Introduction

The purpose of this section is to keep RTA customers, employees and the public informed regarding the financial management initiatives and actions taken to maintain a strong financial position during recent times of national and local economic distress.

This information will be updated regularly. If you have any questions or any suggestions or comments that you would like to share with RTA, please send them to public-comment@gcrta.org.

Budget History

The 2008/2009 economic downturn had far-reaching implications for the City, the State of Ohio, Cuyahoga County, and the nation. RTA was no exception.

The economic recession resulted in:

  • A reduction in sales tax revenue
  • Cuts in State transit funding
  • Loss of ridership and related fare revenue due to unemployment

These factors required that RTA examine all available options to reduce expenses to best fulfill its mission of providing the maximum amount of high-quality and cost-effective public transit service possible to our customers.

As a result, we implemented strong financial management policies in 2011, which allowed RTA to actually increase transit services beginning in 2012, positioning us to respond to even greater utilization of bus, rail, Paratransit and BRT services due to an uptick in emplyment levels.

Good budget execution throughout 2012 allowed staff to present to the Board of Trustees a 2013 budget that increased transit service by approximately 4 percent and also increased staffing by approximately 20 positions.

Again, good budget execution throughout 2013 allowed staff to present to the Board of Trustees a 2014 budget that increased transit service by approximately 4 percent as well as increasing staffing by approximately 46 positions.

In 2014, even with a slight retraction in sales tax revenues, strong budget management allowed RTA to end the year to the good of budget, but did not allow an expansion of services or personnel for 2015, except for implementation of the Cleveland Stae Line, and additional service to relieve overcrowding on certain routes. The 2016 budget will be presented to the Board of Trustees in late summer and fall of 2015. It is anticipated that the Board will adopt the 2016 capital budget in September 2015 and the 2016 operating budget in December 2015.

What are the sources of RTA’s revenue and funding and how does that impact the budget?

In 2009-2010, RTA experienced financial challenges due to a significant drop in both revenues and public investments in public transit.

RTA’s revenues come from three primary sources:

  • Sales Tax
  • Government Investments and grants
  • Passenger fares

1. Sales Tax

  • RTA receives a 1 percent Sales Tax on goods and services sold in Cuyahoga County. This is RTA’s largest source of revenue, representing approximately 60 percent 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 sales tax averaged approximately 5.6 percent. 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.
  • Beginning in 2001, the local economy weakened. Between 2001 and 2009, the annual increase in sales tax averaged only 0.34 percent.
  • In 2009, unemployment, the tightening of the credit market, and the falling of consumer confidence caused by the national recession, significantly impacted receipts from the sales tax. For the 12 months of 2009, sales tax receipts to RTA dropped $18.98 million  - or 11 percent less than the amount received in 2008. Depending upon the speed of economic recovery, best estimates were that it could take several years for the sales tax to once again reach 2008 levels.
  • During this extended period, although sales tax receipts have been far from ideal, other related costs continued to rise.
  • Calendar 2010 collections of $163.2 million represented a significant increase over 2009, but still fell more than $10 million short of the 2008 level.
  • 2011 Sales Tax receipts totaled $173.24 million. Relative to the 2010 Sales Tax receipts of $163.22 million, this is a 6.14 percent increase.
  • The 2012 budget projected that 2012 sales tax receipts would rise to 2008 level, and they did. Year-end result: an increase of 4.6 percent over 2011 receipts.
  • Sales tax receipts for 2013 continued the three-year positive trend and ended 4.64 percent ahead of 2012 receipts.
  • For the first six months of 2015, sales tax receipts are ahead of 2014 levels and ahead of projections.
  • Sales tax receipts for 2014 grew at 3.95% or at a smaller increase than in the previous 3 years.

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. This included buses, trains, train stations, transit centers, etc., and Operating Assistance for expenses associated with operator and mechanic labor, health and retirement benefits, as well as 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 percent 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. The greater the amount of Capital funds used to subsidize labor, the less funds that will be available for Capital needs, such as bus replacement.

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.

Due to issues surrounding the recession and the national debt, discussions in 2011 on a new re-authorization of the Surface Transportation Bill called for a 30% funding cut for public transportation. This could have meant a reduction to RTA of $15 million annually. Thankfully this did not happen.

Federal Transportation Bill - Map 21 – After several years of deliberations, in 2012, a transportation bill was passed for federal fiscal years (FFY) 2013 and 2014. This bill will provide approximately $3 million less funding to RTA annually. In addition, although the Work Access program was not eliminated, funding for this program, from which RTA was awarded $1 million annually, was eliminated.

