RTD cited decreased sales taxes during this recession as being the primary reason for the revenue drop, despite significant increases in fare collection during the same time. From the article:
The report shows RTD's total revenues down over last year by 0.3 percent through November, despite fare revenue being up 17 percent. And sales taxes, which saw a precipitous drop for November, are down 0.4 percent over those 11 months compared with 2007.
Sales tax revenue is RTD's lifeblood, making up about 60 percent of its resources. The national recession has eaten into retail sales, particularly since October.
Yet, another interesting tidbit contained in the article is that RTD managers apparently miscalculated the amount of available revenues they expected:
RTD originally budgeted for a 4.3 percent increase in sales tax for 2008.
But with the economy slowing over the summer, the budget was adjusted to anticipate only a 2.5 percent increase over 2007. The picture looked stagnant until the fall.
But a slight drop in September, followed by a 6.3 percent decline in October, signaled problems.
November's figure showed the drop getting steeper, wiping out all previous months' gains over 2007.
"We've been on top of this for a long time, but, frankly, the 9.6 percent drop in November is much worse than we thought it would be," [RTD General Manager Cal] Marsella told the Rocky on Friday.
"After adjusting the budget twice, I was hoping we would at least be flat in 2008 over 2007, but it looks like we will be under water.
"You play the cards you're dealt, and you can't control that.
Anticipating future revenues is definitely a tricky game, but back in August, Marsella was still expecting increased sales tax revenues when many economic indicators such as the unemployment rate and growth rate showed serious problems with the economy. RTD seems to have a lot of difficulty projecting agency costs versus actual revenues and because of that, it always seems to be scrambling to push quick solutions instead of carefully planning to avoid major problems in the first place. To further Marsella's relatively stupid metaphor, you may have to play the cards you have, but you can still anticipate what cards are left in the deck before you are dealt the hand.
Certainly RTD needs to do what it can to ensure that it gets through the current economic problems without sacrificing too much of what makes it the "number one transit agency in North America."
The wage freeze and the already implemented fare increases will help RTD's bottom line. RTD could also get a boost by decreasing fuel costs, which I guess they will have to wait another three months to take full advantage of (RTD locks its fuel prices in six month increments, so the agency locked the current rate back in October before diesel prices dropped in half). RTD is also currently in negotiation with its union to figure out the workers' contracts for the next three years after they expire at the end of February. The article suggested that RTD will try to use the economy as an excuse to either cut union pay of only accept very modest increases. However, the article did not elucidate the 5 percent service cuts proposed by Marsella, only to say that any cuts would have to be approved by the RTD board. I hope that cuts are the very last resort to RTD's budget woes. The last thing riders need is an even more difficult and/or longer commute than the one we have now, and the reality is that RTD would be kissing some of their fare increase revenues goodbye if they cut service by the 5 percent Marsella mentioned.
This is all grim news for RTD, and especially its riders. Let's just hope that lowered fuel costs and a hopefully quick economic recovery will help RTD get back on its financial foot again. Because the reality from a rider point of view is that its hard to demand much needed improvements to service or structure (fare cards, getting rid of zones), when the agency is quite possibly struggling just to maintain what it has now.
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