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The TriMet budget is a document prepared annually under the supervision of the TriMet executive director of finance and administration. As of fiscal year 2012, TriMet's budget is just over $1 billion annually.

Contents

[edit] Revenue

TriMet operations are funded mainly by a payroll tax on most employers and self-employed individuals within its service area, which accounted in spring 2010 for about 55 percent of the agency's operating revenue. According to TriMet's 2010 report by the Citizens Advisory Committee on the Budget, another 22 percent or so came from fares, 16 percent from state and federal operating grants and 9 percent from miscellaneous other sources, such as sales of advertising.

[edit] Projections

As of October 2010, TriMet's long-term financial assumptions were based on an estimated (p. 11) average annual growth of 4.5 percent to the underlying payroll tax base inside the TriMet service area.

CFO Beth deHamel said at the time that this was based on 4.7 percent average growth from 1995 to 2010. But she said the projection didn't reflect expected demographic shifts, such as the effect of baby boomers leaving the workforce. Average payroll growth in the 2000s was less than 4.5 percent, she noted, because of the decade's two recessions in 2001 and 2007-9.

Payroll tax trends have a dramatic effect on TriMet revenues, deHamel said.

"The biggest assumption in our budget is what happens to the economy," she said.

DeHamel said the agency tries to be neither "optimistic" nor "pessimistic" when it makes assumptions about its future.

"What we're trying to do is be reasonable," she said. "We could be more conservative, but if we budget on a more conservative number, then we're making more cuts."

[edit] Expenses

[edit] Operations

In most years, TriMet's largest single expense is its operations division, which runs and maintains the agency's vehicles. In TriMet fiscal year 2012, this is expected to cost $308 million, or 31 percent of the agency's $1 billion annual budget.

[edit] Operating cost per vehicle

After accounting for fares and fixed costs, TriMet calculated that in fiscal year 2010, its marginal operating expenses per boarding, net of fare revenue, were:

Here's a list of TriMet's weekday operating cost per boarding-ride by line, from winter 2009-2010.

In spring 2011, TriMet also projected that its future marginal net costs per boarding ride would be, in 2010 dollars:

[edit] Other expenses

[edit] Light rail programs

Though its expenses vary widely based on TriMet's MAX construction in a given year, light rail programs have often been TriMet's second-biggest annual expense, with most of their cost typically covered by grants from federal, state and local governments.

[edit] Worsening problems

Future TriMet service is in danger because of the agency's failure to set aside enough money to pay for medical and pension benefits promised to its workers and retirees.

The Citizens Advisory Committee on the Budget wrote in 2010 that "disbursements to retirees cannot be funded without cutting other areas of the budget."

"It's not that we are not paying attention here," TriMet CFO Beth deHamel said in October 2010. "We are more than aware of this, of all our financial problems. ... All of these issues are front and center."

In February 2013, TriMet released a new projection estimating that without benefit cuts or new categories of revenue, the agency would have to cut service 70 percent by 2025 to break even, the equivalent of eliminating 63 bus lines. (Among other things, the projection also assumed an annual bus service increase of 0.8 percent and MAX service increase of 0.5 percent.)

[edit] Unfunded medical benefits

TriMet acknowledges that it not saved nearly enough to pay its future medical costs, and that these may force cuts in future service.

According to the spring 2010 report of TriMet's Citizen Advisory Committee on the Budget, without policy changes, the share of payroll taxes going to medical benefits for the agency's employees and retirees would be:

[edit] Retiree medical benefits

Because of TriMet's generous provisions for early retirement and full medical coverage for retirees, retiree medical benefits (sometimes referred to as "other post-employment benefits" or OPEB) are among its biggest costs.

According to an outside audit released in September 2010, TriMet would owe $817 million in future retiree medical benefits, for which the agency had saved nothing. Without further changes, the auditors found, the agency would have to be saving $75 million a year to meet all its future obligations.

TriMet's problems in this area are worse than those of other governments in Oregon. An April 2010 investigation by the libertarian news blog Oregon Politico (later renamed Oregon Capitol News found that TriMet's unfunded medical obligation "is so large it is 484 percent of its annual covered payroll. This measure eclipsed any other government examined for this article; no other government exceeded 115 percent, and the statewide average OPEB percentage of payroll was a mere 15 percent in comparison."

[edit] Management goal to cut medical obligations

In 2010, about 86 percent of TriMet's retiree benefits were going to retirees under age 65 or to their dependents. DeHamel said in October 2010 that the agency could legally negotiate a benefit cut to these retirees, as long as they did not touch retirees over 65.

"If we're successful in our labor negotations, that liability number will go down a lot," deHamel said in October 2010. "I'm not saying we won't have a problem, but the order of magnitude of the program will be dramatically different."

[edit] Unfunded pension costs

TriMet also had not set aside nearly enough money to cover its pension obligations.

For managers, TriMet's cumulative, unfunded defined-benefit obligations amounted to:

  • 2008: $26 million, or 30 percent of total obligations
  • 2009: $32 million, or 33 percent
  • 2010: $31 million, or 31 percent

For union workers, TriMet's cumulative, unfunded defined-benefit obligations amounted to:

  • 2008: $188 million, or 44 percent of total obligations
  • 2009: $243 million, or 53 percent
  • 2010: $236 million, or 48 percent

[edit] Effect on future bond ratings

DeHamel said in October 2010 that she did not think bond rating agencies were likely to downgrade future TriMet bond ratings, expected to be updated in 2011, based on its unfunded retiree benefits.

"Would they want us to cut service by $75m to affect our OPEB liability?" she said. "No."

With the possible exception of the State of New Jersey, which deHamel said belongs "in a class by itself," deHamel said "when somebody's been downgraded, they've not mentioned OPEB."

[edit] See also

[edit] External links


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