FY2011 Budget Update
Please stop back tomorrow January 28, for updates from the January 26, Commission meeting on the FY2011 Budget Update.
Budget Challenges
Wh
at are the causes for DART's current budget challenges?
Is the Recession Impacting DART Ridership and Passenger Revenues?
Is this just a DART issue?
Is DART’s Budget Balanced for FY2011?
What actions are being taken to balance the FY 2011 Budget
What is the proposed fare increase and when will it take effect?
What are the proposed service reductions and when will they take effect?
How can DART customers and the public comment on the proposed fare increase and potential service reductions?
What are the next steps in developing the DART budget for fiscal year 2011?
Budget Challenges
The recent economic downturn is having far-reaching implications for the region, as well as DART.
A significant reduction in revenue including employment-related loss of ridership and fare revenue, as well as a potential decline in state funds and increased liability expenses, has required that DART examine all available options to fulfill our mission: "To be a leader in improving Central Iowa citizens’ quality of life by placing the customer first while providing safe, innovative, and efficient public transportation service to the region.”
The purpose of this web page is to keep DART customers, employees and the general public informed of financial challenges and the ways that the DART is attempting to meet them.
This information will be updated on a regular basis. If you have any questions, suggestions or comments, please e-mail us at budget@ridedart.com.
What are the causes for DART's current budget challenges?
The reason for DART's budget challenge is a decrease in revenues as well as an increase in liability payments.
DART's revenues come from three primary sources:
- Property Tax Levy
- All property in Polk County as well as all the property in DART member cities that cross the county borders (West Des Moines, Clive, Urbandale, Granger, Grimes, Sheldahl, Des Moines, Carlisle) has a levy assessed on the property by DART.
- This tax levy is governed by the DART Commission’s adopted funding allocation formula. The levy rate varies from city to city, ranging from approximately $0.13 per $100,000 of taxable valuation in the smallest communities to $0.56 per $100,000 of valuation in Windsor Heights.
- These tax levy rates to support public transportation equate to between $11 and $51 per year for a homeowner with a house valued at $200,000.
- This rate is one fourth of what the same homeowners pay for Des Moines Area Community College and one-tenth of what Polk County residents pay for Broadlawns Medical Center annually – two other regional services.
- No matter where one lives in the region, these property tax rates are the lowest for fixed route public transit services in the State of Iowa. Tax rates for transit are higher in Davenport, Dubuque, Iowa City, Sioux City, Cedar Rapids, Clinton, Ames, Waterloo, Cedar Falls and Ottumwa, despite DART offering more than twice the amount of service of most of these agencies.
- While the maximum rate the DART Commission can legally set is capped by state law at $0.95, the Commission has requested the development of a budget that maintains rates at the estimated levels set at the time of adopting the new funding formula in October 2008.
- If property tax rates are not increased, the amount of revenue generated increases or decreases along with the overall property values of the region.
- For this reason, the property tax is directly impacted by the local economy. Over the last several years, when the economy was stronger than it is today, the annual increase in property values for the region averaged over 4% per year. This was DARTs expansion period when Sunday bus service, the D-Line Downtown Shuttle, Pleasant Hill, Regional On-Call, and new Johnston Express services were all implemented.
- In 2009, the growth rate in regional property values was effected by an increased number of foreclosures, collapse of new home construction the national recession-caused unemployment and increased downtown office vacancies.
- Nearly every member city’s property value has not grown at previously predicted rates.
- In order to maintain DART’s tax levies at October 2008 levels, DART will have to reduce its anticipated revenues by approximately 1 percent from its property tax levies.
- Government Subsidies and Grants
Federal Government – In the early years of this program, the Federal Government provided Capital Grants to assist in the purchasing of capital goods, such as buses, trains, train stations, transit centers, etc., and Operating Assistance to assist with expenses associated with operator and mechanic labor, health and retirement benefits, and for fuel and utilities.
A change in the Federal Program in 1993 eliminated Operating Assistance to transit agencies. Because this change was so significant, it was phased in between 1993 and 1998.
