Los Angeles County Item #10

Metropolitan Transportation Authority

FY21 Proposed Budget

Budget Public Hearing

September 16, 2020

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 FY21 Proposed Budget Highlights
Objective: Balancing FY21 Proposed Budget with available resources under severe financial
constraint due to COVID-19, while staying on course to deliver Metro’s mission

• Projecting revenue loss of $730M, $490M in Sales Taxes and $241M in Fares and Tolls
Revenues • Assumes gradual recovery that starts in September 2020, with a full recovery anticipated in June 2021
• CARES stimulus does not cover all losses in operations and provides no funding for capital projects

Labor:
• No reduction of FTEs from FY20 Budget level (CARES reimbursement)
• Union wages will increase up to 4.5% per the Collective Bargaining Agreements (CBA)
• Controlling costs through Non-Contract vacancy savings and overtime usage

Programs:
Expenses • Enhanced cleaning, sanitizing, and PPE availability
• Transit Services at 81% of pre-COVID revenue hours, estimated boardings at 55%
• NextGen investments of $7M for service enhancements, plus $123M for other bus improvements
• All Measure M/R projects in FY20 moving forward, planning phases moving towards shovel ready status
• Transit funding to operators and cities continue regionally, with CARES funds mitigating declines
• Congestion Management and other mobility initiatives adjusted to match demand
• Cost controls in place for Oversight and Administrative projects, leading to 12% reduction

If needed, Mid-Year Budget will be brought to Board for approval based on the pace of recovery
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Quarterly Revenue and Expense Projection Trend

• The Total Expenses Reduction

Curve follows the Revenue Loss
Curve

• Cost inflation is projected to

increase by 2.3%, based on
leading regional forecasts

• Anticipated recovery assumes to

start in Q2 and continue through
the remainder of FY21

• Average Monthly Expenses

increases 21.7% from Q1 YTD
to Q4 YTD

• A midyear budget adjustment

may be necessary if recovery
takes longer than assumed

FY21 Proposed Budget

Q1 YTD Q2 YTD Q3 YTD Q4 YTD
Average Monthly Expense $ $ 412.2 $ 425.4 $ 465.8 $ 501.4
% Reduction vs. FY20 Budget -22.7% -22.9% -16.9% -16.5%

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 Resources and CARES Act Summary
FY20 FY21
Resources ($ in millions) Budget (1) Proposed $ Change % Change
1 Sales Tax, TDA and STA $ 4,174.4 $ 3,685.0 $ (489.4) -11.7%
2 Passenger Fares 284.5 60.3 (224.2) -78.8%
3 ExpressLanes, Advertising and Other Revenues 155.1 138.6 (16.5) -10.6%
4 Sales Tax and System Generated Subtotal $ 4,614.0 $ 3,883.9 $ (730.1) -15.8%
5 CARES Reimbursements - 569.6 569.6 100.0%
6 Grants and Other Reimbursement Revenues (1) 2,594.8 1,563.8 (1,030.9) -39.7%
7 Total Resources $ 7,208.8 $ 6,017.3 $ (1,191.5) -16.5%
(1)
Include Bond Proceeds, Transportation Infrastructure Finance and Innovation Act (TIFIA) loan drawdown and prior
year commitment.

• Sales Tax and System Generated Revenue loss is $730 million or -15.8%, offset by $570 million for CARES

• CARES Act priority was to address and mitigate reductions in sales

tax and fare revenue

• Additionally, each operator received supplemental CARES Act funding

to address losses

• Metro CARES Act allocation for FY20 ($305 million) and FY21 ($570
million)

• CARES stimulus does not cover all losses in operations and provides
no funding for capital projects

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 Expense and FTE Summary
FY20 - FY21 FY20 - FY21 % of
Program Type ($ in millions) FY20 Budget FY21 Proposed
$ Change % Change Total
1 Metro Transit - Operations & Maintenance $ 1,839.1 $ 1,798.6 $ (40.4) -2.2% 29.9%
2 Metro Transit - SGR & Other Asset Improvements 493.5 457.0 (36.5) -7.4% 7.6%
3 Metro Transit Subtotal 2,332.6 2,255.6 (77.0) -3.3% 37.5%
4 Transportation Infrastructure Development 2,382.4 1,486.5 (895.9) -37.6% 24.7%
5 Subsidy Funding Programs 1,404.7 1,239.2 (165.5) -11.8% 20.6%
6 Regional Rail 178.2 219.5 41.3 23.2% 3.6%
7 Congestion Management 135.9 89.6 (46.3) -34.0% 1.5%
8 General Planning & Programs 168.9 155.1 (13.8) -8.2% 2.6%
9 Debt Service 534.9 509.2 (25.8) -4.8% 8.5%
10 Oversight and Administration 71.2 62.6 (8.6) -12.1% 1.0%
11 Total Expenditures $ 7,208.8 $ 6,017.3 $ (1,191.5) -16.5% 100.0%

