BART Board OKs interim budget with July 1 fare increase, Sept. service changes

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Faced with a struggling economy that has resulted in declining revenues and escalating costs, BART’s Board of Directors passed an interim budget Thursday that cuts expenses and raises revenues. Still, a $22 million deficit remains. The $642.4 million Fiscal Year 2010 (FY10) interim annual operating budget reflects the realities of running a transit agency in an economy where ridership and sales tax revenues are dropping and health care and benefit costs are rising. 

"The interim budget will be updated after labor negotiations have been completed to incorporate the financial impact of the new agreements," General Manager Dorothy Dugger said. "Hopefully, the new labor contracts will allow us to balance expenses with revenues.  Labor and benefit costs constitute about 73% of the base operating expense budget.  So, if long-term changes to the wage and benefit levels are not addressed during labor negotiations, additional cost savings thru actions such as service cuts and staff reductions will be necessary to address the expense growth and structural imbalance between revenues and expenses."

BUDGET’S IMPACT ON CUSTOMERS
The budget deals with cutting costs through expense reductions, which include: 

• Eliminating 100 positions – most of which are vacant as a result of a hiring freeze
• Returning to train service every 20 minutes on nights/weekends from every 15 minutes starting in September
• One route service on nights/weekends on the peninsula starting in September

The FY10 interim operating budget also raises revenues by:

• Moving up the regularly scheduled Jan. 2010 cost of living based fare increase of 6.1% to July 2009
• Increasing lowest priced fare from $1.50 to $1.75 (would be equal to or less than cash fares of other Bay Area agencies - e.g. $2 AC Transit; $2 Muni; $1.75 SamTrans)
• Raising the surcharge on trips to & from SFO from $1.50 to $4.00
• Expanding the $1/day parking program to 8 more stations (South Hayward, Bay Fair, San Leandro, Richmond, El Cerrito del Norte, Pittsburg/Bay Point, Concord and Pleasant Hill).

BART’S ORIGINAL $249 MILLION, 4-YEAR DEFICIT
Long-term forecasts originally projected a four-year deficit of $249 million.  The expense reduction and revenue enhancements incorporated in the FY10 budget are projected to reduce the four-year deficit to approximately $111 million and will improve the long-range outlook. "However, with reasonable assumptions for revenue growth – even with expense reductions and revenue enhancements – unless there are changes to the employee and retire benefit cost structure, BART will continue to face projected annual operating deficits for the next four years," Dugger said.

UNION CONTRACT TALKS NOW UNDERWAY
The contracts with all five of BART’s unions expire on June 30, 2009.  BART is meeting with union representatives and has presented them with a list of options to cut costs with a target of $100 million in savings as the employees’ fair share of the overall budget problem.  The agency is asking for both union and non-union employees to pick up more of the cost of their benefits and pensions to lessen the burden on riders and taxpayers.  In addition, BART proposed to eliminate contract language that limits the agency’s right to improve productivity by changing outdated, wasteful work rules, which also reduce expenses. "Our employees do a great job delivering BART service and we compensate them well for that," Dugger said. "However, it would be unfair to burden our riders with additional fare hikes but not ask our unions to cut labor costs, which our riders and taxpayers ultimately pay for."