Less for morre is RTD's unstated miussion.DP
RTD regains financial footing but reduced service looms for years
Special report: RTD’s financial pressures make budgets tight, reducing service
for years to come
More than a decade of spending and borrowing decisions limit recovery, even as
revenues bounce back
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Hyoung Chang, The Denver Post RTD’s W Line train approaches the
Decatur-Federal Station in Denver on Wednesday, Dec. 16, 2021.By JON MURRAY |
jmurray@xxxxxxxxxxxxxx | The Denver PostPUBLISHED: February 1, 2022 at 5:58
a.m. | UPDATED: February 1, 2022 at 7:09 a.m.65
Metro Denver’s transit agency is a long way from the dark days of 2020, when
the initial fallout of the pandemic gave rise to fears of recurring $250
million budget deficits and plans to slash more than 600 jobs.
But the Regional Transportation District is by no means in the clear: It won’t
have enough money in the next five years to restore all the service it’s cut,
the agency’s latest forecasts show. That’s true even as the sales tax
collections it depends upon to pay for most operating costs have fully
recovered, helping to stabilize this year’s $771 million operating budget.
The best RTD can afford, according to its financial plans, is to get back to
85% of pre-pandemic service levels by 2027, up from the current level of
roughly 70%.
A review of RTD’s budget picture by The Denver Post found that spending and
borrowing decisions made over more than a decade have limited the agency’s
ability to devote its resources — including significant amounts of recent
federal aid — fully to pandemic recovery.
RTD AT A CROSSROADS
A Denver Post series examines the ways the coronavirus pandemic has complicated
and in some ways worsened old challenges faced by the Regional Transportation
District:
- Part 1: Pandemic’s “devastating blow” scrambles commute patterns, raising
questions about RTD’s future.
- Part 2: Large operator and staffing shortages keep RTD from restoring more
service sooner.
- Part 3: Agency faces big financial headwinds, but it’s on a firmer footing
than once feared.
To restore more service, the agency also needs to hire enough staff to overcome
double-digit shortages on its operations teams. Then there’s the question of
whether ridership, still stuck at about 53% of pre-pandemic levels as of
November, will rebound enough to justify it. Those other factors ultimately may
prove more decisive when it comes to restoring service in the state’s largest
transit system.
But the financial challenges have piled up.
The agency is contending with a $290 million backlog in maintenance and asset
replacement costs, much of that deferred in the years before the pandemic hit
as officials made decisions such as opting to squeeze more time out of aging
buses. Its leaders have given that backlog priority for the next several years,
on top of new capital items coming due. Freed up by the federal pandemic aid
it’s receiving, the agency’s top budget official says RTD can shift more sales
tax money for that purpose.
As part of that backlog, the agency’s board last week approved a $70 million
order for 142 new buses.
In coming years, RTD also will face rising debt payments for some of the $5.6
billion in FasTracks rail expansions during the 2010s. They were built amid a
severe budget crunch in the program, as costs soared and tax collections came
in under projections, requiring creative financing and partnerships to pull
them off. That included loans with mainly interest-only payments initially.
RTD could be forced to siphon money from its base system, which covers
operations for the older light-rail lines and most of its bus system, to help
cover the resulting $226 million projected shortfall through 2027 on the
FasTracks side of the ledger. The base system will have extra money available
to do that — owing to older project bonds that will be paid off in 2024 — but
the assist would come at the cost of potential investments in more bus service
or other programs.
“From a financial standpoint, I’m genuinely concerned about the level of
service that we’re going to be able to operate in the future, as soon as 2025,
2026 (or even) 2028,” said Director Shontel Lewis, who represents areas
including northeast Denver on RTD’s 15-member elected board. “We can talk about
the budget in terms of dollars and cents, but really we’re talking about the
lives of the individuals who depend upon our service — and have throughout the
pandemic.”
FEDERAL RELIEF FUNDS
Total received: $774M from three pandemic relief packages passed by Congress in
2020 and 2021. Just over half has been spent or committed.
Amount remaining: $304M allocated in equal increments of $101.4 million for
RTD’s budgets in 2022 through 2024. Another $34M in relief funds is being held
by Boulder County pending discussions about restoring service.
Source: RTD.
As they face potentially constrained budgets, RTD leaders are in the middle of
rethinking how they provide service across more than 2,300 square miles, one of
the nation’s largest urban transit agency footprints.
The “Reimagine RTD” initiative, which kicked off before the pandemic, recently
produced a system optimization plan, now under public review. The plan would
establish a guide map for the restoration of routes and major adjustments of
service in the next five years if it wins the board’s approval in March. The
goal is that by the time RTD achieves its target of restoring 85% of service,
what it provides will be more efficient — serving more riders than would be
achieved by simply reversing pandemic cuts.
But the resulting shifts likely would mean eliminating some outlying suburban
routes as RTD improves service for its core daily riders in more populated
places. That could set up contentious board votes for some service changes.
