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Today at the regular monthly meeting of the UTA board of trustees, the UTA board unanimously passed a resolution approving the appointments of John Inglish as chief executive officer, Michael Allegra as general manager, and Bruce Jones as general council and president of government resources.
Prior to discussion on the resolution, UTA Board Chair Larry Ellertson shared a statement addressing the process and the appointments. Mr. Ellertson’s statement is attached.
Also during the board meeting, acting general manager Michael Allegra discussed the 2010 budget situation. He described the actions the agency has already taken to address the reduced sales tax revenues resulting from the recession and additional steps that may be taken in the future. A summary of his budget update is also attached.
Both of these documents were shared with the public and media who attended board meeting. They have also been posted to the UTA website. If you have any questions or would like more information, please contact me at your convenience.
Regards,
Gerry Carpenter
UTA Media Relations/Spokesman
April 28, 2010
To: UTA Board of Trustees
FR: Michael Allegra – Acting General Manager
RE: 2010 Budget & Economic Update
The impacts of the economic recession continue to be unprecedented. The economic challenges that
began in 2008 have resulted in fluctuating, unpredictable fuel prices and a dramatic loss in sales tax
revenues. Government entities have been forced to cut back here in Utah and across the country.
The transit industry is not immune: a recent survey by the American Public Transportation Association
(APTA) revealed that 84% of transit agencies are suffering from revenue shortfalls and are raising fares
and/or cutting service.
UTA has faced the same economic challenges over the past two years, experiencing a significant drop
in sales tax revenues and higher, fluctuating fuel prices. At the same time, we have successfully
opened several major projects including FrontRunner from Ogden to Salt Lake, the TRAX extension to
Salt Lake Central Station, MAX bus rapid transit on 3500 South, and more. And the FrontLines 2015
program, now more than 50% complete, is ahead of schedule and under budget.
Sales Tax Revenues
Sales tax revenues are UTA’s primary source of funding for the operating budget. Over the past two
years, anticipated sales tax revenues have dropped by almost $40 million.
Budgeted Sales Tax Actual Sales Tax
2008 $208,251,000 $188,547,000
2009 $195,690,000 $171,854,000
2010 $174,470,000 down $1.0 million in January
The drop in sales tax revenues has a significant impact on UTA’s short-term and long-term budget
planning. The approximate $40 million lost in the past few years translates into $100 million lost by
2015 and upwards of $2-3 billion lost over 30 years.
Considering the drop in sales tax revenues and the revised growth projections, it’s as if the 2006 Salt
Lake referendum never happened. The new revenue from the 2006 ballot initiative has essentially
been negated, yet we are striving to maintain our current system and open 70 miles of new rail by
2015.
Balancing the 2010 Budget
As work on the 2010 budget began last fall, sales tax revenues were continuing to drop and it was clear
that additional budget cuts would be necessary. UTA staff, in consultation with the Board, moved
forward with a strategic approach to find equitable and balanced savings in 1) increased management
efficiencies, 2) employee compensation and staffing, and 3) service and/or fare adjustments.
The 2010 operating budget adopted by the Board of Trustees is $181.8 million dollars, and includes
$8 million in identified and $3.0 million in “unidentified savings,” for a total reduction of $11 million.
Since the Board adopted the budget last December, staff has been monitoring the economic factors
and evaluating options for finding these additional savings. Many of these measures were previously
identified and have already been implemented; others are being implemented at this time.
The following graph and supporting information shows the breakdown of the $11.0 million in
operating budget reductions. It demonstrates that:
• 71% of savings have come from reducing employee compensation/expenses and
increasing management efficiencies
• Only 29% has come from service reductions that have impacted riders
• UTA has not implemented a fare increase due to the loss in sales tax revenues
EMPLOYEE COMPENSATION & EXPENSES: approximately $3.6 million saved
- Wage Freeze: no pay increases in 2010.
- Retirement: UTA’s contribution to employees’ deferred compensation retirement cut by 50%.
- Performance Incentive: Program suspended for 2010. Employees achieved 98% of the 2009 goals
established by the Board.
- Health Insurance: Plan for 2010-2011 includes higher premiums and reduced benefits for employees
- Efficiency Review: UTA will be making approximately 30 staff reductions as part of an organizational
structure and staffing efficiency review we have been conducting with an external consultant.
That
process is almost complete, and we expect to implement these reductions in the next 1-2 weeks. We
are not providing more specifics at this time out of respect for the employees who will be affected.
* UTA employees at all levels have shouldered much of the burden through the economic downturn.
These measures represent a notable decrease in employees’ take home pay and compensation.
MANAGEMENT EFFICIENCES: approximately $4.2 million saved
- Hiring Freeze: More than 70 positions have been eliminated through vacancies/attrition to date.