• Metro Transit totals $2.3 billion, (37.5% of FY21 Budget) and sees the smallest decline vs. FY20
• All construction projects from FY20 are moving forward, projects in planning phases advancing towards shovel
ready status
• Cost controls in place for Oversight and Administration leading to 12% reduction

• FY21 Budget FTEs remains unchanged

from FY20 Budget level

• Agency looks to protect its existing

employees from the economic impact of
this pandemic by retaining its workforce
while controlling cost through vacancy
savings and reducing overtime usage
whenever applicable.
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 Metro Transit Expenses - Summary
Metro Transit Expenses
Expense Category FY20 Budget FY21 Proposed $ Change % Change % of Total
($ in millions)
Labor - FTE $ 1,147.9 $ 1,192.6 $ 44.7 3.9% 52.9%
Labor - Overtime 88.9 53.0 (35.9) -40.4% 2.3%
Direct Operating Cost
Total Labor 1,236.7 1,245.6 8.9 0.7% 55.2%
Total Non-Labor 320.4 278.4 (42.0) -13.1% 12.3%
Total Direct Operating Cost 1,557.1 1,524.0 (33.1) -2.1% 67.6%
Total Supporting Costs 281.9 274.6 (7.3) -2.6% 12.2%
Total Metro Transit - Operations & Maintenance 1,839.0 1,798.6 (40.4) -2.2% 79.7%
Total Metro Transit - SGR 493.5 457.0 (36.5) -7.4% 20.3%
Total Metro Transt $ 2,332.6 $ 2,255.6 $ (77.0) -3.3% 100.0%

Metro Transit Expenses – Total

• Overall FY21 Proposed Budget of $2.3 billion is $77 million or -3% lower than FY20
• Funding to Metro Transit has been maximized through utilizing all possible eligible funding and CARES
Act reimbursement

Operations & Maintenance Expenses

• Enhanced cleaning and sanitizing for vehicles and stations and PPE
• Staffing remains at FY20 levels and CBA provisions maintained

State of Good Repair Expenses

• Procurement of 200 CNG and 23 electric buses, along with Light Rail Vehicles and start delivery and
testing of Heavy Rail Vehicles
• Bus and Rail Vehicle, Facilities, Wayside (track and signals) Maintenance
• NextGen related investments such as the improvements for Patsaouras Plaza, the Bus Pavilion at
Union Station, and Rosa Parks Bus Station 6
 Revenue Service Hours and NextGen Summary

• In FY21, service will gradually ramp up to 6.6 RSH by June 2021, and will continue to ramp up through
FY22-FY23
• On an annual average, FY21 will operate 81% of the revenue service hours pre-COVID, but carry 55% of the
boardings, based on factors such as staffing availability, equipment, performance, cost, and revenue for
prudent financial management

• NextGen Investments: Investing in and improving the

Bus & Rail System to complement NextGen
• FY21 NextGen related improvements value at
$130.1 million