The Capital Grant portion of the federal program continues and provides funds by a formula to each qualifying transit system in the nation, based upon factors such as population and population density. For qualifying purchases, these grants can typically be used to pay for up to 80 percent of the cost of the capital goods.
Over the years, the definition of “capital” has been expanded and now includes labor costs to maintain capital goods such as buses purchased under the program.
By and large, the principal federal funding available to DART has kept pace with inflation.
However, as local and state revenues have not kept pace with growing costs, the MTA and now DART have been converting more and more of its federal capital funds to operating assistance as allowed by law. DART is now converting nearly 66 percent of its capital funds to fund the operation and keep local tax rates low. This conversion reduces the ability to fund DART’s capital program, which includes buying new buses and vans, funding bus shelter installations, repairing buildings, etc.
State of Iowa Funding – The State of Iowa has never been an aggressive partner in funding public transportation when compared to other states. The typical state in the United States provides approximately 23 percent of the operating costs of its transit systems.
The State of Iowa invests less than 1 percent of the total transportation spending on public transit, putting it 37th out of the 50 states in the nation. Other Midwest states including Minnesota, Illinois, Wisconsin, and even Michigan provide many times more support for public transit. Iowa provides less than 6 percent of DART’s operating budget revenues.
The low level of state funding is declining as the revenue for transit is a small proportion of the registration fees for new car sales in Iowa. The economy has significantly reduced the number of new car sales and even the August 2009 Cash for Clunkers initiative may have only shifted car buying that was already going to happen.
DART is anticipating a reduction in funding from the State of Iowa of as much as $200,000, which would bring the total allocation from $900,000 to $700,000.
- Passenger Fares
Passenger fares cover approximately 20 percent of the operating cost of DART’s service. DART has increased the fare twice in the past five years. Its $1.50 base bus fare is the highest in Iowa.
DART has a very successful Unlimited Access program with many of the most significant employers in the region whereby the employer, school or university pays the fares on behalf of their employees or students, allowing them to ride for free. Nearly 80 percent of DART’s express bus ridership and over 33 percent of DART’s total ridership is not personally paying for their DART ride their employer or university is.
This Unlimited Access program provides significant stability to DART’s farebox revenue stream, but it limits the impact of a fare increase, placing a heavier burden on riders paying their own way.
Passenger fares are proposed to be increased again in May 2010 to a base fare of $1.75. This increase is expected to generate about $80,000 in additional revenue and reduce ridership by approximately 4 percent. If fares are not increased, more service would need to be eliminated.
We are now projecting that passenger fares will be approximately $200,000, or 6 percent, under budget by the end of fiscal year 2010. The national recession has led to rising unemployment and, as a result, a drop in ridership.
It is important to note that although the one-way cash fare has been $1.50, the average per ride fare collected by DART have been approximately $0.80, due to the discounts provided to the Unlimited Access employers, senior citizens, Opportunities through Transit program members, persons with disabilities, school students, and to customers purchasing and using monthly and weekly passes.
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Is the Recession Impacting DART Ridership and Passenger Revenues?
Yes. While DART has experienced significant ridership growth over the past few years, ridership is down over the past year when gasoline prices hit an all time high. Layoffs with major downtown businesses and the rise in unemployment has decreased ridership. DART now projects a shortfall in passenger fares of $200,000 by the end of FY 2010.
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Is this just a DART issue?
No. A recent study conducted by the American Public Transportation Association concluded that nine out of 10 transit systems in the United States either have recently or are in the process of reducing service and/or raising fares.
The recession affects nearly all transit systems, as they are typically funded through property taxes, sales taxes or payroll taxes.
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Is DART’s Budget Balanced for FY2011?
No. As outlined to the DART Commission on October 27, 2009, DART had projected a $2.3 million deficit for fiscal year 2011, which begins on July 1, 2010 and ends on June 30, 2011. Since then, staff has been developing strategies to reduce that deficit and the current shortfall is now approximately $900,000.
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What actions are being taken to balance the FY 2011 Budget?
