Balancing RTA’s operating budget is an on-going process
YEAR-END TOTALS: RTA’s operating budget is monitored constantly, and changes often to reflect variances in market conditions. In 2015, the budget started with a beginning balance of $25.4 million, and ended with $44.6 million. In 2016, the budget absorbed an $11 million gap, and ended the year with $33.1 million. Moving into 2017 and beyond, the budget faces serious challenges.
2017 BUDGET: The 2017 operating budget, approved by the Board of Trustees in December, ensures that current service levels will continue. The budget includes total expenditures of $302.9 million and estimated revenues of $289.5 million, with the $13.4 million gap covered by funds carried over from 2016.
QUOTE: "Effective budget execution, solid management, a commitment from our employees, and a desire to seek out and implement process improvements has allowed RTA to maintain its financial position in recent years. We expect that success to continue into 2017," said RTA CEO and General Manager Joe Calabrese.
KEY ISSUE: According to new Federal guidelines, effective July 1, 2017, Ohio must remove Medicaid managed health-care providers from the Sales & Use Tax base. This issue will affect RTA, each of Ohio’s 88 counties, and many transit systems that receive a portion of their funding from either a portion of the sales tax or directly from County-allocated funds. If no action is taken by July 1, the change will reduce RTA’s sales tax revenues by an estimated $4.5 million in 2017, and $18 million-$20 million annually in 2018 and beyond. Ohio’s response to this issue will appear in the two-year State budget that will be passed in the days before July 1. Several solutions have been proposed, but none fully cover RTA’s revenue loss.
BUDGET BOSS: Tom Raguz, former Finance Director of the City of Cleveland Heights, now heads RTA’s Office of Management and Budget. He fills the vacancy left after the retirement of Gale Fisk. At Cleveland Heights, Raguz managed and developed a new operating budget that included a five-year financial forecast. He also established financial policies and secured funding for the city’s fleet management program.
What RTA needs from State and Federal officials in 2017
FAST FUNDING: RTA asks that the FAST Act be fully-funded with additional sources of funding dedicated to funding public transit at levels needed to achieve a “State of Good Repair”. The bill passed Congress last year, but funds were never appropriated to make the legislation viable.
FILL THE GAP: RTA requests that the State provide a revenue-neutral sustainable replacement for the loss of the sales tax revenue from Medicaid managed health-care services. This impacts the State of Ohio, all counties and transit authorities, with a projected annual loss to RTA of $4 million in 2017, $18 million in 2018, and $18 million each subsequent year. RTA also asks that the State act on ODOT’s “Ohio Statewide Transit Needs Study” findings, and identify dedicated funding to close the huge funding gap identified in the study.
STATE OF GOOD REPAIR: RTA seeks support in obtaining additional federal and state funding for these high-priority State of Good Repair projects:
• $23.8 million for 2018-2020 bus replacement
• $7.4 million for a compressed natural gas (CNG) fueling station and related building upgrades at the Triskett Garage
• $10.0 million for rail infrastructure improvements
• $11.0 million for the Tower City Center Station and track rehabilitation
• $22.0 million for a communication system and replacing the computer-aided dispatch and automatic vehicle locator (CAD/AVL)
• $8.0 million for the fiber optic system replacement on the Red Line
READY TO BID: RTA has a priority list of $95.5 million in design and construction projects in the Capital Improvement Program that are either partially funded or have been delayed due to lack of funding. They can be awarded quickly, when competitive grants are awarded.
UNFUNDED: RTA has a partial list of unfunded projects totaling $411.2 million that are not included in the Capital Improvement Program. They continue to be delayed due to lack of capital project funding.
• $48.0 million for rail infrastructure upgrades
• $15.2 million for the East 79th Street Red Line Station ADA reconstruction
• $300.0 million for a rail car replacement program
Federal update from APTA’s legislative conference
THE EVENT: In mid-March, RTA CEO and General Manager Joe Calabrese attended a 3-day Legislative Conference in Washington, DC, sponsored by the American Public Transportation Association (APTA). There, he met with Senators Sherrod Brown and Rob Portman, and Congressman Jim Renacci, Dave Joyce, Marcia Fudge and Marcy Kaptur.
NEW TAX BILL: There is a lot of talk on Capitol Hill about passing a new tax reform bill. This could impact RTA in 3 ways.
- Will Congress continue to allow a credit for purchasing alternate fuels? With 106 CNG buses in service and more on the way, RTA has a lot at stake.
- Will Congress continue to allow a pre-tax credit benefit for commuters using public transit, the cornerstone of RTA’s Commuter Advantage program? Using a pre-tax credit is the foundation of the Commuter Advantage program, which is now used by 800 employers and 14,000 individuals to purchase a Monthly Pass.
- Will municipal bonds continue to be tax-free? If not, it could cost RTA more to borrow money. Right now, it’s too early to answer any of these questions.
$1 TRILLION?: There was much discussion at the conference of a major infrastructure boost from President Trump, but without specific details, it’s too early to predict what will happen. The American Public Transportation Association (APTA) estimates that $200 billion of investment in public transportation infrastructure, over 10 years, could create and sustain 10 million jobs. It could also contribute $800 billion to the nation’s Gross Domestic Product over 20 years. In a recent infrastructure report card from the nation’s engineers, transit received a D-minus, its lowest grade ever.