Why the reductions in revenue? A major reason is that the new funding formulas used the 2010 Census, in which the Cleveland Urbanized Area showed a real and relative decline in population in the Cleveland Urbanized Area. A second reason is that a new formula for rail systems shifted some funding from older cities to newer cities with more recently built rail networks.

Discussions on a multi-year re-authorization of the Federal Highway Bill have not resulted in any significant action.  Approximately 80% of the revenue collected from the federal gas tax goes into the highway account with the remaining 20% into the transit account.  The issue is that the federal gas tax (18.6 cents per gallon) has not been increased since 1993, and in spite of multiple studies and warnings that this rate is inadequate to maintain current infrastructure, elected officials have not been willing to address it.  Compounding this issue is that today’s cars are getting approximately 35% better fuel mileage than those purchased in 1993, a trend that is projected to continue.  Shortfalls over the last several years have been covered by the general fund based upon annual appropriations. Current projections estimate that the fund will be insolvent in mid-2015.

In December, 2014, the federal government again extended the current bill until September, 2015, without addressing the issue of declining revenues.  USDOT Secretary Foxx has stated that there is currently a backlog of more than $73 billion in state-of-good-repair infrastructure projects in the transit industry, with that number growing at $2.7 billion annually.  This does not include any funding for expansion projects.

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 20% of the operating costs of its transit systems. For comparison, Ohio provides less than 1%.

The State of Ohio invests 99.23% of its resources on highways, but only 0.77% of the total transportation spending is 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 percent 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.

In October 2010, ODOT announced a new three-year program ($50 million per year) to preserve existing transit services and allow the targeted implementation of new services. In February 2011, although the initial year of the above funding was awarded, RTA was notified that a significant amount of funds were being rescinded.

In the 2010/2011 approved State of Ohio budget, funding was cut another 33% to $10.6 million. This represents a 75% cut in State of Ohio funding since 2002. Neither the 2012/2013 budget, nor the 2014/2015 budget, provided any funding increase to transit.

In 2013, the State of Ohio commissioned a statewide public transit needs study culminating with 5 public hearings.  RTA was well represented on the study steering committee.  The results of this study were published in December 2014, concluding that there is greater demand for transit service in Ohio that there is a supply of services, and that service should be expanded to address these needs. It further suggests that a “Blue Ribbon” committee be established to address ways to increase state funding for transit.  The report can be found at http://www.dot.state.oh.us/Divisions/Planning/Transit/TransitNeedsStudy/Pages/StudyHome.aspx.

Although the ODOT study clearly made a strong case for the critical importance of significant additional State of Ohio funding for transit,no additional funds were appropriated in the 2015-2017 budget. Even the $1 million very modest statewide increase proposed by the Governor was cut out by the legislature during the budget process.

RTA urges all interested parties to contact their State of Ohio elected representatives to request sufficient funding for public transit. E-mails can be easily sent at fundohiotransitnow.org.

3. Passenger Fares

Passenger fares cover approximately 20 - 25 percent 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 on September 1, 2009 to a base fare of $2.25. Each 25¢ increase represents approximately $5 million annually in revenue to RTA. If fares were not increased, more critical service would have needed to be eliminated.

The recession resulted in passenger fares being approximately $5 million under budget by 2009’s year-end and the resulting drop in ridership.

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 $1.10, due to discounts provided 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.

The 2015 budget does not include any general fare increases from the 2009 established rates. 

The good news is that although passenger revenues were down approximately $5 million in 2010, they made a slight rebound in 2011 as a result of higher gas prices and an improvement in the economy and jobs.

In 2011, passenger fares increased by 2 percent over 2010. In 2012, they ended about 4 percent above 2011.  Passenger revenue was up slightly in 2013 and 2014.

Was this just an RTA issue?

The answer is no. A recent study conducted by the American Public Transportation Association concluded that 9 of 10 transit systems in the United States either have recently, or are in the process of, reducing service and/or raising fares.

Since transit systems are typically funded through sources such as sales tax, payroll tax or property tax, the recession is impacting almost everyone.

On May 22, 2010, a rally was held in Public Square in downtown Cleveland to highlight the national nature of this crisis. Transit workers from throughout North America and Canada spoke of massive transit cuts and layoffs in their cities resulting from this recession. Rev. Jesse Jackson was the keynote speaker at the event.

On Sept. 20, 2011, RTA and the ATU jointly participated in a rally on Public Square in downtown Cleveland, asking the Federal Government not to “X-Out” transit.

