Three Year Budget:
Attachment 1 is the budget for the three-year period from July 1, 2017 to June 30, 2020. Staff proposed several assumptions for the operating budget, which were reviewed by the Executive Committee in November 2016.
Generally, revenues for programs such as Service Authority for Freeways and Expressways and railroad leases are planned conservatively. Revenues are also planned conservatively for other projects such as rail; however, when managing the budget, staff time will be billed to project revenues and expenditures will be tightly controlled. Staff will also continue to look for new grants to fund staff time. Due to the passage of Measure X, (sales tax measure), in November 2016, revenues for administration and project/program activities have also been budgeted.
Revenue previously received by the Agency from the County and cities will be renamed from "Congestion Management Program" to "Regional Transportation Planning" Assessment. The contribution amounts from the member agencies will stay at the same dollar level as in prior years but will need to be paid from local funds.
The Transportation Agency continues to subsidize the activities of the Regional Impact Fee Agency. The budget is projecting to use $10,000 annually in fee revenue to pay for fee program operating expenses, although the annual cost to the Transportation Agency for this activity is much higher. Expenditures on regional fee activities are being tracked with the expectation that this cost will be repaid to the Transportation Agency as more fees are collected. Fees collected over the last 5 years were designated by Board action to be used for funding the construction of the US101/San Juan Road project.
A 3% cost of living allowance is proposed for fiscal year 17/18. Merit increases and promotions will continue to be available subject to performance. In order to seek ways to restrain rising health care costs, while still providing and protecting quality care, the Agency revised its cafeteria health benefit allowance for its active employees in FY 2011/12.The changes eliminated several variables that existed, permitted the Agency to better forecast its obligation under the cafeteria plan, and reduced the liability for future premium increases. Employees have the flexibility to choose from several plans that are offered by CalPERS. No change to the allowance is proposed in FY 17/18.
The Agency contribution to CalPERS pension costs in FY 2017/18 is projected to be slightly lower than last year as the Agency paid off its side-fund liability in December of 2013 and unfunded liability in June 2016. However, in order to receive Caltrans reimbursement, the Agency must now book its unfunded pension liablility over a 5-year period ($110,168/year). As a result, the budget reflects an overall increase in the pension contribution - this is a paper increase but not an actual increase in costs. More critically, CalPERS recently announced that the discount rate it assumes for investment returns will be lowered from 7.5% to 7.0% over three years. This change will translate into higher contributions by the Agency effective FY18/19. That said, the Public Employees’ Pension Reform Act of 2013 continues to help curtail the Agency’s costs in the future due to the establishment of a 2nd tier, 3 year averaging and required sharing of employee contributions with future new members. Agency employees started paying 1% of their member contributions effective FY 13/14, an additional 1.5% in FY 14/15 and an additional 1% in FY 15/16 for a total contribution of 3.5%. These contributions help cover increases in CalPERS retirement costs and have brought the member share by employees at the payment percentage recommended in the new pension reform law.
Due to the passage of Measure X, (sales tax measure), in November 2016, expenditures for administration and project/program management activities have also been budgeted.
Potential risks to the agency continue to include a reduction in federal and state planning funds and minimal new development and therefore reduced administration funds for the Regional Development Impact Fee Agency. No state funding other than Planning, Programming and Monitoring has been cut or proposed for cuts due to transportation funding safeguards, but staff will keep the Board advised. Should major revenue reductions occur, the agency would have to reevaluate its revenues, costs and mission to determine essential vs. discretionary activities. Billing specific projects for staff time, when possible, will continue to be a priority.
Projects and programs such as the traffic counts and some Complete Streets activities are funded from the Regional Surface Transportation Program. Caltrans audit repayment, Public Outreach, Wayfinding signage and State legislative costs are funded from the Agency's contingency reserve.
As a result of good fiscal management, the Agency has added to its reserve in the past years. As designated in its GASB 54 fund balance policy, the agency will continue to maintain a minimum of a six-month operating budget balance in its undesignated reserve. Also, as requested by the Executive Committee, any excess over the six-month level is designated as a “contingency” fund to cover short-term revenue shortfalls or unanticipated expenses. A portion of the undesignated contingency fund is forecast to be used in FY 17/18, 18/19 & 19/20 for Operating and Direct Program activities.
Annual Work Program:
The annual Agency Overall Work Program describes the activities to be accomplished during the fiscal year beginning July 1, and ending June 30. After the draft Overall Work Plan is approved by the Transportation Agency Board of Directors at the February 22 meeting, the draft plan will be submitted to Caltrans, for review and comment on the state-funded activities in the plan. Agency staff then incorporates comments from Caltrans, as well as comments received from the Transportation Agency Board, into to a final proposed Overall Work Program to be presented to the Board of Directors in May for adoption in conjunction with the final fiscal year 2017/18 budget.
Highlights of the Draft 2017/18 Overall Work Program include:
- Initiate Measure X implementation and administration.
- Pursue federal, state, and local matching funds for priority regional projects.
- Conduct evaluation of the funding and diversion impacts of tolling the Hwy 156 Corridor Improvement Project, based on the results of the Level 2 Traffic & Revenue study.
- Complete the right-of-way acquisition and final design of the Salinas Rail Extension Project.
- Complete the Monterey to Salinas State Route 68 Corridor Plan and identify financially feasible congestion relief and safety improvements as well as wildlife connectivity enhancements.
- Assist Caltrans and member agencies in securing funding and delivering regional transportation improvements.
- Conduct public outreach and education activities.
- Implement traveler information programs.
- Adopt the updated 2018 Regional Transportation Plan.
- Support local utilization of the Complete Street guidelines and implementing other components of the region’s Sustainable Communities Strategies.Fund bicycle racks and related hardware as part of the Bicycle Secure Program.Install signs for initial routes identified in the Regional Bicycle Wayfinding Plan.
- Continue to work with MST and Caltrans to evaluate the feasibility of operating buses on the shoulder of Highway 1 or construct a busway within the Monterey Peninsula Branch Line right-of-way.
The next steps in the process are to present the draft budget and Overall Work Program to the Board of Directors in February and in May to bring the final budget and Overall Work Program to the Executive Committee for review and the Board of Directors for adoption.