Due to record numbers of passengers, Connect Transit had a good year for its buses' fare boxes, but the 15 percent increase in revenue from riders last fiscal year does little to give the agency a solid financial future.
In addition to $1.4 million from bus fares, the Twin Cities' public bus system will rely on more than $8.4 million in state and federal tax revenues to operate this fiscal year.
"That model isn't going to be sustainable," said General Manager Andrew Johnson, noting uncertainty at both the state and federal levels.
As a result, Connect Transit is looking at ways to increase local funding and a potential increase in Bloomington-Normal's sales tax is on the table -- if only because several other community organizations are eyeing the same revenue source.
A community group is asking for a quarter percent hike in the sales tax to pay the $32 million price of new soccer fields and a proposed community center, while McLean County schools are looking at a 1 percent hike for school facilities.
Johnson said Connect Transit won't necessarily try for a sales tax increase and it hasn't reached any conclusions about the best way to enhance local revenue, but it does need to be part of any conversations about raising taxes.
"What we're trying to do is raise awareness. Yes, we're going to need local funding," Johnson said. He said Connect Transit doesn't want to be "victims of being last in line."
Should other sales tax efforts succeed in the community, the rate -- currently at 7.75 percent -- could max out, and Connect Transit wants to respect other groups' needs, Johnson said. "We have to have some local funding eventually, but at the same time we're not planning on doing that at the expense of any other entities in the government area," he said.
Connect Transit this fiscal year also will receive a total of $910,812 from Bloomington and Normal governments, but for capital costs only.
Johnson said Connect Transit is appreciative of the current level of assistance from the state -- about $6.4 million this fiscal year -- but doesn't expect past funding levels to last, and the federal funding mechanism for transit agencies expires in about a year.
Until Congress approves a long-term plan "uncertainty exists and when you have uncertainty about financial matters it means you can't plan and you can't move forward," said Virginia Miller, spokesperson for the American Public Transportation Association.
That could be problematic for any agency, including Connect Transit, as transportation preferences shift toward public transit rather than owning a car due to increased gas prices, lifestyle changes due to mobile technology and increased environmental awareness, she said.
While raising a sales tax to boost local funding is attractive because the burden is borne by visitors as well as local residents, Johnson said it can be volatile and the public isn't keen on a government agency "stockpiling cash" for lean years.
In addition to sales tax as a local funding option, Connect Transit also could look at creating a special district with authority to levy a property tax, or charging fees for automobile stickers -- both options a local study group suggested examining earlier this year.
In the meantime, Connect Transit is looking beyond taxes and fees. The system plans to hire a business development manager who, among other duties, will help establish more partnerships with local businesses to encourage employees to take the bus.
"We think there's a lot of untapped potential out there," said Johnson, adding Connect Transit will never be able to pay for itself through fares alone.
"We don't portray ourselves as a social service, but there's an aspect of that to public transit," he said.
Copyright 2013 - The Pantagraph, Bloomington, Ill.