Transit Talk with the General Manager

February 05, 2010
Mike Wiley, General Manager/CEO
General Transit Questions
Opening Remarks:
Today's session of Transit Talk with the General Manager will begin at noon. Don't forget that we begin taking questions at 10 a.m. through the end of the session at 1 p.m. Log on early to make sure your question is answered.

Comments from Mike Wiley: 

With all of the recent media coverage, you are probably aware that RT is currently facing the worst budget crisis in its history. Last Friday, RT issued a press release outlining our budget deficit and how we've arrived at this point, along with steps being taken to address the budget shortfall.

Below, please find an excerpt from the release for your review. I will address your questions on the budget crisis and other transit related issues during today's session. Let's get started.

"As RT rebounds from bus service reductions and fare increases implemented in 2009, the state's complete elimination of State Transit Assistance funds, and declining state and local sales tax revenues continue to significantly impact RT's operating budget.

RT ridership and fare revenue have been adversely affected by the downturn in the economy, state furloughs and high unemployment. Fare revenue is now projected to be approximately $7 million below budget and sales tax based revenues dedicated to transit continue to decline.

State sales tax revenue, which experienced a decline this past summer of 8.8 percent, will be further reduced by 10 percent in mid-February, for a total reduction of 18.8 percent for Fiscal Year 2010, and is expected to further decline by 19.8 percent in Fiscal Year 2011. In addition, Measure A local sales tax revenue is expected to experience similar reductions for Fiscal Year 2010 and 2011.

These factors combined have created an approximately $16 million budget shortfall for this fiscal year. Despite recent service reductions, fare increases in January 2009 and September 2009, a hiring freeze, freezing employee pay, implementing employee furloughs, and a number of other cost-cutting measures, RT is now faced with an unanticipated budget deficit that must be resolved by June 30, 2010. RT must also develop a long term plan to address the expected further decline in revenue in Fiscal Year 2011.

Further compounding RT's current budget situation is the recent announcement by the Governor of his intention to permanently eliminate State Transit Assistance funds. With no immediate resolution to restore state funding to transit agencies, the Federal Transit Administration has denied RT's request to advance the South Line Phase 2 light rail extension and start construction in spring 2010. This action will delay the 4.3-mile project, increase construction costs, and jeopardize approximately 1,440 direct and 2,385 indirect and induced new jobs in the Sacramento region.

RT will be forced to drastically reduce the level of bus and light rail service, and lay off a high percentage of employees throughout the agency. RT staff is working to identify options to address this significant budget shortfall with the goal of maintaining as much service to the public as possible.

Without a reliable, steady source of funding for transit, RT and agencies across the state will be forced to cut vital services that are desperately needed by our communities. The Governor's reluctance to restore illegally raided funds is certain to have a devastating and long-lasting impact on RT riders, employees and the region.

RT staff will present a budget update and recommendations at the RT Board of Directors meeting on Monday, February 22, 2010, at 6 p.m. in the RT Auditorium located at 1400 29th Street (at N Street)."

Sacramento, CA:  Will Green Line affect 88 Service? What will be the hours of the Green Line? Will Green Line service new Greyhound Station? I like RT, but there was no service to meeting. 11 schedule is really weak considering the ridership. I have to bicycle home from ARC Natomas Center even when it's raining.

Reply:  The Green Line should not affect the 88 service directly, though we should be reorganizing services along the alignment in preparation for its opening date. We are planning to do a corridor analysis to determine just that over the next year or so. The Green Line should operate from 5:00 am to Midnight, much as the rest of the light rail, and the Sequoia Pacific station will be ideally located to serve the new Greyhound station. There is some likelihood that people will walk from the Township 9 station (opening a year from now) before the Green Line extension goes any further. As with the 88, the Route 11 service will be reorganized and enhanced in anticipation of the Green Line extension. Recent budget woes have prevented these improvements from being considered at present.

CA:  how do you justify lightrail expansion when your operating funds are in disaray. Why cant money be redirected from your expansion program which will cost millions to sure up your operating cost

Reply:  All of the funding we have available for our capital program are resources that can only be spent in that manner. We are not using any funding for the capital program that could otherwise be spent on our operating budget. In fact, over the past three to four years we have completely updated our capital program and shifted all of our flexible funding from capital expenditures to our operating budget.

