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Metro
Board Report
File #: 2015-0459.
FINANCE, BUDGET 8~ AUDIT COMMITTEE
PUBLIC HEARING - PROPOSED FY16 BUDGET
May 20, 2015
Metro
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DISCUSSION
The proposed FY16 Budget is balanced at $5.6 billion in total agency expenditures with a small
increase of $53.4 million, or one percent, from $5.5 billion in FY15. This year-over-year budget
increase, which is less than half of the Consumer Price Index (CPI), demonstrates Metro's
commitment to fiscal discipline to ensure continued financial stability for the agency while moving
forward on the following transportation priorities:
Safety and security
Transit service quality improvement, including signal prioritization
New bus and rail vehicle purchases
Delivery of rail and highway projects
Opening of Expo 2 extension to Santa Monica and Gold Line Foothill 2A extension to Azusa
Construction of Regional Connector, Purple Line Extension Segment 1, and Crenshaw/LAX
rail lines
Bike programs
Technology enhancements, WiFi, TAP mobile app
State of good repair
Union Station
Other new initiatives such as first last mile and active transportation
Further, in order to ensure that the FY16 Budget applied appropriate calculations on future costs and
revenues, the following assumptions were used:
CPI of 1.97%, which is the midpoint between Beacon and UCLA, the leading economic
forecasts for the Los Angeles region.
FY16 sales tax growth of 3.2%, based on FY15 year-to-date experience; this is conservative
compared to Beacon, UCLA, and MUNI forecasts.
Fare revenue is estimated at $376M based on the new fare restructure and boarding
projections with the addition of new rail services.
Expo 2 and Gold Line Foothill 2A extensions are projected to open in the fourth quarter of
FY16.
An additional 60 new FTEs to be added through the budget process, justified by new services
or projects as directed.
For SMART, ATU, TCU and AFSCME members, FY16 Proposed Budget salaries and fringe
benefits grow by negotiated rates per the Union Contract terms; Non-Contract salary increase
of 3% in line with negotiated union contracts.
Expense consumables (e.g. fuel, parts) linked directly to service levels.
Bus Revenue Service Hours to remain constant at 7,061,700 hours, with boardings to also
remain constant.
Rail Revenue Services Hours to increase by 66,700 hours (6.5%)due to the expansion, for a
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File #: 2015-0459
total of 1,094,500 hours in FY16.
Since FY10, Metro's total budget has increased by 44% from $3.9 billion to the proposed $5.6 billion
in FY16, reflecting $1.7 billion in growth, mainly due to increased capital programs for improving
deferred maintenance, increasing safety and security measures, and constructing Measure R Transit
and Highway projects.
FY16*
Total Budget: $5.6B
FY10
Total Budget: $3.9B
Subsidy Funding
and DebtSeroice
$A,397M (36%)
`Praposed
Subsidy
Funding and
Qebt Service
Metro
Operations
51,192M (31%)
Gen Admin
Gxn Admin
&Agency
Oversi9hf
S1(?4PA {341
& Agency
6versight
S73lA (195}
;..;,j
~r~
:.~~,;~Y~S
/~~'
Genera Planning,
Programs$34M {1Ye) ~~~
Sennces
Genera3 PWnning,~
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81oo6A{zx)
Freeway
Services
Sf2~)
`tai
The proposed FY16 Budget of $5.6 billion provides the resources necessary to maintain existing
service levels; to continue Metro's emphasis on safety; to integrate, test, and operate two new rail
line extensions opening in the fourth quarter of the fiscal year; and to escalate construction activities
for the Crenshaw/LAX line, Regional Connector, and Purple Line Extension Phase I. It further
reduces debt expenditures $6 million annually for the 30-year life of the refinanced debt. Additionally,
the FY16 Budget delivers funding for the commencement of heavy rail vehicle procurement and the
purchase of 350 new buses and 78 new light rail vehicles, expected to arrive over the following few
years.
The FY16 Budget provides increased subsidies to Municipal operators, local cities, and the County of
Los Angeles; increases in Highway subsidies to subregional projects; increases to Highway spending
on I-5 and I-605; and an anticipated doubling in ExpressLanes toll revenues - to $62 million -which
will enhance transportation and transit services along and near the I-110 and I-10 ExpressLane
corridors. Overall, the budget includes additional spending on increased agency support to carry out
its core mission of planning, constructing, and operating amulti-modal transportation system.
Attachments B (Summary of Agency Resources) and C(Summary of Agency Expenditures) provide
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a high-level summary showing the agency's FY16 expenditures and resources.
