Contributor Dan Ryan joined the blog in 2015 after several guest posts. He grew up in Ireland, and has lived on the Eastside for 15 years. Dan is a recovering economist with a day job in telecommunications. Apart from transit, Dan frequently writes about suburban land use issues.
Yesterday, King County Executive Dow Constantine transmitted the proposed Metro budget for 2021-2022. The budget eliminates several planned RapidRide expansions. Metro will dig into reserves to fund service, and will defer a planned increase in fares. The budget also funds a significant expansion of the electric battery bus fleet. The depletion of reserves sets Metro up for future service cuts unless new revenues can be found by 2024.
The K line in Bellevue/Kirkland is cancelled, apparently having come up short against Renton on an equity analysis. Another line in East or South King County that had been scheduled for 2027 is also dropped.
Metro is cutting funding for the J line (to Roosevelt via Eastlake). But SDOT suggested Tuesday that they would attempt a scaled-back version of the project where the line would terminate to U District station instead.
Also unfunded is the R line on Rainier Ave, previously scheduled for 2024. The Executive indicated there would be a future effort to secure federal funds for this line, but didn’t say when that might happen.
On Thursday, two Sound Transit committees heard staff recommendations for proceeding with paused actions this year. The seven project actions staff are recommending come to just $76 million, though they relate to some $7 billion of larger projects. Along the way, there were tantalizing clues to staff intentions about the larger realignment process to come next summer, perhaps including a phased approach to some rail and BRT projects.
When the pandemic and recession hit in March, it immediately imperiled Sound Transit’s already finely balanced financial plan. The most current projections show the agency running up against constitutional debt limits by 2028 unless spending plans are adjusted or new revenue sources found. The Board decided early on to proceed with projects that are already in active construction, and would consider later how to ‘realign’ timelines and priorities for those further in the future. A comprehensive realignment of future projects is now scheduled for July 2021.
Between the ongoing projects where construction is continuing, and the future projects whose fate will be decided next year, are a set of mostly smaller project actions that were briefly paused in March. Staff are now recommending to move some of these forward, and to delay others until the broader realignment is decided. More details by mode after the jump.
A transit hub northwest of a rebuilt SR 522 and I-405 interchange will serve as the eastern terminus for Sound Transit’s planned SR 522 BRT. It will connect Stride BRT on SR 522 to Stride BRT on I-405. Sound Transit is dropping plans for some BRT buses to serve Woodinville, and replacing those with a Sound Transit Express branded connection.
These, and other updates to SR 522 BRT plans, are shared in a Sound Transit online open house that runs through August 23.
With expanded express toll lanes on I-405 between SR 522 and SR 527, the Stride BRT on I-405 will be accessible at SR 522 from BRT platforms on new direct access ramps. The SR 522 BRT, meanwhile, will terminate at a bus loop and layover area just to the northwest. That makes for a straightforward connection between the two services and to other buses operating in the area.
The transit hub resolves several other tricky issues in Bothell that Martin explored last year.
Sound Transit and King County Metro, along with agencies in other major cities, are making a concerted effort for more federal assistance in the upcoming COVID-19 relief package. Yesterday, the leaders of 27 major agencies joined in calling for up to $36 billion in aid for transit to cover COVID-related expenses and replacing depleted local tax revenues in 2020 and 2021.
Transit operators face a variety of needs. For legacy systems, decreased farebox revenues have put extraordinary pressure on operations while costs related to COVID mitigation have increased. For newer systems that are growing, the recession will reduce local tax revenues for years, imperiling expansion timelines.
While King County Metro is reducing operations, Sound Transit is facing a delay to planned rail and BRT extensions. Current operations are a relative small part of the Sound Transit budget, but the long-term loss of sales tax revenues combines with statutory limits on debt to put the current planned system expansion timeline out of reach.
Among the various assistance measures being debated, the most valuable to Sound Transit could increase the federal share of existing Full Funding Grant Agreements (FFGA) by 30%. A similar provision is in the Investing in America Act recently passed by the House.
In the current FFGAs, Lynnwood Link received a federal match of 36% or $1.17 billion. Federal Way Link received a 25% match for $790 million. A 30% increment to those FFGAs would mean $1.9 billion of additional federal support for Sound Transit.
