improvement over previous projections.

This projected positive balance was only achieved through:

• An 8% reduction of salaried staff positions
• A 3% reduction of salaries for non-union employees
• An additional 25-cent fare increase implemented on September 1, and
• A 6% service cut, which included the elimination of the Community Circulators on September 20, 2009, eliminating 85 positions at RTA.

Unfortunately, there is still a chance that certain grants will not be approved in a timely manner, which will result in a negative balance. We are working diligently with the FTA to avoid this situation.

As previously communicated, the national recession has caused RTA's largest source of revenues, Cuyahoga County sales tax, to generate a projected $18.5 million less in 2009 than 2008 levels. Furthermore, the State of Ohio reduced its funding for public transportation by 33% in the recently approved budget for 2010 and 2011. This situation is certainly not unique to RTA but one that is common to 9 out of 10 transit systems in the nation.

Detailed information about this budget crisis can be found on our website: RideRTA.com, by going to the "Budget Challenges" link that can be found on the main page. This document also includes a 6-Step Plan to preserve transit service and transit jobs in 2010, which we are following, to try to address this crisis.

As a result of these financial challenges, the only way RTA can develop a balanced budget for 2010, will be through a combination of:

• Cost savings strategies
• New revenues from the State of Ohio
• Increases in fares, and
• Additional service reductions and layoffs.

The budget proposal presented on November 9, 2009, to the RTA Board of Trustees contains the following assumptions in order to achieve a balanced budget:

• A reduction in bus and train service, equal to an annual 12% cut, which will eliminate 150 to 200 RTA positions.
• The continuation of fares at the current level of $2.25 base fare, which represents a 50-cent increase to our customers over the base of $1.75, implemented as a two step fuel surcharge in August 2008.
• The reduction of 12% of our service will be the same as eliminating one out of every 8 current trips. If fares fall back to the $1.75 base fare level, it would necessitate an approximate 21% service reduction, which would be the same as eliminating one out of every 5 current trips.

The 2010 budget process will continue on November 17, December 1, and on December 15, 2009, with public input encouraged at the December 1 and December 15 meetings. It is anticipated that the RTA Board of Trustees will discuss and approve a budget on December 15, 2009.

The specifics of the staff proposal for major changes to bus and train service, as well as any change to fares, will be discussed at several Public Hearings anticipated to be held in January 2010. Following the Public Hearings, final decisions will be made, and changes implemented on April 4, 2010.

Let me assure you that RTA has and continues to take advantage of all possible government subsidies to preserve service. We were, for example, able to use approximately $6 million of the Federal ARRA Stimulus Funding to assist our budget in 2009. However, this one-time money will not be available in 2010. The balance of the Stimulus funding cannot, by law, be used to add or preserve jobs but only for major capital projects. Already included in the 2010 budget, is the anticipated use of an approximate $8 million grant awarded by NOACA.

I again solicit your input into this process, and encourage you to share the importance of adequate funding for public transit with your customers and with elected officials who make decisions on the amount of funds they approve for public transportation. While the typical state in the nation invests 23% of the cost of public transit in their state, Ohio provides less than 3%.

Please be assured that we will take great efforts to minimize the reduction of service and to preserve as many positions as possible.

We will also strive to keep you informed of our progress. Any suggestions or ideas that you may have to save jobs at RTA can be communicated to us at gm@gcrta.org.