Sacramento Regional Transit chief Henry Li sat in his midtown office last week working on a major presentation he will make to his board next month about how to shore up the agency’s budget. Down the hall, an RT worker placed a bucket on the floor to catch water from a leak in the aging roof.
The moment was telling. Li is a glass-half-full guy heading a staff trying to fix a bucket-half-empty agency.
A few months ago, Sacramento Regional Transit enjoyed a moment in the sun. After years of financial struggles and meager ridership, RT found itself ferrying thousands of riders nightly to events at the new Golden 1 Center, many of them first-timers who said they found the experience surprisingly efficient and pleasant.
It wasn’t by chance. RT had hired cleaning crews to scour trains, brought two dozen fare checkers aboard to reduce freeloaders, and sent its executives to stations and downtown streets to guide newcomers, ultimately winning kudos from people who had condemned the transit agency two years ago as unprepared for the arena opening.
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The year didn’t end in triumph, though. In November, Sacramento County voters turned down Measure B, a transportation sales tax hike that would have infused RT’s budget with enough money to replace old buses and trains and begin adding back service that was severely cut during the recession. A few weeks later, an errant truck plowed through RT power equipment, knocking the last few stations on the popular Folsom line out of service for two months.
Now, after the ballot measure’s failure, Li and his staff are preparing for a “strategic vision” workshop Feb. 27 to discuss how to move the agency forward. The short-term goals, he said, are to keep the budget balanced, improve basic customer service, and to make RT run more efficiently internally.
The longer-term goals are to find new revenue that will allow the agency to replace old buses and train cars, expand and revamp service, and increase ridership by becoming a commuting choice for more people who have the option to drive.
In an interview last week at RT’s midtown Sacramento headquarters, Li put a good face on the agency’s prospects. “I’m very optimistic about our future,” he said. “The next two years, we are going to address standing issues, and we are going have a wonderful future.”
A year ago, before Li took over as RT general manager, the agency had dipped into its reserve account several years in a row to balance its budget and was months from zeroing out that account.
The agency took several urgent steps to stabilize itself. It increased fares over customer objections. It also cut costs, including eliminating 25 administrative positions, and initiated operational changes, such as adding fare checkers. Since then, RT has been able to increase its emergency account to $3 million, though that is still anemic. Halfway through the fiscal year, the agency’s $162 million operating budget is $2 million in the black.
But RT bus and rail fares remain among the highest nationally. Ridership numbers dropped in the past year, even though farebox revenues increased. Li said a ridership dip after a fare increase is natural, and that the agency expects ridership increases this year.
Folsom Councilman Andy Morin, the chairman of the RT board, said the agency’s policy is to at least consider small fare increases every two years. But, he said, board members at this point are “very reluctant” to increase fares again anytime soon. Nor do they want to reduce service.
The way forward is tricky. Transit agencies nationally face competition from rideshare companies like Uber and Lyft, and lower fares are among the main way mass transit can hold its own. RT has signed agreements with several rideshare companies to cooperate by offering vouchers for riders who take rideshare to and from some light-rail stations.
Mass transit also faces uncertainty in Washington, D.C., where the Trump administration has yet to clearly state a federal outlook on transportation funding. The U.S. Department of Transportation and the White House did not respond to Sacramento Bee questions last week about the administration’s transportation spending goals. Local transit officials say they do not know how a Republican administration and Congress will view funding to support and expand buses, light rail, streetcars and other non-car transportation modes.
RT’s financial problems could get worse. Despite cutting costs enough to turn its balance sheet positive this year, the agency two years from now could run into an annual shortfall of $3.6 million on debt payments, because it will be losing temporary federal funds for congestion mitigation and air quality relief.
Li said the agency is talking with the bus drivers’ union, the Amalgamated Transit Union, about helping out, but he said it is too early to discuss details. RT has signed contracts with two advertising agencies to sell ads on the sides of trains and buses, and to sell the naming rights to some transit stations. That could, if successful, bring in more than a million dollars a year in new revenue.
ATU chief Ralph Niz declined comment, other than saying he is optimistic the agency and union will agree on a fair contract.
The big question is whether Sacramento County is willing to try asking voters again in 2018 for a sales tax increase to supplement local transportation funding. Most of the money would go toward fixing or expanding streets, but a chunk would go to RT. Li said the agency would likely use some of the money to address its most pressing capital need – replacing dozens of light-rail cars that have reached the end of their lifespans.
If it doesn’t get extra money, RT can continue to use those light-rail vehicles but would expect to run into more maintenance costs to keep them running. That could mean fewer train cars on the line during peak times.
“That is the dilemma,” Li said. “If you spend more money on repairs, you have less money to run (service).”
Li said he wants to see the county try the sales tax vote again in 2018. Measure B was not unpopular; it won 66 percent of the vote in November. But under state rules, it needed 67 percent to win. To succeed in a second try, proponents say they will need to do a better job of explaining the measure’s merits to voters.
The Sacramento Transportation Authority board, which includes some RT board members, will at its March meeting discuss the possibility of trying again in 2018. The STA is the countywide entity that would put the transportation sales tax spending program together.
RT board chief Andy Morin said he believes the transit agency has done well in recent months in showing potential voters and regional leaders that it is managing its business better than it has in the past. But, he said, the agency needs to do more to prove it is worthy of a sales tax increase.
“What is really important is we continue to build trust in the region in our ability to operate the best we can with what we have, to show folks we are going to be diligent stewards of whatever budget we have,” Morin said.
At the late February board workshop, Li said, he will present differing scenarios of what the agency can do to right itself depending on whether a sales tax measure succeeds in 2018.
At the moment, Li said, he is not envisioning any expansion of bus or rail lines in the next two years. Service expansion will come in time, he said, when revenues increase.
Despite financial concerns, there is a sense of optimism at RT that hasn’t existed since the recession hit, several staff members said. The agency estimates it is carrying about 10 percent of fans to Kings games and concerts at the downtown arena, more than expected. Ridership was up as well during downtown holiday events.
Last week, during the Women’s March on Sacramento, RT was initially overwhelmed by the numbers of participants who chose to use light rail to get downtown. It led to a few complaints from people who couldn’t get on packed trains.
But RT officials, who scrambled to get more trains on the lines that morning, say they see the silver lining. Light rail is showing signs of relevancy. At the State of the Downtown event last week, downtown leaders asked Li to stand for some applause.
“The community is fair,” Li said. “They are reasonable. If you do a good job, they recognize you. It is going to inspire us to do more.”
That includes, he said, finding money to fix the roof.