The Transit Authority of River City (TARC) Board of Directors passed a Fiscal Year (FY) 2025 agency budget that takes the first step toward addressing a looming fiscal cliff. TARC explains action is necessary – without changes to the budget, the authority will be unable to meet expected expenses by mid-2026.
The approved FY 2025 budget calls for service reductions, effective Jan. 5, 2025. The service reductions will affect fixed route service – TARC3 service will be unaffected. When the service reductions are implemented in January 2025 and maintained moving forward, TARC anticipates that the fiscal would be pushed off for another two years.
The service reductions are the first of a three-pronged strategy to address an operational budget gap expected to be as much as $30 million by July 2026 without cuts, additional revenue or some combination of the two.
The January 2025 service reductions
This summer, TARC will be launching TARC 2025, a community-focused network redesign process that will result in a full plan for an updated TARC network within the reality of available funding by February 2025. TARC will also make comprehensive efforts to identify new sources of revenue to support service from local, state and federal sources.
“This is not a step that the board takes lightly – but it is necessary,” said TARC Board Chairman Ted Smith. “TARC, like many transit agencies across our country, faces significant financial challenges. By taking this step now, we can buy the necessary time to find the resources we need to support robust bus service for the thousands of us who rely on public transit in Louisville.”
Background on the fiscal cliff
The agency notes the looming fiscal cliff is a result of several factors, including a local funding mechanism (the Jefferson County occupational tax) that hasn’t changed its rate in 50 years, minimal state support in comparison to peer agencies, an increasingly challenging financial climate in the U.S. for transit agencies since the COVID-19 pandemic and the expiration of COVID-19 federal emergency funding support for transit agencies.
Reduced ridership, changing travel patterns and unpredictable budgets have recently led to many transit agencies facing comparative financial challenges. Some of the more prominent examples include the Washington Metropolitan Area Transit Authority facing a $750 million budget deficit for FY 2025 and the San Francisco Bay Area’s regional system facing a $93 million gap in FY 2025 that is projected to grow to a $349 million gap by FY 2027.
While TARC has a lower cost per service hour than peer agencies in Cincinnati, Ohio, Indianapolis, Ind., and Nashville, Tenn., TARC has faced a challenging budget climate for more than a decade. A total of $140 million in federal emergency COVID-19 funding since 2020 has kept service running for essential workers during the past few years but those funds are expected to be exhausted by June 2025. At that point, TARC will need to rely on reserves to close the anticipated budget gap, which are projected to run out by summer 2026.
Service reductions
The board-approved service reductions are called “Saturday Plus.” Weekday schedules on a majority of TARC bus routes will shift to Saturday-level service, meaning fewer scheduled buses every hour and less frequent service Monday-Friday. The change is similar to service reductions TARC implemented during the height of the COVID-19 pandemic. Like those changes, no bus routes will be eliminated, meaning no current transit riders will be without fixed-route service.
“Saturday Plus is the least intrusive way for TARC to preserve essential service while still taking important action to address the looming fiscal cliff,” said TARC Interim Executive Director Ozzy Gibson.
To maintain as much frequent bus service as possible, the changes will not affect TARC’s busiest routes – the core frequency routes that include the #4 4th St., #10 Dixie Rapid, #23 Broadway and #28 Preston Highway. Almost half of TARC’s daily boardings are on one of those four lines. Those routes will maintain their usual weekday frequency levels of every 15 minutes.
The budget is now being sent to Louisville Metro as part of the Louisville Metro government annual budget process. The Louisville Metro Council will consider the TARC budget as part of its overall consideration of the Louisville Metro FY 2025 budget.
