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.
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.
Redmond and Seattle lead
Seattle remains exceptional. The largest American cities are not, collectively, growing at all. The ten cities with more than one million population collectively lost residents in 2019. New York has 132 thousand fewer residents than at its 2016 peak. San Jose and Chicago also shrank last year; Los Angeles, Houston, Philadelphia, San Diego, and Dallas all saw fewer than 2,000 new residents each. The narrative of a broad return to large cities looked solid earlier in the decade, but has taken a beating in the last few years. American growth is once again mostly suburban. What you’ve experienced in Seattle this decade is not the norm, and Seattle is showing some evidence of the same shift to the suburbs.
The growth rankings for the decade show Redmond as the fastest growing local city (of those with at least 50 thousand residents). Seattle has outpaced every other significant city. Because it’s so much larger, Seattle has of course added the greatest number of residents.
The narrative around local growth has shifted in several important ways. More charts after the jump.
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.
Via a recent Metro briefing comes a striking map of how Metro ridership has shifted in the COVID era. The 10% of routes with the greatest ridership losses all serve the Eastside or a few Seattle neighborhoods close to the water. Very nearly all of the 10% of routes where ridership has been most stable are in South King County (as of last week of March).
It’s not quite a surprise, of course, except perhaps that it’s so stark. Higher income commuters are mostly commuting to an office and those workplaces have shifted to working from home. On the other hand, those whose workplaces are still open and who are required to be physically present are mostly commuting from South County.
Metro ridership is down about 75%. After a series of reductions between March 23 and April 20, just 34 routes are still running at normal or near-normal levels. Another 81 are substantially reduced and 104 routes throughout the county are not operating at all.
Yesterday’s Sound Transit Board meeting saw first steps toward the realignment of ST3 projects that now appears inevitable. In a preview of discussions to come, the meeting featured unusually intense questioning of spending on Sounder fleet procurement and parking garages in Auburn, though both moved forward.
Chairman Keel set the tone:
No project and no region is more important than any other. We are a regional board looking out for regional mobility.
Noting there would be no money for ‘nice-to-haves’, he continued:
The more we spend on any one project, the later we will deliver on other projects that have been promised to voters.
Expect to hear familiar arguments about regional vs local priorities in the next few months, particularly if the impact of the recession affects subareas differently.
Several future parking expansions for Sounder South stations are projected to come in far above earlier cost estimates. On Thursday, the Sound Transit Board is expected to approve a 675 stall garage at Auburn Station that will cost $120 million, 54% more than the previously approved financial plan.
At Sumner Station, Sound Transit intends to spend $81 million for a 623 stall garage, 41% above the earlier estimate. Sound Transit is selecting a project to be built at Kent Station, where the cost of a 534 stall garage has grown to $117 million, already 29% above the previous estimate.
The price tag per stall is extreme. Each of these planned structures are on sites with existing surface parking. At Sumner, the cost is $160,000 for each of the 505 net new stalls. In Auburn, the 555 net new stalls will cost $216,000 each. Even these dizzy numbers pale in comparison to Kent station where Sound Transit plans to spend $278,000 for each of the 420 net new stalls.
On Wednesday, SDOT revealed bad news about the deteriorating West Seattle Bridge. The bridge now seems certain to remain closed through the end of 2021. It is not clear whether it can ever reopen to traffic. Any repairs are unlikely to yield more than another ten years of useful life. (The coverage of the technical issues by SCC Insight is recommended).
West Seattle will need a new road bridge no later than about the time Link light rail to West Seattle is scheduled to open. So while Seattle absorbs the budgetary impact of repairing and replacing its busiest arterial bridge, and West Seattle residents look forward to years of grinding traffic congestion, there may also be an opportunity to combine these projects and reduce the total cost of the new bridges across the Duwamish.
Local transit agencies are facing financial challenges as revenues from fares and sales taxes decline precipitously. Federal aid has mitigated the most immediate operational impacts, but the affordability of the ST3 expansion plan is now in question. Sound Transit on Thursday signaled it was looking at a re-prioritization of planned capital projects. Decisions on delays to ST3 rail and BRT extensions may come as early as this summer.
In the near term, Sound Transit is financially well-positioned to maintain operations. Recent reductions in service are a result of operator shortages at partner agencies rather than budgetary concerns. Those can be restored as the virus crisis heals and more staff return to work. Transit operations are just $370 million in a more than $3 billion budget for 2020. Fare revenues will fall far short of plan this year, but that’s just $100 million in a full year. The larger part of Sound Transit’s budget is capital for system expansion. A sudden recession threatens a tax revenue shortfall with cascading effects on agency debt leading to extended delays for most ST3 projects.
Bus Rapid Transit on I-405 and SR 522 is likely to be delayed. Only the Burien to Bellevue service is now expected to open on time in 2024. Expectations for service on the northern part of I-405 and SR 522 have slipped into 2025.
In Bothell, Sound Transit intends to open a bus base by 2023. The update to the Board flags some issues with permitting and right of way acquisition. If the base can open by 2023, however, that will open the way to an on-time start of service on south I-405 between Bellevue and Burien in 2024. Other construction on south I-405 is mostly being conducted as part of WSDOT’s expansion of express toll lanes in the area and is on schedule. Sound Transit is in final design for the in-line stop at NE 44th in Renton and was about to start construction before the COVID-19 delays intervened. Pre-construction work is underway at the planned transit center in South Renton.
This afternoon, the Sound Transit Board will consider participating in King County’s program to offer free transit passes to participants of several state benefit programs that are income-based. King County intends to eventually expand the program to all households with income below 80% of the federal poverty level. At the same meeting, the Board is expected to update fare enforcement policies and reduce penalties for non-payment.
