Manager's Forum

San Francisco, Calif.
Dorothy Dugger
BART General Manager

How is BART surviving our budget crisis? We work with the best and plan for the worst. Despite the sobering economy, I feel fortunate to be at the helm of a team that keeps a keen eye on BART?s financial outlook, while diligently implements strategies to weather this crisis.

Our goals have been to maintain the high-quality, safe, reliable service our customers expect while cutting costs, increasing revenues and minimizing the impact on our riders — especially in the area of service cuts. After all, cutting service creates a spiraling down effect. The more you cut, the more customers find it inconvenient to ride, which leads to further revenue declines and then more service cuts.

This economy knocked us with a double financial blow: fewer fare paying riders (55 percent of our operating revenue) and less sales tax revenue (27 percent of revenue sources). In fact this year, we have experienced the two worst quarters for sales tax declines in the history of our service. Our financial outlook started to take shape before the current fiscal year began. In mid-2009, we predicted a four-year, $310 budget shortfall. Our first big opportunity to start eliminating this deficit was when the contracts with our five unions expired. We set out a target of finding $100 million in savings over four years and together the unions and management were able to achieve that goal.

We also began to work on increasing revenues and decreasing costs. We cut expenses through a selected hiring freeze, non-labor budget cuts and securing better rates on the power we use to run our electric trains. We increased revenues by $18.4 million annually by raising fares, establishing new parking fees and increasing off-peak headways (from 15 minutes to 20 minutes) to historical levels. The fare hikes themselves were modest for 95 percent of the people who deliver us the bread and butter of our revenues — our daily commuters.

In most cases, their fares went up by 6.1 percent — or an average 20 cents per trip. However, the steepest fare increase was felt by our San Francisco International Airport (SFO) customers who saw the premium portion of their fare go up $2.50. The reasoning behind increasing the premium fare was that even with the fare hike, the overall ticket price is still significantly more affordable than taking a cab or shared ride to the airport. Additionally, most SFO customers are leisure or business travelers and aren't paying the fare everyday as our daily commuters do. Finally, we cut costs by returning to running trains every 20 minutes during the off-peak hours instead of every 15 minutes. The 20-minute service is nothing new to our customers as it was standard for many decades. We had recently increased the train frequency, but given the financial crisis, we chose to cut it back.

Despite all of these strategies, midyear we found that we still faced a $25 million deficit in this current fiscal year. Instead of burdening our riders with more fare hikes and service cuts, we cut costs further by both tightening budgets and eliminating nearly 80 positions with a concentrated effort to place affected individuals in vacant positions to minimize actual layoffs. This midyear strategy will result in $6 million savings this year and more for the full fiscal year 2011. Couple that with the use of $19 million in federal ?flexible? funding (including some ARRA funding), and we?ve been able to close this year's budget gap.

While the challenge at times seems daunting, the key to surviving a budget crisis involves a multi-faceted approach that is thoughtful, equitable and most importantly, palatable to our customers.