CLEVELAND, OH (WOIO) - The Board of Trustees of the Greater Cleveland Regional Transit Authority (RTA) rejected staff's proposed 2010 budget at their regular meeting on December 15, 2009.
Due to unprecedented financial challenges caused by the recession, RTA faces a $17.4 million shortfall in 2010. In response to this projection, the rejected budget called for a 12% reduction in service effective April 4, 2010, which would result in the elimination of 200 or more positions at RTA and the maintenance of the $2.25 base fare beyond March 31, 2010 when the fuel surcharge expires.
These proposed service cuts and fares are to be the subject of 10 scheduled public hearings taking place in early January.
Contributing greatly to RTA's financial crisis is the dramatic drop in Cuyahoga County's sales tax receipts. In 2009, RTA's tax-related revenue fell by $18.9 million from 2008 levels. Nearly 70% of RTA operating expenses are covered by this tax.
With the many remaining uncertainties, and the public hearings regarding the proposed service cuts and fares, scheduled for early January, the Board decided to pass a short-term 3 - month budget, for the period of January 1 through March 31, 2010.
Some of the outstanding uncertainties include:
The timing of the economic recovery - Will sales tax continue to fall in 2010 or stabilize at 2009 levels?
Personnel Costs - The proposed budget called for no increases in labor rates. If rates go higher, the cuts will need to be more severe. If rates are reduced, the cuts can be reduced.
Ridership - Tied to the economy and employment, what will ridership and passenger revenue trends be in 2010?
Comments from the Public Hearings - Not having a confirmed budget for the last three quarters of 2010 will give RTA the maximum flexibility with respect to service levels and fares.
Additionally, at the Dec. 15th meeting, the Board approved the borrowing of up to $8 million from National City/PNC Bank to allow RTA to cover current expenses. It is feared that without such borrowing RTA would not be able to meet its financial obligations over the next 90 days due to the economic recession, as well as the delay in receipts of certain grant money from the Federal Transit Administration.
"Greater Cleveland RTA is not alone in this crises", said CEO and General Manager, Joe Calabrese. "Nationally, 9 out of 10 transit systems are cutting service and or raising fares due to the impacts of this recession." However, Calabrese stated the Authority's focus will remain the same, "RTA will continue to strive to provide service that best meets the transit needs of our customers within the constraints of our financial condition."