AGENDA ITEM 9-A
ACTION ITEM
TO:
CHAIRMAN BULOVA AND THE VRE OPERATIONS BOARD
FROM:
DALE ZEHNER
DATE:
JUNE 17, 2011
RE:
FY 2013 BUDGET GUIDELINES
_____________________________________________________________________
RECOMMENDATION:
The VRE Operations Board is being asked to provide contingent approval of budget
guidelines for the development of the FY 2013 budget for train operations and capital
projects. Guidelines could be added, deleted, or modified after the Strategic Planning
Retreat on July 29, 2011. Final guidelines will be presented as part of the preliminary
budget information provided in August.
BACKGROUND:
VRE has adopted a financial planning process that provides for early consideration of
budget issues and assumptions. Each year, VRE staff meets numerous times with the
member jurisdictions’ Chief Administrative Officers (CAO) Budget Taskforce to develop
the annual proposed budget. An independent CAO recommendation is provided to the
Operations Board and Commissions in conjunction with the final budget submission at
the December Operations Board meeting.
As part of the budget process, the jurisdictional CAO Budget Task Force met on June
14, 2011 to review various budget issues, including the cost of fuel, contract services,
insurance, the fleet management plan, ridership projections, fuel tax projections, and
subsidy. The goal is to permit the Budget Task Force to focus on material issues early
in the budget process.
PROPOSED POTENTIAL FY 2013 BUDGET GUIDELINES
GUIDELINE #1: VRE staff will take all reasonable measures to continue to grow the
ridership and improve the overall service to the riders. Measures to be reviewed include
service levels, fares, train schedules, service amenities, and contracted services which
bear on the ridership experience. Specific levels of services and service amenities will
be discussed at the Strategic Planning Retreat.
GUIDELINE #2: The total jurisdictional subsidy has decreased for the last three years,
from $17,275,499 in FY 2009 to $15,943,917 in FY 2012. The guideline for subsidy
levels for FY 2013 and future years will be discussed at the Strategic Planning Retreat.
GUIDELINE #3: VRE had three fare increases between July 2008 and July 2009 and
kept fares level in FY 2011 and FY 2012. The guideline for fare increases in FY 2013
and future years will be discussed at the Strategic Planning Retreat.
GUIDELINE #4: The Capital Improvement Program (CIP) will be developed to ensure
the most efficient use of all funding sources (federal, state, and local) and the most
expeditious progress on high priority capital projects. The delineation of the highest
priority projects to meet specific ridership and service levels will be discussed at the
Strategic Planning Retreat.
GUIDELINE #5: Fuel hedging strategies will continue in order to provide greater
predictably in budgeting for diesel fuel costs.
GUIDELINE #6: Funding will be provided to maintain VRE’s level of working capital at
an amount no less than two months of operating costs. This level is consistent with the
reserve goals of other transit agencies and will allow VRE to efficiently meet its
obligations during the course of the year as well as make orderly accommodation for
significant shortfalls. In addition, a capital reserve will be maintained to provide local
match for earmarks, and to fund smaller capital projects and projects for which grant
funds are unavailable. Funding for the reserves will be provided by surplus funds at
year-end and, for the capital reserve, proceeds of the sale of capital assets.
GUIDELINE #7: Review will be given to VRE’s debt levels in order to develop debt
parameters and guidance as to the appropriate balance between debt and “pay as you
go” financing for major capital acquisitions.
OTHER FY 2013 BUDGET ISSUES AND ASSUMPTIONS
 State Funding: State funding varies significantly from year to year. As in the past,
VRE staff will continue to work closely with DRPT to develop estimates. DRPT
now awards match funds at differential rates depending on the nature of the
project; does not provide match to all of the projects in VRE’s capital program;
and may not approve grant amendments required to match state and federal
grants. As a result, the percentage estimate for funding will take these new
procedures into consideration.

Number of Trains. The FY 2012 Budget called for one change to service levels
(the turnback train and lengthening of 326/329) and a gradual increase from 32
daily trains to 34 daily trains over the period ending in FY 2018. The guideline for
additional trains for FY 2013 and future years will be discussed at the Strategic
Planning Retreat. Levels of service will depend on procurement of additional
equipment and funding of any increase in operating costs.