A recent view of the East Link alignment through Bellevue, courtesy of Bellevue Transportation Department. Heavy civil construction is expected to be substantially complete in Bellevue this Fall, except on the central Bellevue segment where it will complete early in 2021.
With a comprehensive realignment of capital projects delayed until July 2021, Sound Transit turned its attention yesterday to current projects where advances through project stage gates have been on hold since March. The Board must decide in coming months how to proceed on many of these projects in 2021 pending decisions on the broader program.
Earlier this year, the Board decided to pause advancing projects not in construction. That meant planning and design could continue, but projects could not advance into project development, final design, or construction. Some of the largest ST3 projects are still too far away to be affected by a near-term pause, but the staff presentation detailed more than a dozen where some work or stage gate decisions are being delayed.
Projects affected by the pause include several in early development. These include Sounder platform extensions on the south line. Those platforms were to be extended to accommodate 10-car trains by 2028. An operations and maintenance facility for Everett Link was to have started work later this year. Environmental work on Sounder access projects has been delayed. These include parking in Edmonds and Mukilteo which are not being moved to environmental review. Contracts have been negotiated at South Tacoma and Lakewood station, but not brought to the Board. In North Sammamish, a 200-car park-and-ride is on hold. The bus on shoulder program has been screened to a short list of possible projects, but paused further development.
A reduced Seattle Transportation Benefit District (STBD), extending the existing 0.1% sales tax but not replacing the lost vehicle licence fee revenues, appears headed to the November ballot. If approved, it will fund youth ORCA and low income programs at existing levels. But Seattle will purchase much less bus service than in previous years, and much of that will be directed to West Seattle while the West Seattle Bridge remains out of service.
The plan to take a measure to the November ballot was announced by Council Transportation Committee Chair Alex Pedersen at a Council meeting on Monday. Existing taxes expire in December, and a November ballot measure must be filed by August 4. Further details are expected within the next few days, and may be refined further by the Council, but the broad strokes spending plan has become clearer. Either a four- or six-year renewal is possible, perhaps because some favor a revived countywide measure in 2024.
The Sound Transit Board has given up on earlier plans to decide a capital program realignment this year, and will extend the process into the middle of next year. The new “path forward” is a comprehensive realignment plan and schedule for future project delivery by July 2021.
In the meantime, a more limited set of actions will be considered this year on projects that require urgent decisions. Projects already in construction will continue. The Board will continue to schedule design and environmental activities on other projects to maintain shovel-readiness. For baselining and construction decision points, the 2021 plan will proceed on a “placeholder assumption” that all future projects are delayed by about five years. Affected projects may encompass the Eastside BRT projects, some Sounder South improvements, the Link OMF South, Everett Link, and funding agreements for “early win” projects with local partners.
Sound Transit embarked on an effort to “realign” the capital program in April after the COVID pandemic and recession cratered revenue expectations. At the time, CEO Peter Rogoff pushed for prompt Board direction on resetting priorities: “Back in 2010, the board took some 18 months to arrive at what realignment decisions had to be made. We may not have the luxury of being able to wait 18 months to come to finality on these decisions given the sudden cliff that the economy may have jumped off.“
The Seattle Department of Transportation (SDOT) has paused work on the Center City Connector (CCC) and several other projects as the city wrangles a steep revenue deficit. The pause appears likely to further delay the start of service. But the recession also threatens the longer term future of the streetcar. Needed revenues from the rideshare tax are less likely to materialize, and there is sharpened competition for scarce general fund resources.
All told, the paused projects are expect to reduce SDOT spending this year by $58 million, or 8% of the $739 million budget. That roughly fills this year’s budget gap for SDOT. SDOT’s revenues are expected to fall short of plan by more than $50 million, including an expected loss of $13 million in general fund support, a $20 million shortfall on parking tax revenues; and at least $7 million less in street use fees. SDOT’s near term options are constrained as they are continuing projects already in construction. At the same time, the West Seattle Bridge is unexpectedly failing, setting SDOT up for a costly repair bill, or even more costly replacement.
The Center City Connector would connect the South Lake Union and First Hill streetcars through downtown Seattle. The project was funded in the budget passed in 2017, but then placed on hold in April 2018. After identifying a series of design flaws and cost underestimates in the plan, an independent review added $88 million to the estimate in the budget, and potentially more if assumed FTA grant funding were to fall through. But the city nevertheless determined to get the project back on track, taking two steps to move the project ahead.
