Steering clear of cutting service and after having just increased fares in April, Caltrain board members approved Thursday a variety of measures to close the agency’s $3.7 million deficit, including cutting costs, using over-budgeted fuel savings from a year ago and dipping into reserves.
The train agency adopted a balanced operating budget of $88 million, an increase of more than 3 percent over 2006-07. Caltrain continues to run a structural deficit — meaning it costs more to run service than revenues generate — as balancing the budget has become an annual exercise in trying to find one-time federal and state funds, cutting administrative costs or drawing on reserves, officials said.
“The budget again is put together with chewing gum and baling wire,” said San Mateo County supervisor and Caltrain board member Jerry Hill. “That’s no way to run a railroad.”
The biggest share of the funds needed to balance the budget, about $2.4 million, will come from a 25-cent per zone fare increase, coupled with ridership gains, according to Chief Financial Officer Gigi Harrington.
A bright spot in an otherwise bleak budget, average weekday ridership continued its steady climb of recent months, rising by 6.7 percent April over a year ago and 8 percent in the year to date, Caltrain chief executive officer Mike Scanlon said. That, along with higher ticket prices, fueled a 17.6 percent jump in fare revenues, Scanlon said.
The additional $500,000 needed to close the deficit will come from cutting expenses, along with $800,000 taken from reserves, Harrington said. Board members never publicly considered service cuts or raising ticket prices, though a fare increase just went into place in April. But that may change a year from now if expenses continue to climb, Hill said.
Drawing down reserves to about $2.6 million went against the early recommendations of some board members, who have advocated that the train agency sock away at least 10 percent of its total operating budget, about $8 million currently, similar to other public agencies in the region.
Jim Hartnett, Redwood City city councilman and Caltrain budget subcommittee member, called the lack of money in reserves disconcerting considering the volatility of fuel prices and the fact that Northern California is earthquake country.
“It certainly does put us in a vulnerable position,” said Hill, referring to the lack of reserves.
Train agency’s plan calls for upgrades, more new cars
Traffic signals, communications equipment and new passenger trains could receive the lion’s share of Caltrain’s $62 million capital improvement budget for fiscal 2007-08, if approved by board members.
The commuter train agency plans to spend about $27 million, or 44 percent of the budget, to upgrade right-of-way, signal and communications equipment in the coming fiscal year, part of its ongoing focus on a “good state of repair,” said April Chan, capital program manager.
Caltrain also plans to put an estimated $16 million, about 26 percent of capital funds, toward the total purchase price of $22 million for eight new Bombardier railcars — the bi-level passenger coaches often praised by passengers for their smooth and quiet ride — with an option for two more. The remainder will be paid a year from now, with the cars going into service in 2009, officials said.
The cars would bring Caltrain’s Bombardier fleet to 25, a fraction of its 110 passenger cars, Caltrain spokeswoman Janet McGovern said. The new coaches are part of Caltrain’s plan to lengthen trains during peak ridership times from five to six cars, McGovern said.
Caltrain also plans to set aside $4 million for preliminary work toward electrification. The board plans to vote on the capital budget at their next meeting, currently scheduled for August.