The recent Virginian Pilot article, “Hampton Roads Transit blows budget by $5M, and six cities will pick up the tab” provides an opportunity to update the public. In the budget that ended on June 30, 2016, expenses were up 2.5% and revenues were down 2.5%, resulting in a shortfall of $5.1 million. Expenses were higher due to personnel costs needed to support approved routes, maintaining older buses that exceed the recommended average age of 6.5 years, and higher usage of critical paratransit services.
HRT’s budget has a true-up provision in which money is either refunded to member cities or additional funding is requested. Since HRT’s inception in 1999, money have been refunded to the cities nine times.
As President and CEO, I’m disappointed with the year end results and we are making process improvements to improve communications. I am committed to work with member cities to build a stronger foundation and budgetary solutions, including the creation of a reserve fund. In most organizations, reserves can help cushion challenging years.
Revenues were down due to a decline in ridership. This has been a national trend in most regions with the exception of transit systems that are either adding or improving service levels or regions where there is significant job creation. Hampton Roads has experience anemic growth since the recession, trailing both the state and the nation.
Transit ridership remains significant. HRT is providing more than 15 million customer trips annually on bus, ferry, and light rail. This year, that’s enough to fill the Hampton Coliseum, Norfolk Scope, Portsmouth Pavilion, and the amphitheater in Virginia Beach every day. This supports over $89 million in consumer spending annually. It also helps the region avoid an additional 45 million vehicle miles traveled on roadways, bridges and tunnels.
What about the past? I’m proud to say HRT has undergone incredible positive changes over recent years. In many ways, we’re not the “same old bus company”. We have improved on-time performance and are focused on improving the customer experience.
Concerning the basic budget model, however, HRT is effectively no different today than when it was formed in 1999. Times have changed, but the region has not changed the way it funds public transit in over 20 years.
Today’s business model is antiquated. It needs reform. For example, it’s good financial policy and fiscal discipline to maintain some kind of reserve. Every city government does this. When unforeseen circumstances or emergencies arise, reserve funds can be used to cover costs. HRT has no such reserve funds.
Another past issue that continues to hinder competitiveness of the regional transit system is a weak mix of funding. It’s generally a good thing to have a diversity of reliable funding sources. If funding is short in one area, another source can help make up the difference. Today, HRT has little diversity of funding sources. Unlike most peer agencies nationwide, HRT has no dedicated funding. As a result, there is an overwhelming reliance on local funds. And if less transit funding from state or federal source comes to Hampton Roads in the years ahead, this decades-old problem is going to get much worse.
I see several opportunities for the region to break through past and present roadblocks in order to achieve more sustainable and effective transit regionally. For all the value transit is providing the region, the historical funding model is simply inadequate to support balance growth.
Here are several action items that we are engaged in:
- Continue efforts on innovative programs to grow new ridership across all market segments. For example, HRT’s GoPass365 program creates partnerships with businesses and educational institutions designed to grow new ridership and revenue.
- Work with cities to amend the current Cost Allocation Agreement in order to allow for creating and maintaining a reserve fund, similar to municipal reserve funds. As an example, The Greater Richmond Transit system has a reserve fund.
- Work with cities to reduce the reliance on Federal capital funding that is currently used to offset daily operations, lowering city funding for operations.
- Collaborate with public and private sector stakeholders across the region to identify and implement new funding sources dedicated for transit that will lessen the burden on municipal partners. As a 31-year public servant, I understand the many service demands placed on municipalities.
