Dallas Rail Transit Not Financially Viable

COST Comments: The article below is a precursor story for Austin if leaders continue to pursue a rail transit trolley for downtown Austin. Below are a few comparisons which should raise strong warnings for Austin City Council members:

1. Dallas’ DART transit serves less than two times as many people as Austin’s Capital Metro. However, its more than $525 million operating costs (including net debt service of $123 million) are more than 3 times Capital Metro’s $166 million. These Dallas DART costs include just over $12 million in operating costs for Dallas HOV lanes which are used by Dallas DART buses.

2. Dallas DART’s light rail serves about 60% as many riders as Austin’s bus system but the light rail’s annual costs including debt service is almost 150% greater than Austin’s bus operations.

3. Dallas DART’s has debt of $2.7 billion, primarily train capital borrowing, and the debt service to pay for this huge rail capital is $123 million this year and growing. This debt service is 75% as much as Capital Metro’s total annual operating costs.

4. Dallas DART planned almost 4,000 employees this year and which is almost four times the number of Capital Metro employees to serve less than twice as many riders.

This is additional strong evidence that rail tranist is not cost-effective and financially sustainable in cities like Austin.

DART set to trim jobs, light-rail service to tackle budget shortfall

12:00 AM CDT on Wednesday, May 26, 2010
By MICHAEL A. LINDENBERGER / The Dallas Morning News

Dallas Area Rapid Transit will make deep cuts in its annual operating budget – including eliminating at least 300 jobs and significantly reducing the frequency of light-rail service – over the next two years as it corrects what appear to have been wildly optimistic revenue projections.

As recently as late last year, the 20-year forecast assumed nearly $3 billion more revenue than DART executives now say is likely to be available. Officials have said the necessary adjustments will all but end the expansion of the agency’s rail service beyond what will be completed by 2013.

DART executives, who had warned board members last month that deep cuts were likely, provided more details Tuesday.

Still, how severely annual operations will be cut may not be clear for another year.

Chief financial officer David Leininger said that if the local economy recovers fairly quickly, as the agency and its advisers predict, DART could get by with annual cuts of about $30 million to $40 million.

That would require about 300 job cuts, a number that could largely – though not entirely – be achieved by attrition and what would amount to a job freeze for the foreseeable future.

No DART employee will receive a pay raise in 2011, he said.

That level of budget cuts would probably leave bus service essentially unchanged, though some of the least popular routes would see their 40-foot coaches replaced by vehicles less than 20 feet long.

Passengers would also see longer waits for light-rail trains. Rail lines that now feature trains every 10 minutes during peak hours would be reduced to a train every 15 minutes. During the single busiest rush hour, service would drop from every five minutes to every 7 ½ minutes.

“This $30 million to $40 million scenario focuses on taking costs out of every area before we get to the bus service,” Leininger said. “That’s because it’s still the case that the majority of ridership actually comes from people who ride the bus. We’ve been very focused on that.”

But bus service will nonetheless be cut severely, if the economic forecast provided by Waco economist Ray Perryman proves again to be too optimistic.

If the North Texas economy recovers more slowly, or if the recovery is short-lived, Leininger said the agency would need to cut $60 million a year from its operating budget. He said he has faith in Perryman’s revised forecast, but he noted at least one other economist working for DART has urged caution.

“We really believe it’s reasonable to assume the Perryman base case,” Leininger said, adding that DART has scrutinized its underlying assumptions thoroughly. “But we think it’s important to put before you the other scenario, so you know what it looks like and what would be required.”

One hopeful if inconclusive sign: DART received 2.7 percent more in sales taxes for March than it did during March 2009, the first year-over-year increase in more than 18 months, he said.

No matter what decisions the board makes this year, it will have to look again at its revenues by next summer to make sure they are in line with Perryman’s projections.

If not, then more aggressive cuts would be required. And that could mean big cuts for bus services, as DART would look to reduce the $102 million it spends annually on bus service by about 17.5 percent.

Core bus routes would not be impacted, but many others would be. Early projections roughly estimate such cuts would end service for about 5,000 round-trip riders each weekday and about 6,500 people on Saturdays. DART provides the equivalent of round-trip bus service to approximately 60,000 riders a day, across 130 routes.

The budget decisions will be made by the board later this summer, in time to approve a fiscal 2011 budget in September.

Unless sales tax receipts are lower than expected over the next few months, it’s likely that the DART staff will urge board members to enact the smaller cuts this year. If by next summer, the economy has not recovered sufficiently, it would then need to enact the steeper cuts.

Some board members questioned whether that was prudent.

“You mentioned that the [less aggressive] cuts would have a limited impact on customers,” said board member Mark Enoch of Rowlett. “But I assume you are talking about existing customers. What about future customers that won’t be served?”

With some DART member cities still waiting for rail service, he said it may make more sense for DART to impose the steeper cuts even if it believes Perryman’s projections. Any savings, should he prove accurate, could then be plugged back into the capital construction budget, he said.

Board member Pamela Dunlop Gates of Dallas asked “why is it reasonable to assume Perryman’s numbers are right” when, she said, it seems that his numbers have been wrong for most of her tenure on the board.

Board member Robert Strauss of Dallas said he wanted to know exactly how much the agency spends on its maintaining and enforcing traffic laws on the HOV lanes it operates jointly with the state.

“I am not sure why that burden has become ours,” he said. “They are not our highways.”

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