RECOMMEND that the Board APPROVE Resolution 2017-15 adopting the fiscal year 17/18 budget and overall work program and estimated budgets for fiscal years 18/19 and 19/20.

The resolution approves the final budget and overall work program for fiscal year 17/18, including federal, state and local grant authorizations and certifications, and out year budgets for fiscal years 18/19 and 19/20.  At its February adoption of the draft budget, the Board did not have any suggested changes for the final budget. This version makes changes to reflect the latest information on revenues and expenditures.

The Agency budget separates expenditures into two types: operating and direct program. Operating expenditures include staff salaries and benefits, materials and supplies, and equipment purchases.  Direct program expenditures include outside consultants, contracts, expenditures that apply to specific overall work program tasks such as rail program, highway projects, bicycle and pedestrian program etc.

The Transportation Agency for Monterey County gets majority of its funding from state or federal sources. The funding is usually specific to the project or program for which it is granted and cannot be used to cover expenditures of a different project or program, e.g. the funding received for the call box program can only be used for motorist aid programs.

The proposed fiscal year operating expenditure budget is $2,913,914, a net increase over fiscal year 2016/17 of $297,176.

The proposed fiscal year direct program expenditure budget is $21,487,765, a net increase over fiscal year 2016/17 of $6,661,970.

Three Year Budget: Changes since the Board reviewed the draft budget on

February 22, 2017 are:

Operating Budget                  February Draft                     May Final       Difference

Revenue & Expenditures        $2,842,024                              $2,913,914      + $71,890

Revenues changed due to:

1.      Measure X Projects/Program funds increased by $145,000.

2.      Pajaro to Prunedale Corridor Study funds increased by $38,336.

3.      SR 218 Corridor Improvement Plan funds increased by $30,500.

4.      Reserve usage decreased by $141,946.

Expenditures changed due to:

1.      Change from a Junior Planner to an Engineer staff position increase by $105,389.

2.      Materials & Services increased by $1,500 for GASB 68 actuarial valuation.

3.      Materials & Services decreased by $35,000 due to cost being shifted to Direct Programs.

Direct Programs                    February Draft                     May Final       Difference

Revenue & Expenditures        $21,145,861                            $21,487,765    + $341,904

Revenues changed due to:

1.      Measure X –Other Direct Costs increased by $123,500.

2.      Regional Surface Transportation Program funds increased by $2,040.

3.      Freeway Service Patrol fund increased by $18,000.

4.      Regional Surface Transportation Program funds decreased by $10,000.

5.      SAFE funding increased by $20,000.

6.      Pajaro to Prunedale funds increased by $121,464.

7.      SR 218 Corridor Improvement Plan funds increased by $66,900.

Expenditures changed due to:

1.      Measure X –Other Direct Costs added by $123,500.

2.      Traffic Counts contract cost increased by $2,040.

3.      Freeway Service Patrol contract cost increased by $18,000.

4.      511/Rideshare marketing & branding increased by $10,000.

5.      Pajaro to Prunedale expenditures increased by $121,464.

6.      SR 218 Corridor Improvement Plan expenditures increased by $66,900.

Due to the passage of Measure X in November 2016, expenditures for administration and Program and Project Management activities have also been budgeted. It is possible that expenses for the administration of the sales tax measure will exceed the 1% allowed for salaries and benefits in the first year, so non-Measure X funds are also budgeted. Also, since overhead costs are not permitted to be recovered from Measure X, it is proposed that the Agency’s undesignated reserve be used to cover overages and unallowable expenses. Additionally, there will be other direct (non-salary /benefits) expenditures, such as consultant and legal costs, which the Agency proposes to utilize the sales tax revenues to cover off the top, prior to distributing to the other Measure X subaccounts.

As a result of good fiscal management, the agency has added to its undesignated 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.

Potential risks to the agency continue to include a reduction in federal, state or planning funds and minimal new development and therefore reduced funds for the Regional Development Impact Fee Agency. No state funding 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 will need 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 priority.

Benefit and salary changes are set forth in the resolution. Also, the authority for out-of state travel trips is outlined in the resolution.

Annual Work Program:

The Transportation Agency received notice in April that it is being awarded two new grants to conduct corridor planning studies in Seaside and Sand City along Highway 218 and between Pajaro and Prundale on the G12 corridor.  Two new work elements are added to the final version of the overall work program reflecting these grant awards.  The remainder of the final overall work program contains minor changes made in response to comments by Caltrans. These edits effectively have very little change to the 2017/18 work program the Executive Committee and Board reviewed in February. 

Highlights of the 2017/18 overall work program include:

• Initiate two newly-funded corridor planning studies to develop a set of proposed improvements:  a) Pajaro to Prunedale (G12) corridor, and b) the Highway 218 Canyon Del Rey Boulevard corridor.
• Conduct Measure X administration and project/program delivery activities.
• Continue to pursue federal, state, and local capital and operating funding.
• Assist Caltrans and member agencies in securing funding and delivering transportation improvements.
• Continue public outreach and education activities.
• Implement 511 traveler information program.

• Adopt the 2018 Regional Transportation Plan update.
• Take the next steps to improve the Highway 156 corridor based on the results of the Level 2 Traffic & Revenue study evaluating funding and diversion impacts of tolling.
• 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. 
• Complete the Monterey to Salinas State Route 68 Corridor Plan to identify financially feasible operational improvements and wildlife connectivity enhancements.
• Complete the right-of-way acquisition and final design phase for the Salinas Rail Extension Project.
• 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.

NEXT STEPS:

On May 24, 2017, the Board will be asked to approve the budget and overall work program, in accord with Agency Bylaws requiring the annual budget be approved no later than the Board May meeting.