Continuous improvement: a daily mantra for RTA staff
TRANSITSTAT: RTA’s ground-breaking TransitStat program has saved taxpayers more than $78 million since it began in 2008. Using this information-based management system, RTA employees have worked on 138 projects. The projects saved $16.2 million in fuel purchases, and $10.8 million in reduced overtime. Paratransit on-time performance rose from 76 percent to more than 92 percent. Officials from around the nation visit RTA regularly to see how they can adopt the program at home. In 2017, TransitStat continues to focus on service reliability and customers’ riding experience, as well as improving processes and reducing costs.
PERFORMANCE EXCELLENCE: RTA is committed to continual performance excellence, and participates in the Full Examining process with The Partnership for Excellence (TPE). In 2015, RTA earned the Silver Award and submitted another application in 2016. Award levels will be announced in June. RTA awaits recognition and the Feedback Report to gain constructive insights on achieving sustainable organizational excellence.
PREDICTIVE MAINTENANCE: Implementation of a predictive maintenance program has made dramatic improvements in the reliability of RTA’s bus fleet. As bus maintenance improves, there are fewer breakdowns, repairs cost less, and customer satisfaction grows.
PTMA: As part of its succession planning efforts, RTA sends about 30 employees each year to a Public Transit Management Academy at Cleveland State University, where they learn modern applications of many transit-related disciplines. Students form teams that study key issues facing RTA, and propose solutions. Some PTMA graduates have been already been promoted within RTA.
CHECK US OUT: The 2016 annual report is now available on-line.
National groups recognize RTA for its achievements
SUSTAINABILITY: All public transit benefits the environment, but RTA has taken it further. The American Public Transportation Association (APTA) has recognized RTA for outstanding achievements in sustainability. RTA is one of five public transit systems in North America at the Silver Level status in APTA’s Sustainability Commitment program. As an example, RTA reduced water consumption 5 percent, and greenhouse gas emissions 24 percent. Some of these achievements are the result of the new Environmental and Sustainability Management System (ESMS) program, which is now in place at the Central Bus Maintenance Facility and two bus garages.
CAR-FREE: USA Today and its 10best.com Web site named Cleveland the top city in the country for visitors who want to go car-free. Cleveland beat out Denver, New York, Chicago and Washington, DC, for top honors. The story cited RTA’s Rapid service to Hopkins Airport, free trolleys and walkability Downtown, and extensive rail and bus service to neighborhoods and suburbs. The selection was made after the Republican National Convention, an event that impressed thousands of first-time visitors.
RTA in the news -- from Public Square to Brookpark
STRONG FINANCES: For the 28th straight year, RTA has been awarded the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association (GFOA). The award recognizes RTA’s Comprehensive Annual Financial Report (CAFR). The GFOA says, “This is the highest form of recognition in government reporting.” RTA was recognized for clearly communicating its financial story.
DESIGN DONE: Construction work is nearly complete on a new $12.5 million Brookpark Rapid Station. A ribbon-cutting will be held this spring. This station, on the Cleveland-Brook Park line, is the busiest station on the Red Line west of Tower City. Funding for this station – and most major projects -- is usually 80 percent federal and 20 percent local. To check the status of an RTA project, go here.
PUBLIC SQUARE: Working closely with the City of Cleveland and the Federal Transit Administration (FTA), RTA began operating buses on Superior Avenue through Public Square on March 6. Public Square -- the traditional hub of public transportation for more than a century – continues to be vital to commuters. Each weekday, 30,000 customers use the rail lines in Tower City and 40,000 customers board buses on Public Square, with up to half transferring between the two modes. Design changes continue to evolve.
SAVE YOUR $$: The average Clevelander can save $9,504 a year by switching from a car to a bus or Rapid, according to the American Public Transportation Association (APTA). That’s about $792 a month in savings. RTA’s Commuter Advantage program makes this savings even easier by allowing employees to purchase Monthly Passes with payroll deduction and pre-tax benefits. To learn more, contact Jim Frick at 216-356-3058.
READY TO RIDE: RTA is working with several large local companies to convince a higher percentage of employees to take advantage of Commuter Advantage and its pre-tax benefits. The results have been great – about 1 in 3 persons who took advantage of the short-term, risk-free trial signed up for the program. Most recently, New York Life and the Downtown Hilton held successful events. With 15,000 riders from 800 employers, Commuter Advantage generates more than $17 million annually for RTA.
HONORED: Loretta Kirk, RTA’s Deputy General Manager for Finance & Administration, has been named one of 10 Women Who Move the Nation by the Conference of Minority Transportation Officials (COMTO). She has worked in transit for more than 37 years, and has held significant COMTO leadership positions on the national and local levels. She is well known for her efforts to mentor and develop young transportation professionals.
WE HAVE JOBS! RTA has openings in many key positions, including mechanics and operators. Help spread the word. Just go here. RTA offers great benefits.
ADDRESS CHANGES: Send e-mail here.
GOING GREEN: Inside RTA is available in text and Adobe Portable Document Format (PDF). It can also be sent to you as an e-mail attachment. RTA may soon offer this newsletter as e-mail only. To make sure we have your correct e-mail, send a note here.
- Joseph A. Calabrese, CEO/General Manager
- George F. Dixon III, President, Board of Trustees