Several costing saving strategies have been explored. These include:
Already Ordered:
- FY2011 Wage Freeze for Non-Union Staff in FY 2011
- General Manager Wage Freeze for FY 2010 and FY 2011
- Non-Union Employee Furloughs – five days before June 30, 2010
- DART Directors Unpaid Holidays - three in FY 2011
- Utility Savings (reduce energy consumption)
Still being Explored:
- Fare Increase (See below)
- Service Reductions (See below)
- Employee Wage Freezes for Union Staff in FY 2011
- Employee Benefit Reductions
- Early Retirement Considerations
- Use of DART Reserves/Retained Earnings
- Second Insurance Policy Purchase for Liabilities
- New Debt Financing Strategy for Accident Liabilities
- Deferral of Capital Projects (Delay in Replacing Buses/Vans)
- No Financing of Local Match
At the January 26, 2010 meeting, the DART Commission will vote on a budget that will incorporate all feasible cost-saving strategies to minimize potential service reductions.
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What is the proposed fare increase and when will it take effect?
The proposed fare increase would take effect on April 25, 2010. Base fare would increase from $1.50 to $1.75; all other fare media would increase by approximately 16.5%. Details are below:
Cash Fares Current Proposed
Adult Regular Cash Fare $1.50 $1.75
Adult Express Cash Fare $1.75 $2.00
Reduced Fares
Children 5 & Under FREE FREE
Reduced Cash Fare
- Children (Ages 6-10) $.75 $.75
- Senior Citizens (65+)* $.75 $.75
- Persons with Disabilities/Medicare* $.75 $.75
Other Fares
LINK Shuttle FREE FREE
DLine Downtown Shuttle FREE FREE
Route 13 S.E. Park Ave. Circulator FREE FREE
Downtown Zone $.50 $.75
West Des Moines Zone $.75 N/A^
Transfers
Regular to Regular FREE FREE
Regular to Express*** $.25 $.25
Regular to On Call*** $1.50 $1.75
Express to On Call*** $1.25 $1.50
On Call or Express to Regular FREE FREE
Passes/Tokens
Weekly Pass $14.00 $16.00
Full Fare Tokens (Pack of 10) $15.00 $17.50
Monthly Pass $42.00 $48.00
Monthly Express Plus Pass $50.00 $58.00
Unlimited Access Participant FREE FREE
Reduced Passes/Tokens
Reduced Weekly Pass* $7.00 $7.00
Reduced Fare Tokens (Pack of 10)* $7.50 $7.50
Reduced Monthly Pass*/OTT** $21.00 $24.00
Reduced Monthly Express Plus Pass* $25.00 $29.00
On Call
Cash $3.00 $ 3.50
Reduced Fares $.75 $.75
- Children (Ages 6-10)
- Senior Citizens (65+)*
- Persons with Disabilities/Medicare*
On-Call w/WDM Human Service Pass FREE FREE
Bus Plus
Zone A $3.00 $3.50
Zone B $3.00 $3.50
Zone C $7.00 $8.00
Zone D $9.00 $10.00
Zone E $11.00 $12.00
General Public Use $24.00 $25.00
* Applies to Senior Citizens 65+, persons with disabilities, Medicare card holders and Veterans with a Service Connected ID.
** OTT participants will be able to obtain a reduced fare monthly pass at a 25% discount at participating site offices.
*** Surcharge to transfer between services.
^ Proposing to discontinue zone.
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What are the proposed service reductions and when will they take effect?
The proposed service reductions would be implemented April 25, 2010. The proposals are listed in the order in which service would be discontinued first. DART staff is hopeful that the other strategies outlined above will offset the deficit enough that not all of the proposals would have to be implemented.
