What happened with Caltrain’s 2018 budget?

Why is Caltrain proposing a fare increase a few months before getting the results of a fare study assessing the risk of fare increases reducing ridership?

The reason is a big operating budget deficit triggered, this year, by challenges faced by VTA to meet Caltrain’s budget request, due to VTA’s budget deficit in the face of steep ridership declines.

For the upcoming budget year, Caltrain had requested about $14Million, in line with VTA’s member contribution back before SamTrans had a financial crisis in FY2011 (see chart and quotes from board meeting, below).

According to Caltrain’s partner agreement, when one partner can pay less than their requested share, the others withdraw proportionately, causing a triple-hole in the budget.Â At that time, the impact was going to be steep serviceÂ cuts.

At that time (following strong community pushback against the service cuts), the partners and MTC came up with a creative solution to backfill Caltrain’s budgetÂ several years, making up for SamTrans withdrawal and other partners’ corresponding reduction. (In the 1990s, SamTrans had put up the money to purchase the Caltrain right of way from the state, and MTC brokered a deal whereby the old loan was considered to be paid back).

caltrain-member-operating-contributions

Since then, Caltrain made it clear in itsÂ annual budget reports that the budget was being balanced with temporary funds, from the right of way repurchase, and additional funds from rapid ridership increases.

Then in 2016 for the FY2017 budget (the two undated slides) Caltrain announcedÂ that the one-time sources had run out, and higher member contributions would be requested unless a dedicated funding source was found.

In 2016, Caltrain raised fares to help close its budget gap. Unfortunately, that fare increase was correlated with flattening ridership.

Now, for the FY2018 budget, VTA has said that it can offer $9 million of Caltrain’s $14Million request. The other partners would be able to pay the full request this year, but because of the way the agreement works, the other partners reduce their contribution proportionately, leaving, once again, a larger budget deficit.

The Caltrain board had planned to make its next fare restructuring utilizingÂ information from aÂ study out later this year that would assess the risk that fare increases would trigger ridership declines. Â But instead, because of the depth of the budget gap, Caltrain proposed to raise fares without the risk assessment.

VTA’s perspective is that it is incorrect to consider that VTA is unable to meet it’s Caltrain contribution request, because VTA is paying what it offered, and is offering the same as the previous several years (when Caltrain was saying its budget was being met with one-time funds).

Noting VTA’s budget challenges this year, and the role in triggering cascading consequences for Caltrain riders, isn’t blaming Caltrain’s financial instability on one agency. Â Indeed, Caltrain’s budget instability has been triggered by each of the 3 partners over the years.

For Caltrain riders, stakeholders, and partners, the current situation is a problem, because the proposed solution – fare increases without risk assessment – risks depressing ridership, and not generating the desired revenue, in addition to increasing highway congestion and solution.

The goal of explaining the situation isn’t fingerpointing – it’s to encourage all parties to find a solution to meet the budget needs without risking ridership decreases. Â Click here to encourage the parties to work together to find solutions for this budget year, and stable funding in the age of electrification.

Caltrain Board Meeting, May 4, 2017

Board Presentation, Operating Budget, Slide 8, and Member Contributions, slide 9
http://www.caltrain.com/Assets/__Agendas+and+Minutes/JPB/Board+of+Directors/Presentations/2017/2017-05-04+Preliminary+FY2018+Operating+Budget.pdf

Board meeting Audio:
https://www.dropbox.com/s/cpx9z6yk4idaux0/2017-05-04%20JPB%20BOD.mp3?dl=0

1:19:55 on audio
Member Agencies weâ€™re holding at the same level as last year, and that is because there is a formula that allocates those percentages and based on one of the member agencies inability to increase that amount.

1:21:20-1:23 Member contributions. At one time there was an idea that member contributions would make up the difference, and they would be split among the 3 agencies. There is an allocation formula based on a.m. boardingsâ€¦ Itâ€™s almost half of what it was at one time. It is the inability of member agencies to contribute at a sustained level that is a major factor in the deficit that weâ€™re facing.