Hyoung Chang, The Denver PostTraffic passes by the Wadsworth Blvd & W 13th Ave.
RTD bus Stop in Lakewood on Dec. 16, 2021.
Agency CFO says he’s “cautiously optimistic”
RTD would have faced the bulk of the coming financial crunches without the
pandemic, but they have made budgeting extra tricky for the foreseeable future.
They’ve strained the agency’s ability to pivot if ridership, contrary to
expectation, resurges quickly once the pandemic fades.
Doug MacLeod, RTD’s chief financial officer, said the FasTracks debt plans and
asset management deferrals were decided in tough budget circumstances. He views
the overall financial picture as brighter now in some ways, owing in large part
to $774 million in total aid allocations from three pandemic relief packages
passed by Congress since March 2020.
RTD 2022 BUDGET: $1.6 BILLION
Major components: $771M operating costs, $345M capital spending and
replacement, $235M debt payments, $185M reserves.
Source: RTD budget.
“I think we need to be cautiously optimistic,” MacLeod said. “I think we’re in
a lot better shape than we were a year and a half ago, but … there’s so much
uncertainty to just throw caution to the wind, financially, and commit to
things that we may not be able to fund in the future.”
The agency has used or committed just over half of the pandemic relief money,
relying on it to avoid massive layoffs in the last two years, cover unforeseen
costs and keep its operations solvent. RTD’s five-year financial plan calls for
using the final $304 million to pad out its budgets through 2024, in increments
of just over $101 million.
Stretching the relief funding out may be a shrewd budget move, but industry
observers say some transit agencies have put more of their shares to use
sooner. A study prepared for the American Public Transportation Association
last fall found that among 74 agencies surveyed, a majority planned to return
to offering full service within a year, even as many were weathering operator
shortages and other pressures.
“That was sort of a policy choice on the part of (RTD) to respond with more
caution, because I think that they are more concerned about long-term
revenues,” said Yonah Freemark, a senior research associate at the Urban
Institute who co-authored the study.
MacLeod and other RTD officials defend their approach as fiscally responsible.
In mid-January, Fitch Ratings, one of the three major credit-rating agencies,
gave RTD’s overall approach a favorable assessment, upgrading its debt ratings
to a stable outlook based in part on “strong revenue growth prospects.”
PANDEMIC EFFECTS ON REVENUE
Recovering sales and use taxes (2019-2022): $659M → $633M → $736M* → $768M*
Depressed farebox revenue (2019-2022): $154.4M → $76.3M** → $77M* → $98M*
*Projections
**Fares weren’t charged for three months in 2020
Source: RTD budgets and financial reports.
Sales and use tax collections returned to normal last year — and even ahead of
pre-pandemic levels. RTD projected nearly $736 million in collections through
the end of December, about 11% higher than in 2019, from the combined 1%
dedicated regional sales tax for its base system and the FasTracks program.
Farebox revenues are still a long way from recovering. They were on track to
come in at $77 million last year, about half what fares raised in 2019.
Beyond ridership recovery, future fare collections also will depend on the
outcome of a study underway now that’s aimed at evaluating, and possibly
reducing, how much people pay to ride buses and trains. RTD has faced criticism
for both the cost and complexity of its fare structure, which sets local fares
at $3 and regional fares at $5.25 but allows discounts for some groups.
Hyoung Chang, The Denver PostAn RTD transit security staff member, right, and a
passenger ride the W Line light rail in Lakewood on Dec. 16, 2021.
RTD’s “brand has declined here locally”
RTD’s five-year financial plan factors in one other headwind for the coming
years — the return of revenue growth caps under the Taxpayer’s Bill of Rights
on its base system after 2024, once the agency finishes paying off those older
bonds. They were issued for the T-REX project, which added light rail to the
southeast Interstate 25 corridor as part of a major highway expansion completed
in 2006.
MacLeod says a rough estimate is that the TABOR caps, which factor in inflation
and population growth, will trim $81.7 million from sales tax collections
between 2025 and 2027, and more after that.
RTD leaders soon will evaluate whether to ask voters in the district to remove
those caps, called a “de-Brucing,” which would allow RTD to keep taxes
collected above the limit.
But RTD potentially faces a problem: a lack of trust among many voters.
“I think one of the things that has struck me in the last decade or so is that
the agency is very well respected nationally — I mean among their peers and in
the industry,” said Ben Bryan, a commercial real estate consultant who serves
on RTD’s Community Advisory Committee and long has advocated for public
transportation in Denver. “And yet, at the same time, their popular image or
their brand has declined here locally.”
Bryan attributes that gap primarily to FasTracks, with all its struggles,
delays and successes — as well as the failure to finish it, despite some
Herculean efforts. It’s also rooted in decisions to suspend popular but
labor-intensive offerings, including the BroncosRide bus service on game days,
prior to the pandemic.
