Facing a budget deficit that threatens to end train service altogether, the Caltrain Board of Directors voted today to declare a fiscal emergency and began considering some new options to cover the deficit for the next fiscal year , including raising fares.
Caltrain has whittled together enough money through partially restored state funding and one-time savings that it may get through the next fiscal year, 2011, without gutting the railroad, but with a $12.5 million deficit left to cover, its staff is proposing cutting some service altogether, including the three trains that reach Gilroy daily, and increasing fares by 25 cents.
Working out the numbers in the past month, Caltrain staff has found that cutting service has limited returns, said Caltrain Deputy CEO Chuck Harvey. That's because Caltrain has an especially high fare box recovery ratio. "We're getting over 40 percent [of our revenue] out of the fare box," said Harvey. "So when we start cutting service, we start losing revenue in a big way. You have to cut a lot to get a net savings."
By cutting the three trains to Gilroy, Caltrain expects it would save $770,000 annually, versus just $200,000 from cutting four midday trains altogether, and just $170,000 from cutting four early morning and late evening trains. Harvey said those trains have much higher ridership, so cutting them cuts deeply into fare revenue, offsetting much of the savings on operating costs, compared to the more sparsely patronized Gilroy trips.
Caltrain would get even less out of cutting weekend service: staff projects it would save just $420,000 from cutting weekend service altogether, since weekend riders are generally different than the commuters who ride the train during the week, and most pay per trip instead of using an unlimited monthly pass.
Without taking any votes on the budget today, the board appeared to favor the Gilroy option. As for fare increases, the options include a 25-cent increase in the base fare, netting $2 million annually, an identical increase in the fare for each travel zone, netting $2.8 million, or an increase in the employee-sponsored Go Pass from $140 to $155, bringing in $150,000 annually.
"Fares are a sensitive subject, particularly in this economy," said Harvey. They were last increased in January 2009, and if the board approves it, they could increase again next January. While the path to a balanced budget still isn't certain, he said the combination of fare increases, service cuts, and capital funding swaps should leave the agency in a position to "cobble this together." The service changes could go into effect as soon as October.
The board will take a vote on the FY2011 budget on July 1, with money from the service changes and fare increases assumed. But an actual vote on both of those changes won't happen until later: first, the agency will hold public hearings in July and August on any changes. Oddly enough, that means the public could be commenting on major changes that haven't been approved yet, but are assumed for budgeting purposes.
Things look even worse for fiscal year 2012, however, when the agency faces a projected $35.6 million deficit.
Caltrain CEO Mike Scanlon said he was "cautiously optimistic" about fiscal year 2011, and that the board could approve a budget that would "buy us another 12 months." But there are "dark, dark clouds ahead in the not too distant future," he said.
"The cliff at the end of the next year is an extremely steep cliff and extremely difficult one to fall off and survive," he added.
The fiscal crisis at Caltrain snowballed in April when Scanlon, who also heads SamTrans, announced that agency, hit hard by the poor economy itself, would likely pull 70 percent of their funding contribution  to Caltrain. That triggered similar moves from the San Francisco Municipal Transportation Agency and the Santa Clara Valley Transportation Authority.
At the time, Scanlon suggested Caltrain might need to cut 50 percent of its service to balance its budget. That's no longer looking likely for fiscal year 2011, but it's still uncertain how Caltrain will make it through FY2012.
"We have not been able to find a service model that will work to keep this railroad open" in FY2012," said Harvey.