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TO: |
Board of Trustees |
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THROUGH: |
Mary DeLoretto, Interim Executive Director |
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FROM: |
William Greene, Chief Financial Officer |
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PRESENTER(S): |
William Greene, Chief Financial Officer |
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Megan Waters, Community Engagement Manager |
TITLE:
title
UTA 2022 Final Budget and Public Engagement Report
end
AGENDA ITEM TYPE:
Discussion
RECOMMENDATION:
Informational report for discussion
BACKGROUND:
Each year, the Authority is required to prepare an operating and capital budget for the succeeding year. After consultation with the Board of Trustees, and in accordance with Utah Code 17B-1-702 and 17B-2a-801, the Executive Director has prepared the Final 2022 Budget for Board review.
DISCUSSION:
The Board of Trustees and UTA staff discussed and set 2022 budget priorities and timelines earlier this year. Long-term financial planning assumptions were reviewed by the Board of Trustees.
Over the first half of 2021, the Board of Trustees and UTA staff reviewed 2021 program delivery, and current operating environment including economic conditions, revenue projections, and the organization’s strategic framework to support near and long-term public transportation needs in the Region.
Using 2021 existing operating budgets as a starting point, the organization updated inflationary assumptions for labor, fuel and other expenses, eliminated one-time 2021 costs, and annualized the cost of mid-year budget adjustments (August 2021 service changes, technical budget adjustments, etc.). The resulting 2022 base budget or budget target was developed at the department and object of expenditure level.
Using the newly developed strategic framework and informed by discussions with the Board of Trustees, the organization built on the 2022 base with the selection of prioritized initiatives focused on:
• Financial sustainability (Safeguarding our Future)
• Restoring ridership (Innovate and Integrate our System)
• Keeping the system in a state of good repair (Deliver Excellence)
• UTA’s workforce needs (Develop our People)
• Continuous improvement (Deliver Excellence)
At the October 27, 2021 Board of Trustees’ meeting, the Board approved the Tentative 2022 Budget. A public hearing was held on November 4, 2021 and the public comment period ran through December 4, 2020.
The Local Advisory Council reviewed and was consulted on the Tentative Budget at their November 17, 2021 meeting. All public and stakeholder comments received to date regarding the 2022 budget have been provided to the Board of Trustees.
Changes from the Tentative to Final 2022 Budget are as follows:
Revenues
Sales Taxes +$16,600,000
Based on the updated October 2021 Sales Tax Forecast produced by the University of Utah’s Economic Development Unit. The continued strength of the Utah economy is evident in this October update. Over the five-year period, the new forecast projects an increase of approximately $81 million.
Passenger Revenue ($1,833,000)
The October 2021 Passenger Revenue Forecast reflects slightly lower than projected ridership and revenue than forecast in the tentative budget. This is primarily caused by continuation of the pay-per-trip agreements with UTA’s largest commercial contracts.
Other Revenues + $1,295,000
These are adjustments to revenue from Salt Lake City anticipated for new service contracted for 2022. The largest element, a $1.7 million increase supports expanded MicroTransit in the City. A reduction of $475,000 reflects an adjustment to Salt Lake City revenues for Route 1 enhancements.
Investment Income + $328,000
A formulaic adjustment based on growth in the fund balance and sales tax increases.
Expenditures
Service Additions + $1,952,000
On October 13, 2021 The Board of Trustees approved expanded MicroTransit service in the Rose Park, Poplar Grove, and Glendale neighborhoods of Salt Lake City. This request funds the estimated cost of $1.77 million for that service. As previously discussed this service is fully revenue backed by the City.
In response to difficulties hiring Operators in the Salt Lake Business Unit, operations of route 455 was moved to the Ogden Business Unit. The net increase of costs ($410,000) reflects additional deadhead costs incurred as a result of the move.
The adjustments in this category also reflect savings to FrontRunner and the Timpanogos Business Units associated with the delayed opening of the Vineyard Station ($228,000)
Recruitment and Retention + $1,829,000
In response to difficulties hiring operators to support the upcoming December 2021 service changes and anticipated ongoing difficulties hiring operators, this request includes $1.466 million to increase the starting wages for all operators in Bus, TRAX, FrontRunner, and Special Services. This change to the pay scale is necessary for UTA to be competitive in the current labor market. A market study of competitor driving positions confirmed the need to adjust the starting wage to help with both attraction and retention efforts. This is especially necessary as the 2022 Budget includes service increases planned for August across modes and Utah’s unemployment rate continues to be under 2.3%.
This change also includes the ongoing costs of increasing the overtime rate from time and a half to double time as implemented by the agency in October to meet the demand for operators associated with the December service changes. This increase of $264,000 will fund the current double time rate through mid-February, 2022.
Part of the strategy to attract and train new Operators includes an “early on-boarding” process that provides a more flexible approach to hiring and certifying new operators. This more flexible approach will provide a robust on-boarding process while trainees are working to obtain their commercial driver’s license during the two-week onboarding process. The onboarding program bridges the time between the job offer and when the official training begins. This program was piloted with staff volunteers during fall 2021 and has been successful. The People Office will hire a Training Specialist to support this new ongoing approach ($99,000).
Fuel and Power Price Increases + $2,261,000
This change is in response to rising prices for fuel and power across the state, nation, and world. The changes are as follows:
Diesel - increase of 25 cents/gallon - $1.459 million
Gasoline - increase of 25 cents/gallon - $227,000
Propulsion Power - increase of 10 cents/service mile - $428,000
Joint Insurance Trust (Benefits) Adjustment +$852,000
Per the Collective Bargaining Agreement, UTA contributes an agreed to amount per month, per enrolled employee to an account that is administered by the JIT.
During the Tentative budget development process, the contribution to JIT was not calculated properly for new represented employees added through the 2022 service changes. This adjustment corrects that oversight.
Technical Budget Adjustments +$177,000
A series of offsetting corrections to the Tentative budget including budget entry errors, changes in budgeted salary and benefit costs, and a one-time addition of $25,000 for UTA to host an APTA Board Member meeting in 2022.
Capital Budget
Revenues Net Neutral Change in Funding Source
Exhibit A in the Budget Summary enclosed with the Adopted Tentative Budget overestimated the State Contribution to the 2022 Capital Program. The proposed Final Budget reduces the State Contribution by $2.5 million and increases the UTA Current Year Funding by $2.5 million.
There are no other changes to Capital revenues or expenses in this request.
ALTERNATIVES:
Discussion item
FISCAL IMPACT:
Proposed changes would increase Operating Costs by $7,071,000 in 2022 as compared to the Adopted Tentative Budget, and approximately $35 million over the 5-Year Financial Plan. Approximately $8.5 million of these 5-Year costs are fully revenue backed by Salt Lake City.
The net increased cost of about $26.5 million is offset by underruns in the 2021 Operating Budget, increased revenues projected in the October 2021 Sales Tax Forecast update and other adjustments to the financial plan.
ATTACHMENTS:
Final Operating Budget - Exhibit A
Final Capital Budget - Exhibit A
Final Operating Budget - Exhibit B (Operating by Office)
Changes from Tentative Operating Budget - Attachment A
Changes from Tentative Capital Budget - Attachment A
Public Engagement Report