Level 1
98 - Ankeny Express (5 AM and 5 PM trips)
96 - EP True Express (4 AM and 4 PM trips)
12 - Urbandale Business Park (Discontinue)
1 - WDM/Fairgrounds (60 minute midday service)
1 - WDM/Fairgrounds (Discontinue service to
Valley West Mall)
1 & 11 - Extend Route 1 (WDM/Fairgrounds) to Jordan Creek on weekdays and weekends and
discontinue Route 11 (Jordan Creek)
1 & 10 - Extend Route 1 (WDM/Fairgrounds) to Pleasant Hill and discontinue Route 10 (Pleasant Hill )
All Routes - Weekday Night Service (Shorten by 1 hour/ last line up 8:45 pm)
4 - Urbandale/E 14th (30 minute peak service)
1 - WDM/Fairgrounds (60 minute service on weekends)
All Saturday Service - (Same schedule as Sunday)
3 - Univ/Highland Oak Park (15 minute all day service)
5 - Clark/E 6th (Discontinue weekend service)
Level 2 (In addition to Level 1 changes)
8 - SW 14th/S Union (60 minute weekday service)
5 - Clark/E 6th (60 minute weekday service)
1 - WDM/Fairgrounds (30 minute peak service)
6 - W 9th-Douglas (30 minute peak service)
7 - Fort Des Moines/Hubbell (30 minute peak service)
90 - Airport South (Discontinue)
3 - Univ/Highland Oak Park (20 minute midday service)
98 - Ankeny Express ( 4 AM and 4 PM trips)
All Routes - Weekday Night Service (Discontinue/
Last line up at 6:45 pm)
Level 3 (In addition to Level 1 & 2 changes)
All Routes - Sunday Service (Discontinue)
95 - Vista Express (3 AM and 3 PM trips)
93 - NW 86th Express (Discontinue midday trip)
93 - NW 86th Express (3 AM and 3 PM trips)
92 - Urbandale Express (3 AM and 3 PM trips)
96 - EP True Express (3 AM and 3 PM trips)
91 - Northwest Express (3 AM and 3 PM trips)
98 - Ankeny Express (3 AM and 3 PM trips)
8 - SW 14th/S Union (Discontinue)
5 - Clark/E 6th (Discontinue)
3 - Univ/Highland Oak Park (30 minute midday)
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How can DART customers and the public comment on the proposed fare increase and potential service reductions?
DART will be conducting the following public meetings in December 2009 and January 2010 to discuss the proposed fare increase and potential service reductions:
- Tuesday, December 15, 2009 – 5:00 pm, DART Commission Meeting (1100 DART Way, Des Moines, IA)
- Tuesday, January 5, 2010 – 6:00 pm , Des Moines East Public Library (2559 Hubbell Ave, Des Moines, IA)
- Wednesday, January 6, 2010 – 6:00 pm, West Des Moines Public Library (4000 Mills Civic Parkway, West Des Moines, IA)
- Wednesday, January 13, 2010 – 6:00 pm, Des Moines North Public Library (3516 5th Ave, Des Moines, IA)
- Thursday, January 14, 2010 – 11:30 am, Des Moines Central Public Library (1000 Grand Ave, Des Moines, IA)
- Thursday, January 14, 2010 – 6:00 pm, Des Moines Southside Public Library (1111 Porter Ave, Des Moines, IA)
- Tuesday, January 19, 2010 – 6:00 pm, Des Moines Central Public Library (1000 Grand Ave, Des Moines, IA)
- Thursday, January 21, 2010 – 6:00 pm, Des Moines Forest Ave. Public Library (1326 Forest Ave, Des Moines, IA)
- Monday, January 25, 2010 – 5:00 pm, Urbandale Public Library (3520 86th Street, Urbandale, IA)
A public hearing will be held at the DART Commission meeting on January 26, 2010 at 5 p.m., at1100 DART Way.
You can also provide comment by:
- Email to: budget@ridedart.com
- Call: (515) 283-8100
- Fax: (515) 283-8135
- Mail: DART RE: Budget, 1100 DART Way, Des Moines, IA 50309
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What at are the next steps in developing the DART budget for fiscal year 2011?
- December 2009 and January 2010 – DART staff will be conducting public meetings throughout the Des Moines region to discuss the fare increase and potential service reductions.
- January 26, 2010 – Public Hearing on Proposed Fare Increase and Service Reductions.
- January 26, 2010 – DART Commission will vote on the DART Budget for FY 2011.
- February 23, 2010 – Public Hearing on DART Budget and DART Commission will Certify FY 2011 budget.
- April 25, 2010 – Implementation of potential fare increase and possible service reductions.
All meetings are open to the public, for more information please contact DART at 515-283-8100. Customers who have specific questions or suggestions regarding the budget can email us at budget@ridedart.com.
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