“People’s expectations were so high, and I don’t think they’ve been able to
meet those expectations,” he said.
Still hanging over RTD is a big financial question: Should the agency fulfill
its 2004 promise to voters, who approved the FasTracks plan, and find a way to
finish out roughly $2.2 billion in unfunded projects? Last year, the board
approved the latest study to assess the viability of building a limited-service
alternative for the costliest component, an extension of the B-Line commuter
rail up to Boulder and Longmont, though it’s shown limited ridership potential.
Hyoung Chang, The Denver PostThe RTD 0 Line bus arrives at the bus stop at
Broadway and Colfax Ave. in downtown Denver on April 20, 2021.
“I want RTD to be a transportation choice”
The northwest rail line aside, board Chair Vince Buzek said in an interview, “I
want RTD to be a transportation choice. I want not only the people who need it
to have it, but I also want the people who say, ‘Hey, let’s go to the art
museum,’ to have it as an option.”
But others, including Lewis, would rather RTD respond to what they see as the
most pressing service needs, especially as the pandemic has reduced commuting
into downtown from the suburbs. RTD has floated plans for projects that are
more cost-effective than building rail, including working with local
governments to build bus rapid transit lines to speed service on heavily used
bus corridors. Planning is underway with the city of Denver for a bus rapid
transit line along East Colfax Avenue.
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Debra Johnson, who became RTD’s general manager and CEO in late 2020, said RTD
shouldn’t shy away from difficult decisions as it faces the challenges of the
pandemic.
“Let’s stop talking about what was. Let’s work on solutions that are within our
reach,” she said. “And let’s ensure that we’re talking to people that are
utilizing our system, because they understand the complexities — they
understand what the problems are. So I, and my team, are listening to their
pain points … because that will help us to identify the problem for which we’re
trying to solve.”
As it grapples with its pandemic-reduced schedule and a tight budget, the
agency is in line to get more outside help, starting with a boost in its annual
federal funding by tens of millions of dollars a year for the next five years
under the $1 trillion infrastructure bill passed by Congress last fall. That
money typically is restricted mostly to capital expenses — paying for projects
or train cars, say, but not for their operating costs.
Less restricted money could come from newly expanded state grant-based programs
intended to boost transit and other alternatives to driving, especially in
metro Denver, which exceeds federal limits for ozone emissions.
So far, RTD’s leaders are taking a cautious approach to the state programs.
State Sen. Faith Winter, a Westminster Democrat, said lawmakers’ intention was
that the programs could cover operating costs in some cases.
RTD is in talks with Gov. Jared Polis, Winter and other lawmakers to create a
pilot program this summer, initially eyeballed at a $28 million state cost,
that would provide transit riders with free fares on high-ozone days, or
potentially on a wider scale during the season.
“I think that’s going to be an important first step,” Winter said, adding: “It
could be the ideological and logistical shift we need to be better partners and
do bigger things.”
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breachBuckmeisterAs a resident of Douglas County this is very bothersome news,
why are these people who seem to believe in the big lie that the election was
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vote?Top CommentTop Comment56 Boulder International Film Festival welcomes back
Alec Baldwin in MarchCanyonman"He described being haunted by the incident, but
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he aged. Just how long will Mr. Rodgers be a functional quarterback, and then
we are right back in the same hole.Top CommentTop Comment14 Douglas County
school board majority sought to oust superintendent — but didn’t tell the rest
of the board, members allegeCandyI can tell you that teachers ARE very
concerned. I am a teacher at DCSD and this constant state of unrest based on
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district (and I know a lot) teaches CRT or anything else remotely questionable.
What we ARE trying to do is our jobs: teach kids to be good citizens, community
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jobs. We care about kids. We don't particularly care about politics, and we
certainly don't want politics in the classroom. Every non-teacher out there, be
that person an administration, elected official, parent, who conveys rumor and
misinformation or undermines the basic, shared goal of educating kids is truly
an obstacle in our way. Seems like every move is a move to prevent us from
doing the jobs we were educated and trained to do. If you don't think a mass
exodus and severe teacher shortage is coming and worsening, then you haven't
been paying attention. We are facing an educational crisis, and the solution to
that is to take politics out of education. Personally, I don't have one
syllable of complaint about Corey Wise. I've worked with him directly and
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always been a professional. I do have a problem with this secrecy. If what
they're doing is right, then why all the secrecy?Top CommentTop Comment35
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Jon Murray | Enterprise and Transportation Reporter — The Denver Post
Jon Murray is an enterprise reporter on The Denver Post's government and
politics team, with a focus on transportation and accountability reporting. He
previously covered Denver city government. A Colorado native, he joined The
Denver Post in 2014 after a decade at The Indianapolis Star. He graduated from
Northwestern University with a bachelor's degree in journalism and history.
