VA: GRTC faces ‘financial cliff’ by 2031. Service cuts, new tax on rideshares explored.

The Greater Richmond Transit Company is facing a “potential financial cliff” and the exhaustion of its reserve dollars in the next six years, according to documents from a Sept. 30 board retreat.

Those documents indicate that authority board members have explored service cuts, delays to planned route expansions, marginal increases to regional sales and gas taxes as well as the establishment of a levy on rideshares like Uber and Lyft as possible solutions.

Regular bus routes operated by GRTC — which is jointly owned by the governments of Richmond and Chesterfield County — serve Richmond and portions of Chesterfield and Henrico counties. The company also operates commuter and seasonal services to Petersburg, Ashland and parts of Hanover County. Last year’s ridership totaled over 12 million.

Documents from the board retreat show that the company’s projected future spending far outpaces its revenues, as federal funding from the American Rescue Plan Act of 2021, a state grant award for free transit, and contributions from Virginia Commonwealth University are all set to expire.

A projected budget hole will require the company to expend prior year surpluses and reserves, the documents show. By 2031, GRTC will have spent 77% of its $22 million reserve fund. And by the same year, the company’s nearly $60 million in reserves supplied by the Central Virginia Transit Authority will have dwindled to a meager $332,347 — a 99.5% hit.

GRTC spokesperson Ashley Potter on Monday evening acknowledged that the company and its board members had “identified a future funding gap” and were “doing what we can to minimize the impact while still providing similar levels of service.”

Will fare-free transit end?

Whether GRTC will be able to maintain the current level of service appears to be in doubt. Among the considerations for closing the funding gap, according to board documents, was the reduction of bus service along fixed routes. Relying on that measure alone would require a 30% service cut.

Delays to or even eliminations of planned service expansions — such as the expansion of Route 1 to the Virginia Center Commons, increasing bus frequency to Richmond International Airport and investments in microtransit — also are on the table.

And the company’s CARE Plus program — which offers booking-based transit to people with disabilities or who are 80 or older — could be threatened, according to the board documents. The program last year served almost 30,000 riders.

In 2020, at the height of the COVID-19 pandemic, GRTC suspended its standard $1.50 per ride and 25 cents per transfer fares and has not resumed them. After some uncertainty as to whether fare-free transit would continue in 2026, the company announced it had managed to make room in the budget.

Potter on Monday said that “GRTC will continue zero fare transit as long as funding continues to be identified,” emphasizing the “importance of transit in the region and the impact of zero fare.”

“They require funds for sustainability,” she said.

Old taxes could increase, new taxes could be created to fill gap

Nineteen percent of GRTC’s $106 million operating budget for 2026 came from federal contributions, while 27% were state dollars, 30% were regional dollars and 17% came from local governments. Other sources include ad revenue and philanthropic donations.

Under Mayor Danny Avula’s first budget, the city will contribute $9.6 million to the agency this fiscal year.

Per state law, 15% of the CVTA’s revenue goes to GRTC. The CVTA is funded in part through a 0.7% sales and use tax and a 7.6-cent-per-gallon gas tax across its member localities: Ashland, Charles City, Chesterfield, Goochland, Hanover, Henrico, New Kent, Powhatan and Richmond.

Both revenue streams were created in 2020 specifically to support the authority.

Some of those figures could change to accommodate GRTC’s growing need — and new sources could be added.

At its September retreat, board members considered a proposal to establish a transportation network tax, which would require rideshare companies like Uber and Lyft to collect a 6% tax from riders and pass it on.

“GRTC is exploring additional funding options and has reviewed a list of additional tax revenues that other agencies are exploring,” Potter said. She did not identify the agencies in question.

Board members also considered marginal increases to the sales and use tax and fuel tax, as well as a request that CVTA increase its annual contribution from 15% to 30%.

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