• NextGen service implementation and

investments will improve speed and reliability,
covering more service miles with less service
hours
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Transportation Infrastructure Development
Transit Expansion
Transit Expansion FY20 FY21
($ in millions) Budget Proposed Difference
1 Measure R/M Transit Construction • All Measure R and M
2 Westside Purple Line Extension Section 1 $ 283.5 $ 181.2 $ (102.3) construction TID projects
3 Westside Purple Line Extension Section 2 312.3 121.5 (190.8) advance towards their
4 Westside Purple Line Extension Section 3 457.3 223.2 (234.1) respective revenue service
5 Division 20 Portal Widening & Turnback 85.0 91.1 6.2
dates
6 Westside Purple Line Extension Subtotal $ 1,138.0 $ 617.0 $ (521.0)
7 Regional Connector Light Rail Transit $ 220.2 $ 144.5 $ (75.7)
8 Crenshaw/LAX Light Rail Transit 224.5 111.7 (112.8) • The Four Pillar projects –
9 Gold Line Foothill Extension Phase 2 156.2 101.5 (54.7) West Santa Ana Branch,
10 East San Fernando Valley Light Rail Transit 35.4 16.2 (19.2) Eastside Light Rail
11 Airport Metro Connector 68.8 80.3 11.6
12 Expo Light Rail Transit Close Out 3.0 1.9 (1.1)
Extension Phase 2,
13 Metro Orange Line Improvements 21.3 20.5 (0.9) Sepulveda Transit Corridor,
14 Systemwide 92.0 78.7 (13.3) and Green Line Extension
15 Business Interruption Fund 7.0 5.6 (1.4) to Torrance continue to
16 Measure R/M Transit Construction Total $ 1,966.4 $ 1,177.9 $ (788.6) advance towards shovel
17 Measure R/M Transit Planning readiness
18 West Santa Ana Branch Transit Expansion $ 49.0 $ 16.5 $ (32.6)
19 Sepulveda Transit Corridor 8.2 13.3 5.1
20 Eastside Light Rail Access 9.0 6.5 (2.5) • San Gabriel Valley Transit
21 North Hollywood / Pasadena BRT Connector 3.2 5.7 2.5 Feasibility Study ($1.5M)
22 Eastside Light Rail Transit Extension Phase 2 9.2 4.0 (5.2)
23 San Gabriel Valley Transit Feasibility Study - 1.5 1.5
24 Green Line Extension to Torrence 2.2 8.3 6.2 • Planning efforts continue
25 Vermont Transit Corridor 1.2 3.2 2.0 for current Measure M
26 Crenshaw Northern Extension 2.0 2.8 0.8 transit projects
27 North San Fernando Valley Bus Rapid Tansit 3.4 2.5 (0.9)
28 Measure R/M Transit Planning Total $ 87.4 $ 64.3 $ (23.1)
29 Program Control & Support Total $ 11.9 $ 14.0 $ 2.1
30 Transit Expansion Grand Total $ 2,065.8 $ 1,256.2 $ (809.6) 8
 Transportation Infrastructure Development
Highway
Highway Program FY20 FY21 • Interstate-5 North Capacity
($ in millions) Budget Proposed Difference Enhancement advances
1 Measure R / M Highway Projects
towards construction with
2 Alameda Corridor East Grade Separations Phase 2 $ 30.0 $ 50.1 $ 20.1
3 Interstate 605 Corridor "Hot Spot" Improvements 45.7 19.8 (25.9) contract solicitation starting in
4 Interstate 5 North Capacity Enhance SR-14 to Kern County Line 17.2 13.5 (3.6) FY21
5 SR-57/SR-60 Interchange Improvements 23.4 6.9 (16.5)
6 Interstate 405, I-110, I-105, and SR-91 Ramp and Interchange Imp (South Bay) 20.7 20.6 (0.1)
7 Countywide Sound Wall Assessment & Constructions 25.8 15.4 (10.4) • Planning efforts continue for all
8 Interstate 5 Capacity Enhancement from SR-134 to SR-170 21.9 15.3 (6.6) highway projects
9 State Route 138 Capacity Enhancements 27.6 15.6 (12.0)
10 Interstate 5 Capacity Enhancement from I-605 to Orange County Line 25.6 15.0 (10.6)
11 SR-710 North Corridor Mobility Improvements 0.8 8.3 7.5 Continue support for Caltrans
12 Interstate 710 South and/or Early Action Projects 31.6 17.1 (14.4)
13 Interstate 105 Express Lanes 2.5 2.9 0.4
delivery of major Highway
14 Interstate 405 Sepulveda Express Lanes 2.3 2.0 (0.4) Program projects including:
15 Highway Operational Improvements in Las Virgenes/Malibu Subregion 15.2 9.8 (5.3) • SR138 Capacity
16 Highway Operational Improvements in Arroyo Verdugo Subregion 13.7 7.8 (5.9)
17 Interstate 5 / St. Route 14 Capacity Enhancement 1.5 1.5 0.0
Enhancements
18 Interstate 5 Corridor Improvements (I-605 to I-710) 0.5 0.0 (0.5) • I-5 Capacity Enhancements
19 Highway Efficiency Program 1.6 0.9 (0.7) from SR-134 to SR-170
20 Transportation System and Mobility Improvement Program 1.5 16.2 14.7
21 Highway Demand Based Prog and Operational Improvements 1.6 0.4 (1.2) • South Bay Improvements and
22 High Desert Corridor (highway department activities) 1.5 0.6 (1.0) Gateway Cities Improvements
23 Measure R / M Highway Projects Total $ 312.2 $ 239.8 $ (72.4) including I-605 Hot Spots
24 Non-Measure R / M Highway Projects
25 Interstate 210 Barrier Replacement $ 7.9 $ 2.4 $ (5.5)
• I-710 Early Action projects
26 Highway Planning & Admin 4.2 2.6 (1.7) • I-5 South projects to the
27 Caltrans Property Maintenance 3.5 1.3 (2.2) Orange County Line
28 Interstate 405 Car Pool Lane 0.8 0.2 (0.6)
29 Non-Measure R / M Highway Projects Total $ 16.4 $ 6.5 $ (10.0) • Highway Operational
30 Highway Program Grand Total $ 328.6 $ 246.3 $ (82.3) Improvements in Arroyo
Verdugo and in Las Virgenes /
Malibu subregions
• Alameda Corridor East Phase
2 projects. 9
 Other Metro Programs
Program Type ($ in FY20 FY21
$ Change % Change
millions) Budget Proposed
• Subsidy - Transit funding to operators and
1 Subsidy Program $ 1,404.7 $ 1,239.2 $ (165.5) -11.8% cities continue regionally, with CARES funds
mitigating declines