The Sound Transit Executive Committee failed on Thursday to reach agreement on realignment criteria for ST3 projects. Board members sought a set of agreed criteria for a better-tuned realignment, but in the end voted only to send a framework of possible criteria to the full Board without recommendation.
A “blunt instrument” delay of five years for all projects not currently in construction would be affordable. To maintain flexibility, early design work would generally proceed on the original ST3 timeline, but construction would take place much later to conserve revenues. But the Board is looking for a realignment process that does something smarter than simply sliding all the timelines.
With the September 2020 service change, Metro will restore service to about 85% of pre-COVID levels. However, that’s just a precursor to a series of service reductions Metro is preparing over the next two years, with a cumulative reduction of 20%-30% of service from previous levels rolling out through every service change in 2021 and 2022. Capital spending will be reduced by 30-40%. The Regional Transit Committee is to receive a briefing on Wednesday detailing how Metro is preparing their 2021-2022 budget.
The near-term finances are rough, though somewhat offset by a once-off infusion of $242 million of CARES Act funding, and some dipping into reserves. A little over half of Metro funding is through dedicated sales taxes. Sales taxes for 2020 are now expected to come in 29% short of the forecast from earlier this year. Fares are not currently being collected. Ridership remains 71% below normal levels, so fare revenue will be much lower even after fare collection resumes. The CARES Act funding buys Metro time to restructure operations, but doesn’t address longer term deficits.
Over the lifetime of the ST3 program, Sound Transit now expects a revenue shortfall on the order of $8-12 billion. Without adjusting expenditures, the agency will run out of available debt capacity by 2028. On Wednesday afternoon, a Board workshop learned more about the depth of the financial crisis and began to review options for responding. On average, according to one board member, the financial outlook suggests a five-year delay to projects not already in construction.
Generally, staff are suggesting extended project timelines. (They were careful not to couch this as a recommendation). In this scenario, environmental and preliminary engineering (E/PE) work might begin on the original schedule, but detailed design and construction work would follow over a longer window than currently projected. E/PE work is relatively inexpensive, typically about 10% of project costs. Getting it done on schedule preserves flexibility in case new revenue or grant options present themselves.
A number of board members raised the possibility of asking voters to raise the debt limit. Similar to municipalities, Sound Transit can borrow up to 1.5% of the assessed value of properties within the RTA. That could be raised to 5% of assessed value with the approval of 60% of voters. There was interest too among some board members in raising taxes or changing the mix of taxes supporting the agency. For now it would be unsafe to rely on that. Any such ballot measure is further in the future than Sound Transit should wait before acting.
The rather generously scoped study is to examine ferry opportunities across the twelve-county Puget Sound region. Apart from the usual ridership and economic metrics, it will emphasize preserving useful waterfront properties in public ownership and to seek opportunities for partnerships with the state.
There are some peculiar candidates for ferry service. Three of the routes are on Lake Washington. King County studied cross-lake service in 2015 and found costs much higher, and ridership much lower, than competing bus services. (The 2015 study followed another Lake Washington ferry study in 2008 and preceded yet another that is now underway).
Some other options in the survey are long north-south routes, connecting Seattle to Des Moines, Tacoma, and Olympia. With prevailing travel patterns and the long distances, those routes are certain to be even higher cost and lower ridership than the hapless Lake Washington routes.
A series of meetings this week will select criteria for Sound Transit’s program realignment. A Board workshop will be held on Wednesday. On Thursday the Executive Committee expects to recommend evaluation criteria for projects to be altered or delayed. On June 25, the full Board is to approve those criteria before a further series of meetings evaluates what is to be done with each project.
The most current recession scenarios, shared with the Board last Thursday, predict a sales tax loss of 26%-31% this year and 27%-35% in 2021. That’s compounded by lost fare revenue, but also offset partly by $166 million in CARES Act assistance.
Added up, the current revenue loss expectation is for $743-$953 million through the end of next year alone. The model appears to anticipate a long recession with revenues persistently below past projections after the pandemic has passed.
