In fiscal squeeze, RTD studies fare hike, service cuts
By Kevin Flynn, Rocky Mountain News (Contact)
Published July 8, 2008 at 6:51 p.m.
Photo by Barry Gutierrez / The Rocky
Frank Torres, 63, right, has been an RTD monthly pass holder for four years. He laughs after telling a joke on the line that runs along Broadway from downtown Denver to Highlands Ranch.
RTD is weighing a fare increase, cuts in bus and light-rail service or a combination of both as it faces the three-sided economic squeeze of skyrocketing fuel costs, declining sales taxes and increasing ridership.
"It's choose your poison: Do you charge more or do you cut service?" said Cal Marsella, Regional Transportation District general manager.
On Tuesday, RTD board members got the latest report on ridership and revenue, which are, respectively, up and down.
The board will soon consider a package to trim its $458 million annual operating budget, to reflect sales tax collections running 4.5 percent below projections while ridership is up 5.6 percent. RTD had budgeted for a 3 percent ridership increase this year.
The eight-county transit agency is facing a $21.4 million gap - an estimated $15.4 million less in sales taxes than budgeted and $6 million more in cost for diesel fuel.
When the budget was adopted last year, RTD estimated it would pay $2.62 a gallon.
Instead, it recently locked in a 2008 constant price of $3.20. RTD doesn't pay federal or state fuel taxes.
Fuel costs hammer budget
Essentially, it began the year already 22 percent over its fuel budget.
Worse, for next year, analysts are suggesting RTD budget $4.55 a gallon - a whopping 42 percent over this year.
Denver drivers don't need to be reminded of the jump, but for the record, just four years ago RTD paid an average of $1.11 a gallon.
The sharp worldwide spike in oil is fueling a surge in transit riders - folks leaving their cars behind when they can.
As a result, RTD has to redeploy some of its buses onto heavy demand routes - adding trips to some - at the expense of lower-ridership routes.
Cutbacks on lesser-used routes can cause hardship on transit-dependent riders.
At the same time, the cost of fuel is redirecting consumer spending. As more money flows into the family car's gas tank, less goes to discretionary spending that generates sales taxes, the lifeblood of RTD.
"Our ridership is at record- breaking levels," Marsella said. "I took a bus home last night and we had six or seven standing-room- only passengers on the regional bus to Boulder. I talked to the driver and he said more and more he's getting counts of standing room only.
"In this situation, you want to split the trip by adding another bus, but we can't.
Just when we need more service, we can't provide it because our means to provide it is being undermined."
Less spending, less in tax
RTD gets only 14 percent of its total revenue from fares. Nearly 70 percent comes from sales taxes.
So when families stay home on the weekend and buy less, there's less money for RTD to put into transit service.
And even though fare revenue in May was up 21 percent, RTD is providing more service for riders without getting any additional farebox revenue.
Under its Eco Pass program, RTD signs contracts with major employers to provide annual passes for their workers.
The price is based on the assumption that many workers won't use it.
But more eligible employees are picking up their passes lately and trying transit, RTD said.
Since the crisis deepened a few months ago, RTD has had one round of its three-times-yearly service changes, which take effect Aug. 17.
But even that first swing at saving money came up short.
The original proposal in May would have cut enough service to save $4.1 million a year.
But after public pleas to spare some of the cuts, the package was thinned down, first to $3.43 million savings and finally to $2.78 million.
flynnk@RockyMountainNews.com or 303-954-5247
Top 10 EcoPass purchasers
* University of Colorado
* TIAA CREF
* Denver Health and Hospitals
* Auraria campus
* Transportation Security Administration
* Internal Revenue Service
* US Bank
* Encana Oil and Gas
* Airserv
* Gary Williams Energy Corporation
Riding with commuters on RTD routes 0, 15 and 120X
* Claudia Aguilar, 39, works in customer service in Denver, lives in Frederick
"I ride Monday through Friday all year long. You have time to read, and just staying away from traffic is great."
* Brian Allen, 28, works for a consulting firm in Denver, lives in Thornton
"It's cheaper with the price of parking and gas, and the commute is shorter."
* Ronald Collins, 33, home remodeler
"It's better than walking. If I had a car I would still take the bus because gas is so expensive."
* Michael Williams, 20, homemaker, Denver
"I have to ride every day just to go to class, to go out to eat or commute. I don't have a car."
* Virginia Allen, 65, retired from academic publishing
"I think everybody should ride the bus. I'm a strong advocate of public transportation."
* Forsythia Owen, 25, taking time off work
"This is my source of transportation. The drivers out there are crazy. Some of the people are very rude and disrespectful."
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July 8, 2008
7:19 p.m.
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kodijack writes:
This reminds me of the drought that we had four years ago. Denver Water spent a bunch of money telling us all to conserve. So we did. And then when their revenues fell short because we all did what they told us we had too...they raised their prices.
