Transit agency budget stretched

Legislative auditors have confirmed what everyone who was paying attention already knew: The Utah Transit Authority budget is stretched to the limit. The reasons are also no mystery. Just as the agency began construction of four new TRAX lines and an extension of FrontRunner through Salt Lake and Utah counties, the Great Recession sliced into its sales-tax revenues.

In 2010, according to the audit, sales taxes provided 63 percent of the UTA’s $275 million total annual revenues. Federal non-capital funds were the second-largest source, providing 22 percent. Fares contributed only 13 percent.

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When the UTA built its first TRAX lines in the late ‘90s, Uncle Sam picked up 78 percent of the $1.1 billion construction tab. But for the latest $2.3 billion in projects, the federal government is paying for only 24 percent. That means UTA local resources have been stretched to make bond payments for construction capital.

At the same time, the sluggish economy has cut into the UTA’s local sales-tax receipts. The $172 million in sales tax the agency collected in 2010 is about $67 million below what the agency had predicted in 2007.

The auditors are concerned that the UTA’s predictions about growth in sales tax revenues, federal grants and fare receipts are too optimistic and that its projections of expenses are too conservative. That combination, say the auditors, could put the agency in such a financial bind that it might have to cannibalize bus service to keep its trains operating.

People who ride UTA buses, particularly routes in Salt Lake City, know that the agency already has cut bus service to live within its means and operate the new Green (West Valley) and Red (Mid-Jordan) TRAX lines. They may shudder at the thought of what may have to happen to bus service when the new Airport and Draper TRAX lines open in the next couple of years. FrontRunner South to Provo also is scheduled to open in that time.

So why not raise fares? UTA projects that its fare income will expand to provide a greater share of revenues. One way to do that is to introduce distance-based fares on the trains. But it will take money to develop such a system, and when a monthly adult transit pass already costs $75, as it does today, some customers may quit riding if fares go too much higher. There may be some room to increase fares, but as the audit suggests, it is limited.

Much depends on fuel costs and the economy. If the economy picks up, tax receipts will, too. But greater demand could push fuel prices higher. As the auditors put it, UTA is on a budget tightrope, and any missteps could be calamitous.