TriMet's Budget: The Big Picture

TriMet continues to feel the effects of the lagging economy and high unemployment in the Portland area.

As of May 2009, the unemployment rate in the Portland metro area was 11.5%. Because more than half of our operating revenue comes from a payroll tax paid by local employers, we have less money for bus and rail service when unemployment is high.

On June 24, our Board of Directors adopted TriMet's Fiscal Year 2010 budget, which reflects revenues about $31 million below where we had originally projected. Here's how we're addressing the shortfall:

Federal stimulus money reduced our gap by about $7.25 million, leaving us with about $24 million deficit.
We made non-service-related cuts of 9% throughout the agency, totaling $13.5 million. This included a hiring freeze, salary freeze, executive furloughs and the elimination of 139 full-time staff positions. This lowered the budget gap to $10.5 million.
An initial round of bus and MAX service cuts, which saved $6.9 million, was finalized in May and will take effect in September 2009.
After taking these steps, we still have a $3.5 million budget gap, which we propose to cover through minor bus frequency reductions effective November 29, 2009.

Below are answers to some common questions about TriMet's funding and why cuts are necessary.

How is TriMet funded?

Like most transit agencies, the money allocated to TriMet for building our transit system is different from the money for operating it.

The majority of TriMet's operating revenue
comes from business payroll taxes.
(Click chart to enlarge)

TriMet's operating funds pay for the day-to-day administration and operation of bus and rail service, and most of the cost to replace and rehabilitate vehicles, equipment and aging infrastructure. We receive about 55% of our operating funds from a payroll tax paid by businesses located within the TriMet district boundary. Another 21% comes from fares, which is typical for transit agencies. When unemployment goes up, revenue from the payroll tax goes down, which means less money for TriMet operations.

Our capital funds pay for rail construction projects such as WES Commuter Rail and MAX Green Line. These funds come from a different pool of money, largely in the form of grants from the federal government, and are often allocated many years in advance. We also receive a small amount of state and federal money for other capital improvements. By law, these funds are designated for capital investments only, so we can't use them to pay for day-to-day operations.

What steps has TriMet taken to avoid service cuts?

Before considering cuts in service, we've taken a number of steps to reduce costs and improve efficiency throughout the agency. This includes a $13.5 million reduction in costs not directly related to service on the street, including administration.

Our FY10 budget includes a 6% reduction in administration staff positions: 139 full-time positions.
A hiring freeze is in effect and we are not replacing staff who retire or leave TriMet.
A salary freeze is in effect for administration employees.
Overtime has been reduced by 14%.
Some administration employees have volunteered to work fewer hours.
Top executives are taking unpaid two-week furloughs.
We increased deductibles for non-union employees enrolled in PPO health and dental plans.
We are producing fewer print materials and relying more on electronic media.
We have made reductions in limited-term employment, travel and research.

Ridership is up, isn't it?

TriMet ridership increased 2% in 2008, but the added revenue from fares is not enough to close the budget gap. Fares make up about 21% of our operating revenue.

Can you increase fares to balance the budget?

In September 2008, we increased fares 25 cents, 20 cents of which is helping to recover fuel expenses. We realize that fare increases impose a hardship on many riders and therefore we will not raise fares in 2009. However, if the economy does not improve, we may need to consider a fare increase to avoid additional cuts in service.

Won't the federal stimulus help?

TriMet has received more than $53 million in stimulus funds from the American Recovery and Reinvestment Act. Federal guidelines require that this money be spent only on capital projects and infrastructure that will make the transit system more robust and create new jobs, so we can't simply apply it toward our operating costs. However, stimulus money has offset some planned investments totaling $7.25 million, and in turn, reduced the severity of the service cuts taking effect in September. Here's a list of capital improvements we are making using the stimulus money.

What are other transit agencies doing?

Transit agencies across the country are reporting an increase in ridership but are cutting service due to the weak economy. Like TriMet, most are heavily subsidized and receive just a portion of their revenues from fares. So far, TriMet has weathered the economic downturn better than many agencies.

* TriMet's fiscal year begins July 1 and ends June 30.