I have a real problem with the fact that RTD only collects 14% of all of its revenue from ridership. It costs that much to run the transit system? If it costs that much then maybe we need to re-think the whole thing.
July 8, 2008
7:34 p.m.
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uncledave writes:
Sounds about right. No "let's figure out how to reduce our costs" just "let's stick it to the public". You can bet none of the RTD Board is taking a paycut.
July 8, 2008
7:45 p.m.
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Mike846 writes:
Kodijack has it right; government rarely thinks things through to their long-term end. The water fiasco is a classic example. They ban smoking in all casino's, and then wonder why gaming revenues are down. Now the transit system they touted as being the solution of the future for the city and suburbs is unable to meet the demand because they low-balled equipment needs and had artificically low fares. Of course, when they sold this bill of goods to the voters, they didn't tell them those salient facts, especially the one about sales tax subsidizing the whole thing. Thats one of the reasons mass transit is failing in many of our older cities that have been losing sales bases. Of course, the Democrats in our state legislature have the answer: more taxes on everyone, not just higher fares for users. The Europeans have been making these systems work for years and years now. Do you suppose it might be time to see how THEY do it? Naw, the Liberals are smarter than anyone with experience, so they won't even ask. Vote the rascals out of office every chance you get. They are idiots. Mike
July 8, 2008
8:34 p.m.
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kali73 writes:
I agree with Kodijack relating this to Denver water. Solutions are not rocket science. What ever happened to build the light rail and they will come? Well, now they come, and some are even paying for their ride!
They should get rid of all the "RTD management Nazis" meaning the management sitting/sleeping in their white Suv/vans at almost every other stop. How much is that costing to "monitor" transit? Use that money for security to check fares - that is a revenue generator for RTD unlike the costly RTD management. Also, cut the RTD board's salary & benefits until they can provide a proper projection - that will be the day! Reduce the number of 16th St shuttles - way too many it almost looks like a train. So, now where is my mgmt consulting fee? :)
July 8, 2008
8:34 p.m.
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rj1967 writes:
If fares equal 14% of revenue then a non subsidized bus fare would be $12.50!! Somebody please explain how it costs $12.50 every time someone boards a bus or light rail.
July 8, 2008
8:37 p.m.
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tchoupitoulas writes:
It just stuns me when an entity like RTD touts their "Record Ridership" then in the same breath says that they have to raise prices and reduce service because of their "Record Ridership."
If they are so strapped for cash, why in the world did they just waste seven years and millions of dollars on the T-Rex expansion between Broadway and Lincoln Avenue AND continue with plans to expand even more along the northwest corridor? Jaw-dropping ineptitude.
July 8, 2008
9:01 p.m.
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wisdomwriter writes:
The one thing that still bothers me is the rate of non-paying passengers it carries daily. I don't know what planners were thinking when they decided to have open stations where anyone can get on the train without paying. Any other city with successful public transit (Boston, New York, Chicago, Atlanta, and others) has closed stations that require you to pay to get in...I am sure fare revenue would jump significantly if that was done in Denver, but it might be too late...
July 8, 2008
10:12 p.m.
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maithoughts writes:
How come you can stand up on a bus or train, yet I'd get a ticket if you don't wear a seatbelt in my front seat. I have both front and side curtain air bags. Just wondering.
July 8, 2008
11:46 p.m.
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TonyB writes:
I'm with rj1967. My wife and I would spend $24.29 (full unsubsidized fare) for round-trip tickets to downtown Denver. We could drive down there for about a gallon of gas. Hmmm
July 9, 2008
12:18 a.m.
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superbad writes:
I just wanted to point out to Mike846 that European urban mass transit is much more heavily subsidized than RTD is. Also, for those of you shocked that an unsubsidized bus fare works out to $12: have you ever taken Super Shuttle? It's $25 to get from central Denver to the airport, and they make you ride all around town for two hours while they pick people up.
Ultimately, you can thank GM's lobbyists for getting the original street car systems ripped out of almost every major American city back in the 40's and 50's. The Denver Tramway System was once a profitable private company (and it received no sales tax revenue). Now we get to spend $6 billion to build a far less useful light rail system, and pay sales tax on top of that forever and ever to keep this sprawling, inefficient bus system afloat. So thanks, GM!
July 9, 2008
3:22 a.m.
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LOUIE writes:
Why don't they use thier power of emminent domain, and steal more private land below appraised market value, and sell it off to future private developers at a substantial profit? They look to already being able to do so, why stop now Cal Marsella, you're on a roll! RTD has learned a new way to steal from the private sector below appraised value and the sell it off at great profit to land developers at a huge profit, never giving the private land owner his just compensation. RTD uses emminent domain like a thief; they've become the private land developers best friend under the guise of whats best for the public intrest. They are a professional thief using the government to steal land cheaply to be resold at great profits.