The hiring freeze is still in effect and all vacant positions must come to the executive group for review
- Training/Travel: Reduced by 50% agency-wide
- General Reductions: Across-the-board budget reductions applied to all departments
- Other Operational Efficiencies: internal task teams have studied and are now implementing several
initiatives to save money. These include: consolidation of radio centers; reducing TRAX and
FrontRunner “layover” time; delaying the service vehicle replacement schedule; using contracted
services where appropriate; streamlining the operations run cut process
SERVICE ADJUSTMENTS: approximately $3.2 million saved
- Holidays: Added two holidays without service in 2010 - Memorial Day and Labor Day
- Rail Service Adjustments:
- Reduced weekend and late night service on TRAX in December 2009
- Reduced mid-day TRAX and FrontRunner service in April 2010
- Bus Service Adjustments:
- Adjustments to specific routes and trips implemented throughout 2009
- Reductions to specific routes and trips, and reductions to Saturday service in
April 2010
- Service Improvements: service has been reduced in some areas, but improved in others
- Added routes and increased service on several routes, such as the Flex routes
- Increased bus connections downtown from Salt Lake Central Station – the “2 to the U”
- In response to public comments, UTA maintained service on Route 472
* Service adjustments have been focused on off-peak, lower ridership and parallel service to minimize
impacts to riders as much as possible.
* Changes to paratransit services have been implemented over the past several months, reflecting the
public hearing process conducted last summer and the final plans subsequently adopted by the Board
of Trustees. The savings achieved in paratransit services have been leveraged with federal funding
programs to implement seven new flexible bus routes throughout UTA’s service area.
4
Reductions in Capital Program
In addition to the operating budget, the capital program has not been immune to budget cuts. As we
have evaluated the FrontLines 2015 program and other capital expenditures, we have identified the
following major savings:
• FrontLines 2015: $70 million
• Revenue Service Vehicles: $21 million
Going Forward
These measures address the economic challenges we have faced over the past year and balance the
current $181.8 million budget. However, as we move forward into 2010 we are still facing potential
budget shortfalls:
• Sales tax revenues: down approximately $1.0 million in January
• Farebox revenue: possible shortfall due to economy and ridership
• Fuel costs: currently running above budget
We are continuing to monitor sales tax revenues and fuel prices, and may be coming back to the Board
for a mid-year budget amendment. But with only one month’s worth of sales tax revenues for 2010,
we suggest that a budget amendment at this time would be premature.
Almost three-quarters of the budget reductions (71%) have come from our employees’ compensation
and from increasing management efficiencies. To date, we have not implemented fare increases and
we have minimized service reductions and impacts to our riders. However, due to ongoing challenges
with sales tax revenues and fuel prices, we are considering the prospect of additional budget cuts
throughout 2010 that may include fare increases and/or additional service reductions.
We are currently developing various scenarios for service and/or fare changes, and will likely initiate a
public comment process very soon. Because of the six-month lead time needed to implement a
change in services or fares, we need to begin the process as soon as possible. The six-month
timeframe includes going through an open public hearing process, reviewing the comments and
making adjustments to the proposals, and implementing the changes to begin realizing the financial
savings.
STATEMENT
Meeting of the UTA Board of Trustees
April 28, 2010
On behalf of the Board of Trustees, we welcome all Board members and the public to today’s
meeting. We appreciate the public interest in the Utah Transit Authority because we
understand its importance to the Wasatch Front and the State of Utah. Transportation is
critical to accessibility, sustainability and quality of life in Utah.
As you know, government entities throughout the State of Utah are struggling with tough
economic challenges, and UTA is no exception. UTA, like other government and transit
agencies, is dealing with a decrease in revenues of tens of millions of dollars. As an agency, we
are taking significant steps in dealing with these budget and economic challenges. Our efforts
to balance the budget have involved impacts to service and operations, capital programs and
our employees.
We believe the public has not been accurately informed about how we are dealing with these
impacts and why we are proposing to require UTA’s officers to take on new assignments and
expand their duties, without salary increases. I want to be very clear about this point: the
appointment of officers we announced on April 8 represents a transition in roles and
responsibilities, it does NOT represent salary increases or promotions.
One of the first steps in dealing with economic challenges is to require our senior staff to take
reductions in compensation. We have done this: UTA’s senior management has taken a 10 to
15 percent compensation reduction this year by foregoing the performance incentive, at a time
when they are taking on additional job responsibilities.
Additionally, the UTA Board and staff have adopted a balanced strategy in dealing with this
economic and budget crisis. We have moved forward looking to achieve equitable savings in
three (3) areas:
• Management efficiencies
• Employee compensation & staffing
• Service and/or fare adjustments
Mike Allegra, Acting General Manger, will review the budget information in greater detail
during his report to the Board later in this meeting, and his report will demonstrate that our
efforts to find balanced savings have been successful. The Board supports this effort and
believes it is sound in its approach and will place UTA in a better position for the future.
Because of budget impacts from this economic crisis, it is necessary that we require staff to
take on additional duties and responsibilities, including senior management. The most senior of
management positions at UTA is the title of General Manager. As in any organization,
succession planning is important to UTA. The appointments being considered today reflect the
Board’s responsibility to address succession planning and a transition of this most senior
management position to Mike Allegra. We would like to make it clear that Mike Allegra will be
the new General Manager.
As Mike Allegra assumes the management role of General Manager, John Inglish will continue
to serve UTA and the Board in his role as CEO, focusing on policy-level initiatives and programs.
We appreciate the opportunity to clarify some misinformation and misunderstanding that may
have occurred regarding this transition, and to confirm that we have determined to propose
this transition with the stipulation that it be without any addition of staff or salary increases.
Larry Ellertson
Chair, UTA Board of Trustees
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