Financial Stability & Sustainability

Metro’s funding shortfall

Why we have a shortfall, what we’re doing to address it

Metro service is funded primarily by sales tax, and the economic downturn that started in 2008 caused a significant reduction in Metro’s revenue from this source. We have taken action to make up for the lost revenue and preserve most bus service:

  • Between 2009 and 2013 we have cut costs, increased operational efficiency, raised fares and tapped other funding sources. These actions have saved $798 million, preserving most bus service between 2009 and 2013. Many of these steps will continue to save a total of about $148 million every year.
  • Since 2011, when the county adopted service guidelines for Metro that emphasize productivity, Metro has followed the guidelines to restructure large parts of the transit system.
  • Metro is implementing business process improvement programs and Lean events.
  • Guided by King County’s Energy Plan and Strategic Climate Action Plan and Metro’s Sustainability Plan, Metro has lowered energy and water consumption and has reduced waste disposal by reusing and recycling more, cutting or avoiding costs.
  • These actions are detailed below.

    While many of the actions are resulting in continuing or new savings, some were only temporary or one-time measures that run out in mid-2014. Metro faces an ongoing budget gap of up to $75 million.

About our costs

Metro’s strategic plan sets a goal of costs growing at or below the rate of inflation. Between 2008 and 2012, Metro’s average annual increase in costs was 2.4 percent—about the same rate as inflation. While sales tax collections are expected to return to the 2008 level in 2014, the purchasing power of those funds in 2014 is not the same as it was in 2008. An analysis prepared by King County’s Office of Economics and Financial Analysis shows that using 2013 dollars, sales tax collected in 2013 is $58 million lower than 2007.

Metro has taken (and is still taking) actions to control our costs—see details below.

Actions taken to preserve service

2009-2013

  • Changed the way we plan schedules so we use fewer buses to deliver the same amount of service. Scheduling and other efficiency steps recommended in a 2009 performance audit are saving more than $20 million annually.
  • Negotiated agreements with employees to waive a cost of living increase in 2011 and reduce the future rate of wage growth. These actions saved $36 million for 2011-2013 and $17 million annually going forward.
  • Cut more than 100 staff positions and reduced programs that don’t directly affect service, saving $14 million per year.
  • Saved health care costs through the County’s employee health program—$10 million for 2007-2011.
  • Cut $180 million from the capital program, which pays for buses, shelters, and buildings.
  • Shelved most plans to expand bus service, but continued developing voter-approved RapidRide service because it is highly productive and has received about $120 million in grant funding.
  • Following the recommendation of a public advisory committee, changed the way we plan service to emphasize productivity, geographic value, and social equity. Using this new approach along with more efficient scheduling that saved 120,000 service hours, we cut 75,000 hours of the least productive bus service and reinvested 100,000 hours in more productive service. These actions have resulted in higher ridership and fare revenue, generating about $8 million annually.
  • Raised fares four times in four straight years—a total 80 percent increase generating $35 million annually.
  • Ended free rides in downtown Seattle, expected to raise $2 million or more per year.
  • The county approved a property tax that is providing $18 million annually for bus service, while reducing other property taxes so taxpayers don’t pay more.
  • Reduced the bus replacement reserve fund by $100 million, as recommended by the performance audit, and used the funds to support bus service.
  • Used half of the operating reserve fund to support service.
  • The county adopted a temporary $20 congestion reduction charge on vehicle license renewals, raising about $50 million over two years (expires in mid-2014).

Continuous improvement

  • Conducted a Vehicle Maintenance Base Automation Pilot Program at two base locations, resulting in the reduction of one position at each base (saving $100,000 annually at each) and improving worker productivity (e.g. a 49% improvement in work order completion time at one location and a 28% improvement at the other). Savings are expected to grow as employees become accustomed to new work processes and as the program is expanded to all other Metro bases in 2014.
  • Began using online employment applications that enable Metro to process twice as many applicants with the same number of employees.
  • Consolidated electronic personnel records with the aim of increasing security, improving access, allowing queries and disaster recovery, and using less office space.

Lean process improvement efforts

What is Lean?

Lean is a way of thinking and a set of tools for maximizing customer value while minimizing waste. King County is using Lean with the intent of continuously finding better ways to work and deliver better results for the public.

  • Began using online employment applications that enable Metro to process twice as many applicants with the same number of employees.
  • Made Family Medical Leave administration improvements—for example, eliminating paper attendance cards and instead using the HASTUS transit management software. Results include less staff time needed for some procedures and fewer errors in personnel records. This project is profiled on the King County website.
  • Improved ORCA Business Passport contract renewal processes for more than 800 businesses that sell ORCA passes. For example, the project resulted in a 20-percent reduction in renewal cycle time.
  • Recently started a Lean project for Metro’s Vehicle Maintenance section that has the goal of reducing bus parts inventory and inventory costs.

Sustainability actions

  • Reduced energy use at Metro facilities by 13% between 2009 and 2012. Facility energy conservation efforts helped Metro avoid approximately $170,000 in energy costs in 2012, equivalent to a 7% savings.
  • Metro has received or will receive a total of $1.8 million in utility incentives for energy conservation projects initiated in 2007 through 2013. Estimated annual electricity and natural gas savings are 4.9 million kWH and 275 Therms.
    Examples of projects:
    • In 2013, replaced ventilation fans at North Base that are projected to save approximately 2 million kWh per year, equivalent to $116,000 in annual savings.
    • In 2013, upgraded lighting at Downtown Seattle Transit Tunnel stations for an estimated annual savings of 477,000 kWh and $30,000 in energy costs. Metro is continuing the lighting efficiency program in the tunnel and at transit facilities and park-and-rides.
  • Reduced energy use between 2009 and 2012 by transit service vehicles by 4% per mile. In 2012, transit service vehicles traveled over 59 million miles.
  • Reduced solid waste by 394 tons in 2012 compared to 2003, avoiding approximately $66,000 in waste disposal costs.
  • Reduced water consumption by 14,264 CCF in 2012 compared to 2009, avoiding approximately $276,000 in water costs.

Service levels at other transit agencies during the economic downturn

Since 2009, the majority of transit agencies across the nation and the region have seen their revenues affected by the economic downturn. Metro has maintained roughly the same level of service by cutting costs, improving the efficiency of operations, and increasing revenue. Metro is reducing service starting this year to reflect available revenues and the expiration of the temporary two-year congestion reduction charge. Increasing sales tax revenue will close part of Metro’s funding gap and allow Metro to preserve some of the service initially recommended for reduction.

Other transit agencies in the region have reduced service since 2009. Pierce Transit cut service by 37 percent between 2009 and 2012. It was considering an additional 28 percent service reduction for September 2013, after voters rejected a proposed sales tax increase for the agency in November 2012. Higher than expected sales tax revenues in 2013 have allowed it to delay cuts and keep service at the current level.

Community Transit made cuts in 2010 and 2012, reducing service by 37 percent below its previous level. With increasing sales tax revenue, it announced in March that it is planning to restore 20 percent of the service hours that were cut over the next six years.

Among 30 of the largest bus agencies nationwide, 23 decreased the hours of bus service provided between 2008 and 2012.

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