FTEs
As shown in Attachment D, the FY16 Budget proposes to add an additional 60 FTEs, which includes
5 Contract FTEs in Communications for the Xerox call center transition plus 55 Non-Contract FTEs in
the following departments:
Office of the Inspector General - 3 FTEs for additional oversight of construction projects;
Equal Employment Opportunity Office - 1 FTE to meet Federal EEO regulation requirements;
Enterprise Risk &Safety Management - 7 FTEs for construction safety monitoring and
evaluation;
Labor/Employee Relations - 2 FTEs to oversee the additional work load supporting agency
recruitments and improve hiring processes;
Program Management - 4 FTEs for project management, budget and cost estimates for the
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File #: 2015-0459.
the addition of(a) posts on Metro's The Source online weblog and (b) a Public Forum, held on
Saturday, April 25. Attachment E provides a summary of public comments received to date and
considered during the FY16 Budget development process. A complete list of areas of discussion from
public comment collected from all sources will be provided under separate cover.
Reimbursement Resolution
Federal tax law requires that bond proceeds can only be used for expenses incurred after the
issuance of bonds. In order to be reimbursed for expenses incurred before the bond issue, Metro
must pass a resolution indicating the intent to issue bonds at a later date for the expenditures
described in the reimbursement resolution. The attached resolution (Attachment A) is included in the
budget board report as a matter of course, to tie expenditures anticipated in the budget to proceeds
from future bond issuance, and it must be approved as an item separate from the budget document.
DETERMINATION OF SAFETY IMPACT
The proposed budget continues to make safety a primary goal and provides funding for new and
ongoing safety programs throughout Metro.
FINANCIAL IMPACT
The proposed FY16 Budget (provided in a separate transmittal) is $5.6 billion. The budget includes
expenditures and appropriates the resources necessary to fund them. The proposed budget
demonstrates Metro's ongoing commitment to meeting its capital and operating obligations, which is
a requirement necessary in order to continue to receive subsidies from the state and federal
governments and to administer regional transportation funding to local cities and Municipal
Operators.
NEXT STEPS
Implement and monitor the FY16 Budget, modify the budget at midyear as required based on the
vision and priorities of the new CEO, identify areas for improvement, develop multi-year financial
forecasts, and regularly update the Board on the agency's ongoing financial performance.
ATTACHMENTS
Metro
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File #: 2015-0459
~, ,/
Nalini Ahuja
Executive Director, Finance & B
. Washin n
Phill
Chief Executive Officer
Metro
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ATTACHMENT A
REIMBURSEMENT RESOLUTION
OF THE
LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY
FOR FISCAL YEAR 2016
WHEREAS, the Los Angeles County Metropolitan Transportation Authority (the "Metro")
desires and intends to finance certain costs relating to (i) the design, engineering,
construction, equipage and acquisition of light rail lines including the Exposition Line
Phase II Project, (ii) the design, engineering, construction, equipage and acquisitions for
the Southwestern Rail Maintenance Yard, (iii) the design, engineering, construction,
equipage and acquisitions for the Rail Deferred Maintenance Project, (iv) the design,
engineering, construction, equipage and acquisitions for the Foothill Operating
Maintenance Yard,(v) the design, engineering, construction, equipage and acquisition of
various segments of the Universal City Pedestrian Bridge, (vi) the design, engineering
and construction of Metro Blue Line Pedestrian Swing Gates, (vii) the design,
engineering, construction, equipage and acquisition of the Patsaouras Transit Plaza
Improvements, (viii) the design, engineering and other related close out costs of the I405 Car Pool Lanes project, (ix) the engineering, construction, renovation, maintenance,
and/or acquisition of various capital facilities and equipment, including buses and rail
cars, related to service operation, (x) design, engineering, construction, equipage and
acquisition of various highway projects including soundwalls and carpool lanes, and (xi)
to other transit related projects (each a "Project" and collectively, the "Projects");
WHEREAS, to the extent that federal and/or state grant funding budgeted to be received
during FY16 is delayed or reduced, the Los Angeles County Metropolitan Transportation
Authority desires and intends to finance certain costs relating to the Projects.