• Regional Rail - Link US property acquisitions,

Rosecrans / Marquardt Grade Separation and
2 Regional Rail $ 178.2 $ 219.5 $ 41.3 23.2%
Metrolink's fare revenue replacement

• Congestion Management - Reduction in

Congestion ExpressLanes demand and usage along with
3 $ 135.9 $ 89.6 $ (46.3) -34.0% removal of duplicate vendor
Management

• General Planning - Projects are evaluated to

General Planning & continue at regular or adjusted speed
4 $ 168.9 $ 155.1 $ (13.8) -8.2% including West Santa Ana Branch, Sepulveda
Programs Transit Corridor, Centinela Grade Separation,
Rail to Rail/River and LA River Bike Path

• Debt Service - Primarily due to repayment

5 Debt Service $ 534.9 $ 509.2 $ (25.8) -4.8% schedule structure at the time of the original
bond issuance.

• Oversight and Admin – Cost controls result

in 3% of total budget while continuing to invest
6 Oversight and Admin $ 71.2 $ 62.6 $ (8.6) -12.1% in agency priorities such as equity,
sustainability and climate action initiatives and
projects
7 TID and Metro Transit $ 4,715.0 $ 3,742.1 $ (972.9) -20.6% 10
8 Total Expenses $ 7,208.8 $ 6,017.3 $ (1,191.5) -16.5%
 FY21 Budget Outreach
Comments received as of 9/10/20

Metro.net/myvoice • Regional Service Councils

• San Gabriel Valley COG
-Emails (>400,000)
• Gateway Cities COG
-Visits (>8,000)
• Valley Industry Commerce
Virtual Meetings (>20) Association (VICA)
[email protected]
• Bus Operator Subcommittee (BOS)
-Email comments (83)
• Streets & Freeways Committee
• Technical Advisory Committee
(TAC)
Questionnaire • Policy Advisory Committee (PAC)
-Responses (4,217) • Local Transit Services
-Comments (1,644) Subcommittee (LTSS) Citizens
Advisory Council (CAC)
• Measure M Oversight Committee
• Metro Budget Public Hearing

Summary of Comments – Top Transit Priorities

 Better Transit - “Expand Rail Network” and “Increased Safety”
 Less Congestion - “Dedicated Bus Lanes” and “Traffic Reduction Pilot”
 Complete Streets - “Improve Pedestrian Crossing”
 Access to Opportunity - “High Density Developments Around Transit” and “Easier Reduced Fare
Program” & “Better Mobile and Web experience”

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 FY21 Proposed Budget Risks
• This budget assumes a gradual and immediate recovery beginning in September, with a full
recovery anticipated in June 2021.

• Further declines in sales tax revenues from the current estimate as a result of prolonged
impact of the ongoing COVID-19 pandemic, uncertainty of when consumer spending return to
pre-COVID levels.

• Costs that rise faster than the inflation factor built into the budget for goods/services used to
deliver Metro’s projects and services.

• Uncertainty regarding public willingness to return to public transit post-COVID.

• Changes in Metro’s share of federal and state funding that is dependent on legislative or other
actions.

• Unanticipated mobility initiatives added post Budget adoption.

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 Next Steps
• Final Board Adoption expected on September 24th

• Board Adoption is legally required

• Mid-Year Budget Update (if needed) – December/January TBD

• Review of the Sales Tax and Other Revenues, based on duration of

pandemic
• Review of delivery and expenditure on projects and programs and
adjustments on a case by case basis
• Opportunity of additional funding and competitiveness of our projects

• Performance Monitoring

• Report back to the board regularly regarding financial performance

throughout FY21

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 September Board Report FY21 Budget Adoption

A. ADOPTING the proposed FY21 Budget as presented in the budget document (provided in a
separate transmittal and posted on metro.net);

1. AUTHORIZING $6.0 billion annual consolidated expenditures to achieve goals and

objectives set forth by the Board adopted Metro Vision 2028 strategic plan; and

2. AUTHORIZING a total of 10,219 FTEs with 8,482 Represented FTEs and 1,737 Non-
Represented FTEs which did not change from FY20 authorized levels; and

3. APPROVING the Life of Project (LOP) budgets for new capital projects with LOP
exceeding $5 million presented in Attachment A; and

4. AMENDING the proposed budget to include $165.2 million for Gold Line Foothill Extension
2B for a total of $265.2 million, finalized after budget closed; and

B. APPROVING the Reimbursement Resolution declaring Metro’s intention to issue debt in FY21
for capital projects, as shown in Attachment B, with the provision that actual debt issuance will
require separate Board approval.