Very low income transit passes
The free transit passes for very low income households complements the existing ORCA lift program. While the existing program offers 50% discounts for households with low incomes, the expanded program reduces to zero the cost of passes for the very lowest income households. In combination, this means a single person could have a free transit pass if their income is below $9,992, or a 50% discount with income up to $24,980. A four person household could avail themselves of free transit if their income is below $20,600 or a 50% discount with income below $51,500.
When first proposed by King County, the free transit passes looked set to cause some confusion because it could not be used across all local agencies. Riders could travel for free on King County Metro services, but would have to pay on Sound Transit. With Sound Transit now set to participate in the program, this inconsistency is resolved, but a new inconsistency arises unless Pierce and Snohomish County agencies also participate.
King County voters will not be asked to vote on a Metro funding measure in August after all. In a statement on Monday afternoon, Claudia Balducci announced the decision not to proceed with the countywide measure. This seems to clear the way for Seattle to run a replacement of the expiring taxes for their transportation benefit district in August.
Had the corona virus crisis not intervened, King County was expected to finalize a measure this month funding the service currently paid for by the Seattle TBD and increasing service elsewhere in the County by perhaps 450,000 hours annually (equivalent to just under 10% of total current Metro hours). The King County measure would also have funded a low income free fares program that is already scheduled to launch in June, and might have funded electrification at some bases.
The proposal had obvious challenges. Transit measures are risky with county voters even in a better environment. A loss at the ballot box in August would have meant existing Seattle taxes expiring in December, and it probably would not have been possible to run a replacement Seattle measure before the Spring. A November Seattle measure would have been awkward because it could only be filed before the day of the August election.
King County is contemplating a 0.2% sales tax increase that would replace the expiring Seattle TBD taxes and raise a total of $160 million annually for Metro. The package under discussion would extend the service hours funded by Seattle’s 2014 levy, currently about 350,000 hours annually in Seattle. It would add new funding for 450,000 to 550,000 hours elsewhere in the County.
The planned August 4 ballot measure must be filed by May 8. Effectively, the deadline for a King County decision is much sooner. Seattle is not yet on board and wants to see the County proposal this month so the city has time to deliberate whether to support the County measure or pursue their own. A series of meetings up through March 23 are scheduled to finalize the County’s proposal.
Metro is funded by a 0.9% countywide sales tax. Since 2014, this has been supplemented by a $60 vehicle license fee and 0.1% sales tax in Seattle. Those will expire at the end of December. I-976 removed the city’s authority for the vehicle license fee, but the tax continues to be collected while litigation is ongoing. With Seattle paying higher taxes than the suburbs, service became correspondingly more Seattle-centric. Suburban leaders want a countywide tax that extends the improvements in Seattle service levels since 2014 and ‘levels up’ the transit service outside the city.
Metro Connects is King County Metro’s long range plan. Developed in 2016, it lays out a 25 year vision for the evolution of the Metro network. The plan envisioned a 70% increase in Metro bus service hours by 2040 over 2015 levels. In recent months, Metro has been updating their analysis of how much the plan would cost to implement, and delivered an initial update to the Regional Transit Committee last week. The analysis has already identified billions of dollars in additional costs over the projection in 2016.
The Metro Connects plan was, by design, an unconstrained and unfunded vision of the future network to meet the needs of 2040. Baseline expectations for tax and fare revenue indicated enough funding for just 30% of the additional capital costs and 50% of the extra service hours originally identified. Early goals including RapidRide expansion have been scaled back. The initial plan was to open 13 new lines by 2024. In 2018, that was reduced to just 7 lines by 2027.
A report last June found Metro could reach its 2040 targets with a renewal of the Seattle Transportation Benefit District (about $54 million annually) and another $220 million in county funding. A county ballot proposition is being considered for this August, but it will likely be sized at no more than $160 million including replacement of the Seattle levy. That can only be a down payment toward the 2040 targets. Last week’s update to Metro Connects’ costs push those goals further out of reach.
Sound Transit’s System Expansion Committee unanimously approved a motion on Thursday to advance work on a Link station at NE 130th. If adopted by the full Board later this month, as seems likely, Sound Transit will proceed with design work and the first of the construction required to avoid serious disruptions to riders if the station were built entirely after Lynnwood Link has opened.
The motion defers to next year a second decision: whether to continue toward an early partial build or early full build. The early partial build would construct enough of the station to avoid an extended window of single-tracking trains through the construction zone after 2024, but would open the station for service much later. The early full build would complete the station so it could open in 2025 soon after the rest of the line.
The Sound Transit Board will reopen the decision, approved by the Board just two weeks ago, to rename the University Street Station in downtown Seattle as Union Street/Symphony station. The news came at the conclusion of Thursday’s Executive Committee meeting when Claudia Balducci announced that she would bring a motion for reconsideration to the next Board meeting.
Last month, you recall that we voted on the naming of the University St station. I wanted to just let you all know I’m going to bring a motion to reconsider that decision. I’ve come to believe Robert’s Rules of Order actually contain deep wisdom on the human condition. One of those rules says if you vote and you feel you have made a mistake, you get to ask for reconsideration. My decision on that was based on the tension between the rider experience and wayfinding, versus the safety impacts of how our system works with acronyms for stations. Since that vote I’ve visited that area. The doors are nowhere near Union St. And there’s been some reporting that showed we have acronyms like Angle Lake station. Do you know the acronym for Angle Lake station, colleagues? “200”, nothing to do with the name of the station. So we have that precedent already of that acronym. I think we should really revisit it and I’ll be asking that we do that at the next Board meeting.