2009 Budget

When the RTA Board of Trustees passed the 2009 budget in December 2008, financial challenges were already a reality. It was noted in the budget that if additional funding was not received, fares would be increased and services cut. Unfortunately, the economic situation necessitated that fares be increased and services be reduced:

  • Effective Sept. 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 Sept. 20, 2009, all 12 Community Circulator routes were eliminated, and service was also cut on 15 big bus routes. These service cuts saved approximately $1.6 million by 2009 year-end and approximately $6.4 million annually for 2010 and each year thereafter.

These steps alone did not balance the 2009 budget, but got RTA close.

As of Dec. 1, 2009, it was evident that awarded Federal Grant revenue would not be received in time to balance the 2009 budget. For that reason, the Board of Trustees approved a resolution authorizing the short-term borrowing of approximately $8 million, on or around Dec. 21, 2009, in order to end 2009 with a positive ending balance.

The many steps taken to balance the budget were implemented, and the year ended with a positive balance of $2.88 million. This represents a slim 2-3 days of operating reserves.

2010 Budget

Based upon the Tax Budget approved by the RTA Board of Trustees in July 2009 and submitted to Cuyahoga County, the deficit for 2010 could have been $29 million.

The actions taken in 2009 by RTA, in the form of the fare increase on Sept. 1, 2009, and the service cut on Sept. 20, 2009, reduced the amount of that projected deficit to approximately $17.4 million.

What steps were taken in developing the RTA budget for 2010?

  • Nov. 9 and 17, 2009 and on Dec. 1, 2009 - The staff presented their proposed 2010 budget at Board of Trustees Committee Meetings.
  • On Dec. 1 and 15, 2009 - A Public Hearing on the budget at the RTA offices.
  • On Dec. 15, 2009 - The Board of Trustees rejected the staff recommendation to approve a 2010 budget due to future uncertainties. These uncertainties were: the worsening of the economy, outstanding labor cost issues, and the future input from the public at the scheduled public hearings in early January. As an alternative, the Board of Trustees passed a short-term temporary budget allowing RTA to operate through March 31, 2010.
  • February 16, 2010 - The RTA Board of Trustees held a public meeting on the 2010 budget and approved the budget for the remaining 9 months of 2010, and voted to maintain the current $2.25 base fare structure. This adopted budget, with reduced revenues, necessitated the implementation of service cuts in April 2010. This fare was scheduled to roll back to $1.75 on April 1, based upon resolutions previously adopted.

What services were under consideration to be eliminated in 2010?

  1. Sunday/Holiday Service, which would reduce expenses by approximately $5 million annually, and reduce staffing by 66 positions.
  2. Saturday Service, which would reduce expenses by approximately $7 million annually, and reduce staffing by 93 positions.
  3. Elimination of Saturday and Sunday/Holiday Service, which would reduce expenses by approximately $12 million annually, and reduce staffing by 159 positions.
  4. Eliminate low ridership routes and those in close proximity to other RTA routes.

A service cut was implemented on April 4, 2010, that was designed to allow RTA to balance the 2010 budget. This cut eliminated 12 percent of RTA’s service hours, and cut 185 RTA positions.

Was the 2010 Budget balanced?

Yes. While revenues were at budget levels, expenses were well controlled as a result of the aggressive steps that were taken by RTA, which included the maintenance of the $2.25 fare, the service cuts in April and the closing of the Harvard District in August 2010. The ending balance of approximately $15 million was carried over to 2011, and represented an approximate one-month operating reserve consistent with Board Policy.

2011 Budget

On July 13, 2010, the RTA Board of Trustees approved the 2011 RTA Tax Budget, which, if no action was taken, was projected to be in the red by approximately $7.8 million.

As in the past, RTA's goal was to do everything in its power to avoid any additional service cuts and layoffs in 2011.

RTA staff knew the major challenge would be in 2012, when nearly $10 million in limited duration grants, programmed for 2010 and 2011, would not be eligible for renewal.

Action Steps Taken:

  • The staff continued to explore strategies with its two unions in the hope of developing ways to reduce the cost of service delivery, so that existing services and employment levels could be retained.
  • The staff worked with elected officials, ODOT and NOACA on strategies to increase transit funding.
  • The staff prepared a comprehensive plan that identified the following annual cost savings by temporarily closing one of the three existing bus districts:
    • Closing Harvard District - Savings of approximately $4 million
    • Closing Triskett District - Savings of approximately $3 million
    • Closing Hayden District - Savings of approximately $1 million

As a result of this evaluation, the Harvard District was closed on August 22, 2010.