Sacramento, CA:  Will your books be opened so that customers can see what these harsh increases in fare are really doing to help the problems at rt

Reply:  Our financial reports are posted on our website at: Some of the reports included at this site include the current year budget and prior year audited financial statements. In addition to the reports stated above, we provide unaudited monthly financial reports at The monthly financial reports can provide some insight as to how much fare revenues we are receiving.

Sacramento, CA:  What types are service cuts are being considered?

Reply:  We are facing very tough budgeting challenges, not only for 2010, but also for 2011. Our preliminary indications are that we need to achieve at least a $36 million reduction between now and June 30, 2011. That is the basis of our service reduction target. We are currently working on additional internal cost reductions in an effort to minimize the service reductions. After we reach our targeted cost savings from other operations and support activities, we will have a better sense of how much of the remaining savings to achieve from service reductions. RT has implemented many internal cost reduction measures over the past 30 months that have saved millions of dollars. The next level of reductions will be much more severe. At this point we will likely propose service reductions of up to 30%.

Sacramento, CA:  Have you considered lowering fares to increase ridership?

Reply:  We are looking at various ways to increase ridership, however when doing this we also have to consider how these decisions could impact our revenue stream. Currently, the fare revenue we receive from our customers only accounts for 25% of our operating cost. While reducing fares may increase ridership it will not increase it enough to make up for the loss of revenue. That being said, we are not anticipating a fare reduction.

sacramento, CA:  when i was in las vegas i notice all the buses run on the street has full bus wrap in advertisement. but here in sacramento the ads are much more smaller. can you generate more revenue by selling bigger space? i remember one of the board members do not like the bigger wraps but time are different profits are more important at this point.

Reply:  Last year RT staff had extensive discussions with the firm that sells our exterior bus advertising. They were asked about adding larger bus wraps to create additional revenue. The results were presented to the RT Board and they approved some larger adds on RT's vehicles. We have done everything we can to increase advertising revenue. However, the Sacramento advertising market isn't as lucrative as Las Vegas'.

Sacramento, CA:  I ride the light rail from Watt Manlove at least three days a week and always notice the guard sitting in her car instead of standing at the station in the morning hours. I think a more visable presence would help with security, not to mention people doing the job they're paid for.

Reply:  We will check into the situation you noted and take appropriate actions. Thank you for this information. Our goal is to have the Security Guards monitoring the stations and park-and-ride lots.

elk grove, CA:  is there any chance the RT will get bus service back from city of Elk Grove?

Reply:  The City of Elk Grove opened its service to competition last year and RT was one of the bidders. As it happened, Elk Grove chose another firm to operate the service. It is unlikely that RT will provide service to Elk Grove during the term of the agreement that Elk Grove has with a private provider.

Sacramento, CA:  From the News and Review: "Currently, Californians pay a 6 percent sales tax on gasoline, plus an 18 cents per gallon excise tax. By mandate, the sales tax from gasoline funds the state’s Public Transportation Account and is also used to calculate school funding required by Proposition 98. Schwarzenegger proposes to eliminate the sales tax and increase the excise to 28.8 cents per gallon, which would then go directly into the state’s general fund. The switch would grant a $1 billion tax cut to automobile drivers, since overall, they’d be paying less tax per gallon. At the same time, it would effectively eliminate all state funding for public transportation" Is this legal? Can the governor really undercut the vote of the people so easily?

Reply:  I'm glad you asked. The Govenor's proposal will effectively permanently eliminate state funding of public transit. The Govenor's proposal is in retaliation to the successful lawsuit by the California Transit Association (CTA). If the state was currently complying with the will of the people and with the Supreme Court of California, RT would be receiving an additional $26 million this year and next, and we would be able to avoid the drastic measures we are now considering. While the eligible uses for the excise tax are dictated by the California State Constitution, Article 19, the fact remains that the sales tax was approved by the citizens of California.

Sacramento, CA:  With all of RT's budget struggles, is bankruptcy a possibility? What happens then?

Reply:  As with so many public agencies in California today struggling with deep cuts in revenue, RT is looking at all potential outcomes and bankruptcy is one of them. As you may recall, a significant portion of these issues are the result of the Governor's raid on the STA funds and recent news of decreases in sales tax revenues designate for RT's operations. To make sure bankruptcy does not occur, RT is developing an 18 month recovery budget that will provide a game plan for the foreseeable future to get past the worst possible outcome, which could be bankruptcy. RT is facing this challenge head on by presenting an 18 month recovery plan to the Board on February 22nd. With a strong recovery plan in place, RT should be able to weather the storm.

