The outlook for the Whatcom Transportation Authority budget has changed from a promising surplus to a dismal red over the course of just a few months.
This spring, WTA board members were contemplating a surplus in excess of $19 million. This year’s budget anticipated the amount of cash the agency held in reserve growing by nearly $5 million. All of this bounty was due to lower expenses during COVID-19 shutdowns, conservative budgeting during the pandemic and — most significant of all — $39 million in federal pandemic relief.
All these additional millions prompted WTA board member Todd Donovan on March 17 to question why the agency continued to order diesel buses instead of buying the more expensive all-electric buses at a faster pace, in response to climate change.
By this summer, however, the agency’s financial outlook had dimmed considerably in the eyes of WTA officials. On July 14, board member and Whatcom County Executive Satpal Sidhu urged the board to address the budget numbers found on Page 32 of a new document, the six-year Transit Development Plan that will get a public hearing at 8 a.m. on Thursday, July 21.
The six-year plan indicates the agency’s cash balance will in fact grow this year but will shrink in the following years. By 2027, the agency will be in the red, with a negative end-of-year balance, given current projections.
“My suggestion is we should take this page seriously,” Sidhu said, adding that the board should confront its dire forecast directly at a meeting in the next couple months.
The six-year budget assumes that expenses will increase 5% annually. WTA Finance Director Shonda Shipman told the board July 14 that inflation and a growing staff will put increasing pressure on WTA’s revenues over the next several years.
In an interview, Shipman cautioned that the six-year budget is “aspirational,” meaning it includes major capital projects even if WTA doesn’t yet have the grant money or other funding to pay for them. Ordinarily, those projects don’t get built without large state or federal contributions. But WTA’s six-year wish list includes some much-needed, multi-million-dollar projects for the growing agency, including an expansion of its Maintenance, Operations and Administration Base on Bakerview Spur, also known as MOAB.
“MOAB was built for a 20-year cycle, and we’re at 20 years now,” WTA General Manager Les Reardanz told the board on July 14.
The WTA budget trends sharply downward through 2027 despite a new revenue source: $2.9 million annually from the 16-year “Move Ahead Washington” transportation package the state Legislature approved in March. The budget projections also assume a reliable 5% increase in sales tax revenue every year.
Reardanz warned that in reality, sales tax revenue isn’t that reliable. Public agencies learned that lesson in 2009 when an unexpected and deep recession caused sales-tax revenues to fall far short of their targets.
Shipman mentioned to the board that WTA could raise its sales tax rate, though the agency has no plans to do this anytime soon. Reardanz said WTA may also explore leasing some of its properties to create a more predictable revenue stream.
This story was updated at 1:31 p.m. July 19 to correct a mistake in Whatcom Transportation Authority’s six-year budget plan.