This downsizing and reduction of overhead expenses saved significant money, did not impact any transit service to the public, but allowed RTA to have a balanced budget for 2011. This consolidation of RTA’s facilities resulted in the elimination of 50 positions at RTA.

On Dec. 7, 2010, the RTA Board of Trustees approved the RTA budget for 2011. Due to reduced costs, primarily from the closing of the Harvard District, our goal of no additional service cuts, no layoffs and no fare increases for 2011 was made possible.

Budget execution and an improving economic environment meant that by year’s end, revenues were up, expenses were down and the budget was balanced.

This budget performance allowed RTA to submit a 2012 budget with three goals:

  • preserve existing service levels
  • have no fare increases
  • have no layoffs

2012 Budget

The 2012 Budget was first presented to the Board of Trustees in October. Public hearings on the budget were held on both Nov. 15 and Dec. 6 so that interested parties could comment, and was adopted on Dec. 6, 2011.

This budget not only accomplished the goal of no service cuts, no layoffs and no fare increases, but called for

  • A 4 percent increase in service and
  • The addition of staff positions to address overcrowding on several RTA routes and services as a result of increased ridership.

This was made financially possible due to funds carried over from 2011 that were to be spent in 2012.

Since labor costs represent more than 60 percent of RTA's budget, contract negotiations with RTA's two unions were of the utmost importance. After several years of negotiations, an innovative agreement was reached that balances the needs of our employees, our customers and the taxpayers by tying future wage increases, if any, to increases in RTA revenues. This best assured that future wage increases would not have a negative impact on future service levels or fares.

The 2012 budget as adopted did expend more dollars in expenses than were anticipated in revenues. This allowed the needed increase in transit service to address overcrowding on buses and trains, and addressed on-time performance issues that were being caused by overloads, while placing a significant priority on staff in the areas of budget implementation and creatively reducing costs.

A significant unknown in this budget at the time of adoption was the level of Federal funding for public transit. The 2012 adopted budget assumed that if significant cuts were made by the Federal Government, the budget would need to be adjusted.

2013 Budget

The 2013 budget was approved by the Board of Trustees on December 18, 2012.

The proposed budget called for a 5 percent increase in transit service and a slight increase in staffing by 20 positions. The increase in service related to addressing bus and rail capacity issues, the annualization of the new Downtown trolley service, and the possible addition of a new Park-N-Ride facility in Independence.

Funding for the initial three years of the trolley expansion was provided by grants from several governmental and private industry sources.

The 2013 Budget contained no increase in fares, but did establish a new Student Fare for K-12 students with proper identification. The new cash fare was $1.50, with the All-Day Pass priced at $4.

2014 Budget

The 2014 budget was approved by the Board of Trustees on Dec. 17, 2013.

The proposed budget called for a 4 percent increase in transit service and a slight increase in staffing by 46 positions. The increase in service relates to addressing bus and rail capacity issues, the possible addition of a new Park-N-Ride facility in Independence, and the late fall commencement of the West Shore Express, an improvement to the family of #55 bus routes serving primarily the West Side.

The 2014 Budget contained no increase in fares.

2015 Budget

The 2015 budget was approved by the Board of Trustees on Dec. 16, 2014.

Because of the projected tightening in revenues, the budget calls for no increase in general transit service and a slight decrease in management positions.  The 2015 Budget contains no general increase in fares.

Historical Perspective

Because revenues dropped, what steps has RTA taken to attempt to achieve a balanced budget?

