Finally...a break from RTD

Now that Cal Marsella has left as RTD director, maybe there has been some sense of common rider decency restored at the transit organization. According to an article from the Denver Post, RTD officials are not planning on increasing the fares for 2010.

Apparently, RTD's previous proclamation that our transit fares are similar to other cities no longer holds water. According to RTD's own records, our express and regional transit are on average nearly a full dollar ($.96) higher than other cities. Anyone who has ever took a $10 SkyRide trip to the airport fully understands this. Supposedly, the local transit fares are on par with other cities though I wonder if it takes into consideration our awful zoned system which makes light rail potentially cost upwards of $4.50 just to travel through a few zones. Many if not most cities have one fare for all local transit, regardless of how far you travel.

Because of the higher fares, RTD has gained 12 percent more fare revenue for the first quarter of 2009. I doubt the revenue increase will continue much further into 2009 since the system-wide cuts that just went into effect will certainly effect the fare box.

So while it's good news that RTD probably won't raise fares in 2010, the bigger worry is what RTD is going to do in face of massive revenue declines from its take in sales tax. During this recession, sales tax revenues decreased 12 percent for the first quarter of the year. Since RTD gets the vast majority of its revenue from taxes, this is definitely a bad situation. The genius analysts at RTD said they are only expecting a seven percent tax revenue drop for the year, which I think is dubious since we are already at 12 percent for the first three months and its not like the economy is steadily improving. I expect deeper revenue declines and severe slashes in the service as a result.

With the economy in trouble its hard to expect RTD to do anything but remain in a holding pattern, but they should also really be considering its place within this city and how to get Denver a truly great transit system if they are going to have any long term viability. Sure FasTracks will help when (or if) that is completed, but a lot of the problem is at a systematic level with policies that do not fully consider the transit experience for its riders. RTD needs a much less complicated fare structure (get rid of zones already), an increase in neighborhood service, stops that actually provide accurate schedules, and a greater ability for regular people to simply take transit instead of driving. We are a long way to go before RTD is anything close to cities with real transit, but I have been encouraged by a few recent developments (acknowledging that RTD is overpriced, the upgraded web site, the fact that Cal Marsella is no longer in charge). But what else should RTD be doing NOW to make sure it has a healthy future.

An article in the Rocky Mountain News on Friday shows that RTD's financial problems may be worse then many expected. The article said RTD's revenues from November 2008 fell 9.8 percent and the transit agency is considering a 5 percent cut in bus and light rail service along with a staff salary freeze. 

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.