RTA faces $300 million shortfall; higher taxes possible

2013-08-24T00:00:00Z RTA faces $300 million shortfall; higher taxes possibleBy Darren DaRonco Arizona Daily Star Arizona Daily Star

The Regional Transportation Authority is staring at a $300 million shortfall.

And it’s going to require creative solutions or painful decisions to close it, organization leaders say. Translation: More taxes or something won’t get built.

When voters approved the RTA package in 2006, projections showed the half-cent sales tax would generate $2.1 billion over the 20-year life of the transportation plan.

But the economy soon plunged, and along with it consumer spending.

Current estimates show if RTA tax receipts go up 5 percent every year, the overall revenues collected would be around $1.8 billion, RTA Transportation Services Director Jim DeGrood said. He said they now average about 4.8 to 4.9 percent annual growth.

Beyond less-than-planned revenues, the $1.8 billion is calculated using 2006 dollars, so the RTA still must account for inflation when it actually spends the money, DeGrood said.

On a positive note, DeGrood said many of the road-construction projects have been coming in under budget, although not low enough to offset the decrease in revenue.

Because DeGrood doesn’t foresee the economy booming any time soon, the transit authority needs to start weighing its options on how to close the gap.

“The test for us is how we react to it,” DeGrood said. “We need to make smart moves.”

While the “sky is not falling” and there’s no need to rush into any decision, he said, the RTA does need to start discussing how it’s going to align expenses with revenues.

First up is to figure out exactly what the authority has to work with. DeGrood said the University of Arizona’s Eller School of Management will run the numbers in September.

Once it has exact numbers, talks about what to do next will begin.

Some of the options include cutting RTA projects equal to amount the authority is short. In this case, that would mean trimming about 15 percent across the board for road improvements, transit and other projects.

Cuts could mean anything from scaled-back road projects to less money for streetcar operations and maintenance.

The latter wouldn’t surprise one city official.

“I’ve been preaching for over a year that we can’t rely on the RTA for O&M (operations and maintenance on the streetcar,” said Councilman Steve Kozachik. “If they shave that $11 million they earmarked for O&M out of that project, our general fund is going to take that as a direct hit. I hope that’s not where they go to fund their shortfall, but for some of us, it wouldn’t be a huge shock.”

Kozachik said it’s no surprise the cash flow is less than predicted. He said many RTA projects are overdue for a second look to see which are necessary and which can be trimmed.

“It’s time they finally agreed … to give some of the road construction work a haircut and save millions of taxpayer dollars instead of blindly spending money on work that’s neither justified by travel habits or population levels,” Kozachik said. “We’ve got a citizen task force working on the Broadway design that has been begging the consultants for months to be allowed to show some creativity in what they propose. Maybe finally the piggy bank will be the tipping point for getting to that point.”

But cuts aren’t the only option.

Another would be having voters extend the RTA’s charter beyond the 2026 deadline. An extension would allow the RTA to collect enough tax dollars to cover the gap, DeGrood said.

A third option could involve asking for bond money. Although interest from a bond would eat into revenues, DeGrood said low interest rates would minimize the impact.

Before any of that happens, discussions have to take place among RTA staffers, its board and local governments.

City spokesman Mike Graham said city officials will have to sit down with RTA folks on how they’d like to proceed and bring the results before the mayor and council.

The county expects every program to share in the burden of shouldering the revenue shortfall, said county administrator Chuck Huckelberry.

Also, plans should be made sooner rather than waiting another decade and scrambling for a solution, he said.

Contact reporter Darren DaRonco at 573-4243 or ddaronco@azstarnet.com. Follow on Twitter @DarrenDaRonco

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Activate

Latest Election 2014 video

More

Election 2014: Candidate for Governor, Doug Ducey

Star reporter Joe Ferguson asks Doug Ducey what he would do in the first 100 days of office if elected governor.

Follow the Arizona Daily Star

Featured businesses

View more...

Deals, offers & events

View more...

Event Calendar

Today's events | Add an event

Most viewed:


Get weekly ads via e-mail