Sacramento, CA:  Wasn't there a lawsuit that determined that the governor had to pay back a portion of the money he raided from transit funding? Please clarify the basics and outcome of that lawsuit. Where's the money?

Reply:  That's a great question. You're absolutely right. The State Supreme Court ruled against the state's taking of the transit funding, and returned the case to the Superior Court, which directed that the State had to return the funds to transit operators statewide. However, the Governor and the legislature still have to act to direct the money to transit, and that has not happened. As it turns out, the money was collected (from sales taxes on gasoline and diesel) and is sitting in an account. The Governor is still looking for ways to use that money to repair part of the State budget, rather than returning it to transit.

Sacramento, CA:  Can you please elaborate on this: "Meanwhile, Wiley is pressing forward. Despite the tough economic times, he’s working on a proposal that would raise Sacramento County’s sales tax rate in order to pay for a dramatic expansion of the Regional Transit system. The board of supervisors has until August to consider placing any measure on the November ballot." What would this mean for the current layoff and service cut situation?

Reply:  Thank you for asking. The objective of a ballot measure is to provide a dedicated, stable and secure revenue source for transit service in the Sacramento area, and allow RT to begin implementing the TransitAction Plan, that was adopted by the RT Board in 2009. A new ballot initiative would also mitigate the current layoff and service reduction plans.

Sacramento, CA:  When will RT pull in the reins on the Los Rios pass fraud? I wonder how much fare revenue is being lost to this phenomenon...

Reply:  RT is working directly with Los Rios and our own transit officers to determine if there are various ways to reduce the potential for fraud. In many cases, we are not seeing fraud, rather we are seeing an increase the number of Los Rios passes used. As such, RT recently implemented a program for tracking the number of individuals that display the Los Rios pass when boarding a bus. We believe this information and information received from other transit operators will show significant increases in Los Rios pass usage. This information will then be provided to Los Rios to determine if contractual issues are sufficient to re-open the contract for public discussion.

Sacramento, CA:  What is the status of RT's SILO LILO deal? How will it affect RT's ability to operate in the future?

Reply:  RT's SILO deals are stable. RT continues to insure that the contracted SILO/LILO payments are made. Through a cooperative relationship with its equity investor, RT has no immediate threat of early termination on its leveraged lease transactions. Unless an early termination is invoked, RT operations will remain unaffected by the SILO LILO issues outstanding.

Citrus Heights, CA:  Where/how can we find the petition against the gas pump tax swap proposed by Gov. Arnold Schwarzenegger?

Reply:  Without suggesting you should sign or not sign a petition, the California Transit Association is one of the sponsors of this initiative. Their website is

Natomas, CA:  What can be done to expedite Green Line to Natomas. Someone needs to tell me, what as a individual I can do. What about a section on your website, "How you can help !!".

Reply:  RT is currently in the design/build phase for Green Line to the River District (or phase 1 of the entire line) The 1.1 mile extension to the River District (7th and Richards) is scheduled to start operation in January 2011. In addition, RT is in a charrette planning process for the Green Line to the Airport (phase 2). During this process we are gathering as much input from residents as possible to properly integrate light rail into the community. What you can do is stay involved by attending the next Green Line Phase 2 meeting (check the web site) and encourage your friends to get involved as well. And, thank you for your idea of a "How you can help!" section. We'll look into adding that to the Web site. You can help expedite the entire project by getting involved and advocating for more local funding for transit!

Sacramento, CA:  I just found the answer to my question: In 2007, the California Transportation Association—a coalition of local transit agencies like RT—sued the state, saying the repeated raids on transit funds were illegal under rules set by Proposition 42 and other transportation funding measures passed by voters over the past 10 years. The court agreed, and last year ordered the state to pay back $1.2 billion. None of it has been paid back yet, and transit advocates say it probably never will be if the governor’s gas tax scheme becomes law.

Reply:  Your article is mostly correct, but I would suggest one alternative interpretation. The $1.2 billion exists. It was collected at a time when the voter-approved gas tax was in place. Thus, the Governor and the legislature would have to retroactively change the character of that funding in order to use it as they want to. That is even more difficult to accomplish than the illegal conversion of a voter-approved sales tax into a State-controlled excise tax.