1. RTA has reduced expenses

  • In 2002, RTA began to aggressively reduce overhead expenses. Consolidating 7 operating facilities to just 3, successfully accomplished this and reduced expenses by several million dollars.
  • At the end of 2008, RTA eliminated 5 percent 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, savings millions of dollars over the previous year.
  • After getting the Ohio Law changed to allow for Energy Price Risk Management, RTA began to purchase futures contracts in 2009 for 2010 fuel at very favorable prices. As a result, RTA reduced its 2010 expenditures for diesel to less than $8 million, nearly $9.5 million below 2009 costs. This program continues to work as anticipated and is allowing RTA to not only save money on fuel, but to also to very accurately predict what fuel costs will be in subsequent years.
  • With the impact of the recession being worse than anticipated, RTA went one step further in May 2009 than the wage freeze for the salaried staff, by reducing salaries of the non-union salaried staff by a minimum of 3 percent effective June 1, 2009 through December 31, 2010.
  • In July 2009, RTA announced an additional elimination of staff positions by 3 percent, to be implemented by the end of 2009.
  • RTA even deferred the issuance of the last paycheck of 2009 until Jan. 1, 2010, for non-union salaried staff, to assist in balancing the 2009 budget.
  • RTA furloughed more than 100 support employees, on a voluntary basis, to reduce payroll costs during the period from Dec. 21-31, 2009.
  • In the end, with no new revenues forthcoming and no cost-cutting strategies agreed to by our unions, the only way for RTA to realistically balance its budget for 2010 was to implement the April 4, 2010 service cuts.
  • RTA worked closely with its two unions on strategies to reduce costs, retain positions and minimize service cuts.
  • RTA's contract with the Amalgamated Transit Union (ATU) expired on July 31, 2009 and its contract with the Fraternal Order of Police (FOP) expired on Feb. 28, 2010. New agreements were signed that froze wages and then ties increases to RTA’s revenues and ability to pay.
  • Actual expenses in 2011 were less than those of 2005.

2. Identified new funding sources

  • RTA worked aggressively to identify supplemental funding to help balance the 2009 budget, and with significant success:
    • RTA was able to get funding to pay for the operating costs of the downtown trolleys for 2009 in the amount $783,000. (This funding was also made 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 one-time funds will not be available in 2010 or beyond.
    • RTA was able to secure $7 million of CMAQ funds to help offset the operating costs associated with the HealthLine.
    • RTA actively worked with ODOT and NOACA on other funding sources to help balance the 2010 and 2011 budgets.
    • RTA was able to secure $3.6 million in funds to pay the operating costs associated with the downtown trolley expansion.

How has the weak local economy impacted RTA staffing?

The weak local economy has dramatically impacted RTA staffing.

  • In 2000, RTA had 3,086 employees
  • At 2009 year’s end, RTA had approximately 2,375 employees.
  • At the end of the first quarter of 2010, 2,293 positions were filled.
  • At the end of the second quarter of 2010, 2,148 positions were filled.
  • The RTA budget for 2011 set the maximum employment level at 2,232, a reduction of 245 positions from the 2,477 authorized in the 2010 budget.
  • The RTA budget for 2012 set the maximum employment level at 2,282, an addition of 50 positions to allow RTA to address capacity issues.
  • The RTA budget for 2013 set the maximum employment level at 2,302, an addition of 20 positions to allow RTA to address capacity issues.
  • The 2014 budget set the maximum employment level at 2,348, an addition of 46 positions to allow RTA to address capacity issues and allocate more resources to Information Technology (IT) and electronic repair.
  • The 2015 budget set the maximum employment level at 2,345, a slight reduction of 4 positions over 2014.
  • As a rule of thumb, the cost for each position at RTA is approximately $75,000, which includes salary, fringe benefits, retirement costs and payroll taxes. That means, to address a $7.5 million deficit, it would require the elimination of 100 employees. To address a $15 million deficit would require the elimination of 200 employees.

Is population loss a factor in RTA’s future?

  • The simple answer is “yes”. According to the 2010 US Census figures, between 2000 and 2010, the City of Cleveland experienced a 17 percent decline in population and Cuyahoga County experienced an 8 percent loss in population. Unfortunately, these were among some of the highest population declines in Ohio.
  • Why is this important? Population is a major factor in the development of federal funding formulas. If there are fewer people, there are fewer people for RTA to serve.
  • If there are fewer people, there are fewer people to support RTA with their contribution to the countywide sales tax.

How does RTA compare to other transit systems in Ohio?

RTA is, by far, the largest transit system in Ohio. RTA serves nearly as many customers as the transit systems in Columbus, Cincinnati, and Dayton combined.

The following is a comparison of ridership and transit miles operated in 2012 by the four largest transit systems in Ohio:

  Total Passengers Total Miles of Service
Cleveland RTA 48,234,103 20,423,099
Cincinnati Metro 17,553,120 10,609,303
Columbus (COTA) 18,692,312 12,771,894
Dayton RTA 10,068,819 8,208,655
National Transit Database (2012)

Did the Recession Impact RTA Ridership and Passenger Revenues?

Yes. While RTA experienced six consecutive years of ridership growth between 2003 and 2008, ridership was down in 2009 and 2010. This reduction in ridership significantly impacted fare revenues. In the second and third quarter of 2011, ridership increased.

In addition to traditional unemployment impacting ridership, the fact that many entities are furloughing employees on a regular basis means a reduction in the number of work trips and therefore ridership.