Cost Recovery Ratio. The budget forecast will ensure the cost recovery ratio
remains in the 50% to 60% range.

2.1% Motor Fuels Tax: VRE staff is aware of jurisdictional concerns related to
fuels tax revenue projections and the ability to continue to support current VRE
expenses and other transit projects. The requirement that individual jurisdictional
subsidy levels must not exceed 2.1% motor fuels tax receipts will be a topic at
the Strategic Planning Retreat.

Spotsylvania County: Spotsylvania County will be providing their full FY 2013
subsidy payment and $2.3M in deferred payments from prior fiscal years in FY
2013
NEXT STEPS:

Continue discussing FY 2013 budgeting scenarios with the CAO Budget Task
Force.

Present preliminary budget forecasts/options to the Operations Board in August
2011, with revised guidelines based on the Strategic Planning Retreat on July 29,
2011.

Begin review of all FY 2013 revenue and cost assumptions in September 2011
with CAO Budget Task Force.
FISCAL IMPACT:
There is no fiscal impact related to the development of the FY 2013 budget.
TO:
FROM:
DATE:
RE:
CHAIRMAN BULOVA AND THE VRE OPERATIONS BOARD
DALE ZEHNER
JUNE 17, 2011
FY 2013 BUDGET GUIDELINES
RESOLUTION
9A-06-2011
OF THE
VIRGINIA RAILWAY EXPRESS
OPERATIONS BOARD
WHEREAS, effective financial planning for the Virginia Railway Express is based on
budget development with guidelines approved by the VRE Operations Board; and,
WHEREAS, the VRE Operations Board has directed that the development of each
annual budget involve consultation and cooperation with the Chief Administrative
Officers of VRE’s participating and contributing jurisdictions; and,
WHEREAS, the VRE Operations Board will conduct a Strategic Planning Retreat on
July 29, 2011; and,
WHEREAS, the below proposed budget guidelines will be discussed and possibly
modified, or guidelines may be added or removed.
NOW, THEREFORE, BE IT RESOLVED THAT, the VRE Operations Board directs VRE
staff to develop budget options for the FY 2013 operating and capital budget in
accordance with the following potential guidelines:
GUIDELINE #1: VRE staff will take all reasonable measures to continue to grow
the ridership and improve the overall service to the riders. Measures to be
reviewed include service levels, fares, train schedules, service amenities, and
contracted services which bear on the ridership experience. Specific levels of
services and service amenities will be discussed at the Strategic Planning
Retreat.
GUIDELINE #2: The total jurisdictional subsidy has decreased for the last three
years, from $17,275,499 in FY 2009 to $15,943,917 in FY 2012. The guideline
for subsidy levels for FY 2013 and future years will be discussed at the Strategic
Planning Retreat.
GUIDELINE #3: VRE had three fare increases between July 2008 and July 2009
and kept fares level in FY 2011 and FY 2012. The guideline for fare increases in
FY 2013 and future years will be discussed at the Strategic Planning Retreat.
GUIDELINE #4: The Capital Improvement Program (CIP) will be developed to
ensure the most efficient use of all funding sources (federal, state, and local) and
the most expeditious progress on high priority capital projects. The delineation of
the highest priority projects to meet specific ridership and service levels will be
discussed at the Strategic Planning Retreat.
GUIDELINE #5: Fuel hedging strategies will continue in order to provide greater
predictably in budgeting for diesel fuel costs.
GUIDELINE #6: Funding will be provided to maintain VRE’s level of working
capital at an amount no less than two months of operating costs. This level is
consistent with the reserve goals of other transit agencies and will allow VRE to
efficiently meet its obligations during the course of the year as well as make
orderly accommodation for significant shortfalls. In addition, a capital reserve will
be maintained to provide local match for earmarks, and to fund smaller capital
projects and projects for which grant funds are unavailable. Funding for the
reserves will be provided by surplus funds at year-end and, for the capital
reserve, proceeds of the sale of capital assets.
GUIDELINE #7: Review will be given to VRE’s debt levels in order to develop
debt parameters and guidance as to the appropriate balance between debt and
“pay as you go” financing for major capital acquisitions.