July 9, 2008
6:56 a.m.
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Shadow writes:
Sounds to me like there may be a monopoly on transportation. Isn't this a page out of the airlines playbook. Raise fees and remove services?
July 9, 2008
8:02 a.m.
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ecoscience writes:
Didn't these management geniuses just give themselves some huge payraises? Start by rolling those back before raising fares and cutting services. (It sends the right message don't you think?)
We need more light rail, not less. If fuel prices for buses go up, then it mitigates the impact by having a better network of light rail lines. Is this a correct assumption?
July 9, 2008
8:21 a.m.
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Citizen21 writes:
RTD is loosing money on the Eco Pass Program - Not the monthly ridership or those single trip riders. That program needs to be fixed, revenue would raise.
July 9, 2008
3:22 p.m.
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Konyok writes:
Step by step ...
Of course, nowhere does RTD, or Kevin Flynn, mention that fuel only represents about 5% of RTD's budget. 40% of RTD's budget is servicing the construction bonds for this wonderful light rail system that carries maybe 10% of the traffic that the steadily deteriorating bus system does.
We, the taxpayers, were had. We are now saddled with cost overruns, an expensive rail system that doesn't match Denver's geography or traffic patterns, and a red headed step child bus system that worsens daily.
But, that light rail sure is pretty, isn't it?
July 9, 2008
3:34 p.m.
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Konyok writes:
Citizen21,
Eliminating Eco passes would help, but won't solve the problem.
(What a deal! For $100 cost per employee per year the eco pass holder has unlimited free ridership on any RTD service. Plus, if for any reason the eco pass holder misses her bus she can call a taxi and RTD will pick up the tab!)
The problem is fundamental and structural: RTD's debt to revenue ratio would cause a bankrupcy in any private business. They failed to plan for any fuel cost increases and they based all of their revenue projections on the rosiest of economic forecasts.
July 9, 2008
11:25 p.m.
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prk166 writes:
Konyok --> On top of that @3/4th of LRT riders were already taking the bus. We're spending billions to shift those riders from buses to trains.
Superbad --> "European Mass Transit"??? You mean it's more or less the same whether one is in Sweden, England, Portugal, Hungray, Slovenia or Moldova? I wouldn't paint with a broad brush like. What is being done in Lithuania is different than Luxemburg or Spain. And if anything, their higher spending on transit, in light of a couple decades of double digit transit declines in many major Western European metropolitan areas, points to how expensive rail is to operate. Problems are usually not resolved simply by throwing more money at them.
July 13, 2008
8:06 p.m.
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warrengfunk7 writes:
RTD can further increase efficiency and reduce costs by replacing more bus routes with rail lines - which is what FasTracks is doing. Furthermore, converting it's bus fleet to natural gas would also be a big step in the right direction - which is what RTD is doing.
On the other hand, highways require immense amounts of TAX money for construction and maintenance. Talk about being heavily subsidized, the roads and highways you drive on are subsidized to the point they are "free." Free to use, but not free, because you pay for them with a tax.
You see, all of our transportation is subsidized. The US Dollar has been inflated so highly, that American people couldn't afford to get anywhere without transportation subsidies. Imagine having to pay a toll, when you leave your driveway and pay tolls for every single mile you drive, no matter where you go. Add that to the cost of gas, insurance and vehicle maintenance and you are spending MORE than the $12.50 unsubsidized cost it costs to take a light rail train downtown.
July 13, 2008
8:10 p.m.
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warrengfunk7 writes:
many people (like ones posting on this article) can be so illogical with their bias assumptions. You must fully analyze the situation - that is the key.
July 21, 2008
2:47 p.m.
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prk166 writes:
Warrengfunk7 -0-> Illogical? Speak for yourself. You are the one endorsing spending billions of dollars on trains to "save" a few ten thousand on operating costs. Light rail is not less expensive to operate than buses UNLESS you take out the billions upfront required to build the lines.
And if you're going to logically calculate costs, don't forget all the extra time spent taking transit instead of driving. All that time spent transferring from but to light rail, from walking to and from the bus stop, etc, etc. For example, it takes me @ the same amount of time to my job than to take the bus. And my big ol hind end doesn't bike very fast. And beside the time, take into account the amount of money spent PER USER. The old argument is that people don't use transit because it doesn't get them where they're going. Funny cuz even when you look at downtown which has great transit service and people are faced with paying money for parking, they still don't capture more than what? 50% of the market? 60?
"ridership is up 5.6 percent. RTD had budgeted for a 3 percent ridership increase this year."
-- Did I miss it or does RTD not publish their numbers and reports on their own web site?
July 28, 2008
3:15 a.m.
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SL10 writes:
What is not mentioned in the article is that Access-A-Ride fares will go up also to $4 from $3.50 currently. That will affect many who need the service. :-(