Thankfully there has been a significant turn-around in ridership as 2011, 2012 and 2013 ridership showed an increase.

Commonly Asked Questions

If RTA had not built the Waterfront Line, would RTA still have these financial challenges?

Yes. The financial issues related to the drop in sales tax, population and funding from the State of Ohio, and not the construction and operation of the Waterfront Line.

The decision to build the Waterfront Line was made 15 years ago in the early 1990’s, with an opening date in 1996. The State of Ohio was a major contributor towards the construction. RTA issued approximately $50 million in capital bonds to pay for the balance of the project, the majority of which were retired in 2002. These bonds, which were for “Capital” purposes, are not available to cover operating costs, such as operator salaries and fuel for the Community Circulators.

The Waterfront Line serves major community venues such as the Rock Hall, Science Center, the Flats, Voinovich Bicentennial Park and Browns Stadium. Although this service was very successful in the early years, when the Flats were a major destination for Clevelanders, due to low ridership as a result of the issues in the Flats, the Waterfront Line service level has been reduced, and now operates on weekdays only during commuting hours. This has significantly reduced RTA’s costs to provide the service. The direct cost to operate the Waterfront Line in 2009 was approximately $100,000, which is much less than the cost to operate the Community Circulator service, which was approximately $5 million.

In July 2013 when the Flats East Bank project was opened, RTA once again began operating the Waterfront line 7 days a week. The Waterfront Line was credited by the developer as being integral in making this development work. The new Ernst and Young
Office complex is more than 90 percent occupied, and the hotel and three restaurants are doing well. The second phase construction is scheduled to begin in late 2014.

If RTA had not built the HealthLine on Euclid Avenue, would RTA still have these financial challenges?

Yes. The financial issues are related to the drop in sales tax, population and funding from the State of Ohio, and not the construction and operation of the HealthLine.

As a matter of fact, an independent study by a professional financial management firm hired by the Federal Transit Administration concluded that RTA would be much stronger financially with the project than without the project.

Most of the funds used for the HealthLine were from special federal transportation grants that could only be used to build this project. If RTA turned down the grants, the funds would have been re-allocated to a competing project in another state.

RTA sold capital bonds to pay for a required local share on the project in the amount of approximately $20 million, which is about the same amount as was spent for the vehicles alone and represent only about 10% of the total project investment.

Because RTA is able to operate the HealthLine more efficiently than it could the service it replaced (the #6 bus line), RTA was able to secure some level of CMAQ operating grants, and was able to sell the naming rights under a 25-year agreement. The HealthLine is a real financial winner for RTA and is actually helping to balance our budget. This project brought jobs and economic development investment to the region that will benefit RTA, its customers and the taxpayers for years to come.

Through a special grant program, The HealthLine was deemed eligible for offsetting federal operating funding for a three-year period. RTA was granted $3 million in 2009, and $6 million for 2011 and 2012 for this purpose. These funds directly benefitted RTA’s financial picture in a very positive way.

The HealthLine, which was named the best BRT system in North America, is an international model of how transit done right can both increase ridership and spur economic development. Since its inception in 2008, ridership has increased by more than 60 percent, and more than $5 billion in economic activity has occurred along the Corridor.

When is RTA going to extend the rail service in Northeast Ohio?

The answer to that question is when and if funding becomes available and demand is sufficient.  Today’s budget estimate for extending rail is approximately $100 million per mile.  There are currently no local resources available for such an investment as all current dollars are being dedicated to maintaining the current rail system.

There may be (or may not be) money available in the future from the federal government to pay up to 50% of the cost of expansions for qualifying systems once the gas tax issue is resolved or another funding source is identified.    Studies have shown, however, that Greater Cleveland may not easily qualify because of its relative lack of traffic congestion in Northeast Ohio, and our region’s lack of projected population growth that would make current traffic congestion become worse.

Even if the federal government would pay for 50% of the cost, the next question is where would the remaining 50% come from? 

What is RTA’s biggest challenge going forward?

A significant challenge is finding resources to allow for the replacement of our rail car fleet.  Ideally the fleet would be replaced around 2023 (if not before) as the cars reach 40 years of age.  RTA would likely need to replace approximately 75 of the current 108 rail cars, with a typical car costing between $3.5 and $4 million each in 2014 dollars. Finding resources for this estimated $300 million plus purchase is certainly a big challenge.

Finding resources for this estimated $300 million plus purchase is certainly a big challenge.
 

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