AGENDA ITEM 10-A
INFORMATION ITEM
TO:
CHAIRMAN COVINGTON AND THE VRE OPERATIONS BOARD
FROM:
DOUG ALLEN
DATE:
NOVEMBER 16, 2012
RE:
FY 2014 BUDGET UPDATE
At the October 19, 2012 Operations Board meeting, a presentation was made on
the FY 2014 budget. The information below provides a brief update.
Current Unfunded - Operating: Since the prior version of the budget was
presented to the Operations Board, the current unfunded amount has increased
from $4.7M to $5.5M. This is primarily due to revised ridership projections, which
decreased from 21,200 in the first budget draft to a revised projection of 20,100.
This includes 500 riders from the proposed 10-car Fredericksburg line train. While
the overall budget deficit has only increased $800,000, the actual result of this
adjustment is $2.0M. Budget reductions elsewhere in the budget have offset
some of this loss. The SJR-297 revision to state operating revenue is proposed to
take effect in FY 2015 and has no bearing on the proposed FY 2014 budget.
Current Unfunded – Capital: The six-year capital plan is still under review, but
as in prior years, available funding is inadequate to meet the most pressing
capital needs of the current system, including: implementation of Positive Train
Control; replacement of remaining legacy cars; platform extensions to address
safety concerns at overcrowded stations; required 10-year overhaul of the new
Gallery cars; and capital repair of stations and other facilities. Since VRE relies
almost exclusively on federal and state grants to meet capital needs, only about
$9M is available annually for this purpose. Major projects in the past have only
been accomplished with special targeted federal and state grants, which cannot
be counted on in the future. More detail on the capital program will be provided in
December.
10-car Fredericksburg line train: While the additional train is currently included
in the FY 2014 budget, it is under review. If initiated on January 1, 2014 as
planned, the net cost would be $1.4M for six months of service. The fiscal impact
of this train alone equates to an additional 8% subsidy increase or a 4% fare
increase.
Track Access Funding: This version of the budget assumes that the $9.6M
unfunded for train access will be restored based on assurances provided by
Director Drake at the PRTC commission meeting and Jim Dyke at the NVTC
commission meeting on November 1, 2012.
Fare indexing: The fare indexing policy was first introduced during the FY 2009
budget process and was based on equal percentage increases of fare and
subsidy over six years. It compared standard indices and VRE’s six year plan
requirements. As of the last adopted six year plan (FY 2013), 3.37% was needed
to balance the budget.
The following is current average annual index information for the period 2008 –
2012:



AAR (with fuel): 3.99%
CPI – U (all items): 1.41%
CPI – U (transportation): 2.12%
Next steps: Work on the budget will continue over the next month in conjunction
with the CAO Task Force. VRE staff will have a balanced budget to present to the
CAO Task Force, which will meet for the final time at the beginning of December.
Operations Board adoption is scheduled for December 21, with Commission
approval on January 3, 2013.
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