Seattle added 11,440 residents in the year ended last July, faster growth than any other city outside the sunbelt, and enough to make Seattle America’s fastest growing large city since 2010. But that is still the fewest residents Seattle has added any year this decade, and a halving of the peak growth seen in 2016. Meanwhile, the Eastside has accelerated with more growth just as Seattle has been slowing. There’s been a shift too from King County to neighboring suburban counties. Seattle metro area growth has begun to resemble the more typical suburban pattern elsewhere in the country.
In 2014, Seattle voters approved a six-year tax package for Metro transit via the Seattle Transportation Benefit District (STBD). It included a 0.1% sales tax and a $60 vehicle license fee, and the taxes expire this December. In recent weeks, there have been hints that the expected renewal may not be on the Fall ballot. Via the Seattle Times on Friday evening comes a report confirming that regional leaders are focused on a bond measure for Harborview, with other tax measures taking a back seat. The STBD taxes may be allowed to expire or the sales tax be extended at its current rate only, roughly halving the revenues of the Seattle TBD.
Meanwhile, a meeting of regional transportation boards heard last Tuesday that Metro is preparing a 20% service reduction in response to a projected budget shortfall of $2 billion over the next decade. The worsening projections include both the expiration of STBD funding and an extended period of lower sales tax revenues countywide.
Last week, King County Metro General Manager Rob Gannon delivered a sobering assessment of Metro’s challenges in returning to normal service. Funding from the CARES Act has back-filled most of the revenue declines for 2020, but massive shortfalls in fare and tax revenue lie ahead after that once-off money runs out.
Between foregone fares and lowered tax revenues, Metro expects a revenue shortfall this year between $240 and $265 million. That is mostly replaced by $243 million in CARES Act money that is being disbursed through the FTA. There are strings attached to what kind of spending can be supported through CARES Act dollars, but Metro anticipates the money will be completely or very nearly completely spent down in 2020.
Beyond that, the prospects for further federal aid are uncertain, and certainly will not be sustained at the rates in recent stimulus legislation. The revenue forecast from the King County budget office is for a reduction in sales tax alone of $397 million between 2020 and 2022, though budget director Dwight Dively indicated on May 5 that he expects the actual deficit to be somewhat worse.
When we wrote recently about Sound Transit’s post-COVID funding shortfalls, the comments conversation turned quickly to Sounder North. The lightly used commuter rail line is everybody’s favorite local example of a transit service serving too few riders at extreme costs per rider. As the only Sound Transit rail serving Snohomish County to date, it has survived persistent concerns about costs in the past. Lynnwood Link is now nearing completion and is anticipated to open in 2024. Is it finally time to cut Sounder North?
Snohomish County, like other subareas, will shortly have to delay or suspend some future projects as the COVID-induced recession reduces tax and fare revenue. Some back-of-the-envelope math suggests cutting Sounder would avoid roughly one and one-half years of delays to Everett Link.
Yesterday, the Washington State Supreme Court agreed to hear a challenge by King County and others to I-976, the initiative approved by statewide voters last November to remove car tabs. Yesterday’s decision fast-forwards the case so it moves directly from King County Superior Court to the Supreme Court without a transfer to the Court of Appeals. The accelerated review means a decision is likely sometime this summer.
For Sound Transit, the outcome may take longer to play out. Sound Transit asserts it may continue collecting the MVET whatever the outcome of this case. If the initiative is upheld in this case, it probably means another round of litigation to sort out the unique Sound Transit issues.
To date, the initiative has not taken effect. An injunction granted in November remains in force and is now extended until the Supreme Court decides the case. Collections of the motor vehicle excise tax have continued although those may have to be refunded if the initiative is upheld.
In a February decision, King County Superior Court mostly upheld the initiative. While the Supreme Court may see the issues differently, it suggests I-976 is more likely than not to be found constitutional. Immediate impacts would include a reduction of funding for the state’s multimodal fund by 85%. The Seattle Transportation Benefit District would see about half of its revenues disappear, though those taxes were scheduled to expire at the end of this year anyway and a replacement with a higher sales tax levy seems likely. The STBD’s reserves could cover most of the cost of refunding vehicle license fees for 2020 if required, but it would start 2021 in a cash-poor position even if local voters approve new STBD taxes later this year.
Sound Transit’s expansion plans are obviously threatened by I-976, particularly now that the effects are magnified by an impending recession. A deep recession and I-976 together would exceed any margin of error in the ST3 financial plan several times over. Projects not already in construction would be cancelled or suspended into the far future.