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Riding out the recession

Sun., Nov. 15, 2009

Spokane Transit Authority puts projects on hold, looks for ways to bolster revenue

It wasn’t long ago that the Spokane Transit Authority was riding high.

Boardings were up nearly 50 percent, and the agency’s cash reserve had grown thanks to voter approval of a sales tax increase earlier this decade.

But the worst economic recession in generations has brought a new reality: Cuts in service are likely over the next several years.

“We are in a pickle,” said Richard Rush, a Spokane city councilman and member of the STA board.

Rush and others want STA to look beyond the recession and get ready for conversion to a “green” economy. Rush, a bus rider himself, believes that having a modern and efficient transit system is critical to energy conservation and sustainability.

“We’ve got to position ourselves for the growth in ridership that’s going to inevitably come with the growth in oil prices,” Rush said.

For now, expect penny-pinching.

Officials are planning for a 2 percent cut in service late next year, followed by more substantial reductions of 7 percent a year in both 2011 and 2012. The service cuts would be accompanied by reductions in spending on new buses and other assets.

Decisions on how to reduce bus service to meet budget goals won’t be made until later next year. Rush declined to speculate on what the cuts might look like.

Even with the prospect of reduced service, however, there appears to be little appetite for a tax increase. Sales tax currently makes up two-thirds of STA’s revenue.

State law would allow the transit agency to collect an additional 0.3 percent sales tax on top of STA’s existing 0.6 percent sales tax collection, but STA Chief Executive Officer Susan Meyer said “this is a trough we have to live through.”

Fares account for about 15 percent of the budget, and STA is taking steps to shore up that revenue source.

Fare increases approved by the board earlier this year are being implemented in three phases beginning Jan. 1, when a regular single bus fare will rise to $1.25 from $1. Paratransit fares will increase by a quarter, to 75 cents. A second increase in 2011 will boost regular bus fare to $1.50 and paratransit fare to $1.25. A year later, the paratransit fare will increase again to match the $1.50 bus fare.

Improvements on hold

Meyer said she doesn’t want the transit agency to become paralyzed by the down economy and its current budget woes but wants it to look ahead.

Among its latest efforts, STA is:

•Embarking on a new study of rapid transit through the Spokane Valley with an eye toward possibly using electric buses at a fraction of the cost of light rail.

•Working with the city of Spokane on an analysis of the potential for a streetcar system serving downtown, the University District, hospitals, Browne’s Addition and the Spokane County Courthouse. The cars could run on tires and be powered electrically.

•Creating a “smart bus” system in which riders would get real-time arrival and departure information, even mid-route. Installing cameras on all buses is part of the project, an element that is under negotiation with drivers. The cameras would be a deterrent to potential problems because the video images could be retrieved for evidence. “It’s an element of safety customers haven’t had before,” Meyer said.

•Modifying the downtown STA Plaza to make drop-offs, boardings and transfers more efficient.

To offset those investments, STA is going to postpone vehicle replacements, expansions of park-and-ride lots and improvements of agency facilities. Plaza modifications will take place over several years to conserve cash in 2010.

In addition, STA is curtailing a program in recent years of helping finance local street construction projects, such as the installation of heavy-duty concrete intersections on heavily traveled routes, including several this year on East Sprague Avenue.

Meyer has argued with other transportation officials in the region that STA funds should be used only for transit service. She won the argument by seeking a ruling from federal transportation officials, she said.

“It’s kind of unusual to have a transit agency pay for so many road projects,” she said.

Sales tax revenues still key

Because STA depends so heavily on sales tax collections for its fiscal health, the agency could be facing budget constraints for some time to come.

Sales tax collections through September were down 12 percent from their peak in 2007, and there is little prospect for recovery until nearly 2015, Meyer said. STA is currently planning for an additional 1 percent decline in 2010 under a conservative budgeting approach.

STA would balance its 2010 budget by using $15 million out of a $59 million cash reserve that built up in the economic growth years earlier this decade.

Eastern Washington University economics professor Grant Forsyth said he is forecasting a 1 percent growth in retail sales in 2010 in the Spokane area, which, if true, offers only a glimmer of hope for STA and local governments suffering under the recession.

Longer-term prospects for job and income growth are not strong, he said. That means that sales tax collections will remain sluggish. “It’s going to be a pretty tough time for agencies that are dependent on taxable sales,” he said.

Just over a year ago – in October 2008 – STA was celebrating its first month with more than a million riders. Ridership last year was up 48 percent over 2003, and the growth continued into the first part of this year.

STA officials said the higher number of passengers may have been partly triggered by higher gasoline prices, but they believe that a concerted effort to make the system friendly to riders paid off, too.

Among the changes that have been popular are new express routes, wireless Web connections, an online trip planner, good public relations, enhanced security at the plaza, “smart card” debit cards and new pass programs.

A rapid transit system through Spokane Valley, a streetcar system downtown and computer tracking of bus operations are seen as extensions of those improvements.

The key to the future of transportation in Spokane, Rush said, “is a robust public transit system.”

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