WHEREAS, Metro expects to issue debt through the issuance of tax-exempt bond
issues to pay for these expenditures, which bond issues will have three separate
security sources, Proposition A, Proposition C and Measure R sales tax revenues,
respectively, or grant revenues to finance the costs of the Project on a permanent basis
(the "Debt");
WHEREAS, Metro expects to expend moneys of the Enterprise Fund (other than
moneys derived from the issuance of bonds) on expenditures relating to the costs of the
Projects prior to the issuance of the Debt, which expenditures will be properly
chargeable to a capital account under general federal income tax principles;
WHEREAS, Metro reasonably expects to reimburse certain of such capital expenditures
with the proceeds of the Debt;
WHEREAS, Metro expects that the amount of Debt that will be issued to pay for the
costs of the Projects will not exceed $261 million for Proposition A, $143 million for
Proposition C, and $160 million for Measure R;
WHEREAS, at the time of each reimbursement, Metro will evidence the reimbursement
in writing, which identifies the allocation of the proceeds of the Debt to Metro, for the
purpose of reimbursing Metro for the capital expenditures made prior to the issuance of
the Debt;
ATTACHMENT B
Summary of Agency Resources
($ in millions)
ExpressLar
Advertisir
and OthE
3%
2,290.5
999.2
487.5
376.0
146.8
1,268.4
5.568.4
41%
18%
2
10
ATTACHMENT C
Summary of Agency Expenditures
millions
$ 1,461.3
2,133.4
1,378.4
93.9
172.8
328.7
$ 5,568.4
1
Metro Operations
Metro Capital
2
Subsidy Funding Programs
3
Congestion Management
4
General Planning and Programs
5
Debt Seniice
6
7 Total Expenditures
26%
38%
25%
2%
3%
6%
100%
General Planning
and Programs - 3%
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263
95
18
5
60
8,253
9,657
25 Agency Total
22
23
19
20
21
24 Contract Total
4
1
9,717
8,258
190
150
91
285
161
167
1,459
28
8
154
8
42
0
4
14
8
38
249
95
15
24
7
144
75
73
I-605, I-5
SCRIP
Transit Construction
EEO
40
S
93
1
0
7
39
5
86
0
3
ATTACHMENT D
39
36
10
15
8
3
0
3
6
55
Regional Rail
Communications
Congestion Reduction
Engineering &Construction
Highway Project Delivery
Board of Directors
Chief Executive Office
Chief Executive Office
175
142
88
285
158
161
1,404
10
11
12
13
14
15
16
17
18
8
9
2
3
4
5
6
7
1 Non-Contract
FY16 FTEs
ATTACHMENT E
FY16 Budget
Summary of Public Engagement Efforts and Comments Received
Public Engaqement Efforts
Action
Summary/Recap
Stakeholder
meetings
Service Councils(SC)
Citizens Advisory Council(CAC)
Streets and Freeways
Subcommittee (SFS)
Bus Operations Subcommittee
(BOS)
Technical Advisory Committee
(TAC)
Comments
Service Councils: 22
CAC:8
SFS: 4
BOS: 1
Website
Social Media
E-blast
>24,000 emails
Messages on-hold
Publications
(multi-language)
Phone calls: 2
Take-ones
(English/Spanish)
Budget Public
Forum
>
Strategy
Attendance: 18
Comments Received
Comments received from the public during Metro's FY16 budget outreach process are
summarized below. Feedback was received from the following sources and groups:
Alternative
Revenues
Key Topics
Transit
Service
S nopsis of Comments
Bike and pedestrian projects can actually make travel for the
disabled more difficult
Metro has an obli ation to follow accessibilit requirements
TPIS screens are not accurate
Improve the communication of service alerts to Metro customers (i.e.
add alerts on new bus cameras)
Expand TAP program to be used for goods purchase, similar to Visa
or MasterCard
Introduce automatic fare caps on the TAP card
Coordinate with other agencies to create a regional transit mobile
phone app
Complaints about lack of LASD presence and ineffectiveness of law
enforcement
Find ways to control fare evasion
Visit other cities such as New York, London or Tokyo to learn from
their security model and apply those lessons to the Metro system
Permanent) staff transit stations with law enforcement officers
Some suggested expanding the ExpressLanes project to other
highways; conversely, others stated that charging for usage of these
lanes is not fair to low income drivers
Cancel the 710 North project and use the funds to build the Gold
Line out to the LA County border
No room to widen the 5 freeway between the 605 and Downtown LA
Install cameras on Freeway Service Patrol vehicles to protect drivers
Numerous suggestions to reduce or eliminate freeway funding
Customer service should be a top priority
Customer Service should be open longer; should be easier for the
public to give feedback and get a response
Customer Relations should provide faster responses
Decrease the base fare and decrease the monthly pass to $50
Preference for alternative fare structures, such as distance based
Ke Topics
ADA
Comments
Technology
&
Safety
Security
Highway
Programs
Fares
Customer
Service