Sacramento, CA:  After reading the latest news on RT's budget struggles, My wife (An RT employee) and I, brainstormed several hours and came up with these useful ideas and theories that may help RT through these difficult times. 1. Lease busses out for convention charter,( i.e. San Antonio,Tx RT) They receive revenue from the Chamber of Commerce's Budget. 2. Offer 2 for 1 advertising rates on busses and trains. 3. Post advertising space on top of RT roof. Current adverting rates for such space (I.e San Francisco) run $5,000 to $20,000 per month. 4. Sell real estate properties owned that are a liability. 5. Open vacant lots for vendor sales and charge for spaces (I.E Denios) 6. Lease Theme Busses to Apple,Disney,Southwest Airlines, At&T&T, Verizon etc. Each bus will be outfitted by the sponsor. Who would not want to ride on a Disney bus? 6. Auction old busses or sell for scrap 7. Create your own Hydrogen for busses instead of buying. Use hydrogen in your bus tires the mileage savings will be instantaneous and can be tracked weekly. 8 Re -negotiate labor contracts. 9. Re -negotiate office supply contracts and leases (i.e Copiers,papers) 10.Go Public ( American stock exchange) This revenue can bring in a modest 1-Billion Dollars as an initial public offering. 11.Go outside of normal funding sources (I.E Saudi Arabia) I am sorry these are not questions, but I am sure solutions are needed instead of questions. Please consider these ideas as our way of helping RT during these challenging times and our way of saying that we care. Pastor Tom B.(I.Q 180) White House Crises Team 1984-91

Reply:  Thank you for your ideas. We will add this to our list of ideas on how to increase revenues and reduce costs.

Sacramento, CA:  Will Paratransit be required to absorb some of the burden of this budget crisis? If RT has to cut 30% of service and sustain administrative and operational layoffs, does it follow that Paratransit will have to do the same?

Reply:  RT currently contracts with Paratransit, Inc. for the provision of ADA Paratransit service. This is a complementary service to our fixed route service. When we reduce bus and light rail service we will reduce our complementary paratransit service.

So Natomas, CA:  Won't the fare increases at some point actually begin to lower total revenues as more people decide not to take the bus?

Reply:  Yes, and this is a delicate balance all transit agencies must measure when increasing fares. What typically happens after the first couple months of a fare increase is a leveling off of sorts. Although some riders may discontinue riding, most continue to ride. RT has only increased fares when absolutely necessary and a fare increase is not proposed in the near future.

Sacramento, CA:  Will bus and trolley service ever be expanded in areas that have very poor parking such as parts of midtown so people will not have to take long walks from light rail stations?

Reply:  RT's TransitAction Plan includes the details covering expansion plans for the next three decades. It shows light rail, streetcar and bus service changes throughout our system. The plan creates the connectivity between modes throughout the region including midtown. As always, funding is required to make the improvements proposed in the TransitAction Plan.

So Natomas, CA:  What do you mean about people being able to walk from the Township 9 Station? Is that the bike lane that is supposed to be adjacent to the Green Line over the American River?

Reply:  My apologies for the vague answer. The Township 9 station will be on Richards Boulevard, between 5th and 7th streets. Since the new Greyhound station will be at 4th Street, it seemed logical that some people would walk a block or so from Township 9 to Greyhound, when that terminal opens for service.

From Facebook, CA:  Has there ever been plans for shelters to be built at the Folsom bound Light rail stop at 8th and O Streets? It seems to be the only major stop without protection from rain, sun and wind.

Reply:  We have a number of stops in downtown Sacramento where light rail operates in the city's right of way. These stops have very limited amenities K Street and 8th & O Street are examples. 16th Street, 13th Street and 12th & I Street are going to be remodeled this year. These stations will have improved or new shelters as part of the remodeling. We continue to look at the older stations where improvements are needed and budget those improvements as funding allows.

Sacramento, CA:  In the interest of disclosure: What are the total cash gross receipts, the total investments from all operations, and the total net worth of all the operations of Sac RT? (All of them please, not just those "available" to use.) What has been the growth over 5, 10, 15, 20, 25 years?

Reply:  RT posts it's audited financial results at the following location: In respect's to total gross cash receipts, page 61 of our FY09 Comprehensive Annual Report breakdown our fare revenues for the past 8 years. For FY09, RT's farebox revenues (which is cash collected from the bus and light rail FVM's) amounted to approximately $8.8M. As you will find, the majority of RT's fare revenues have come from outlet sales (sales to various state agencies, not for profits and companies). When looking at investment income, you will need to also look at interest expense. Since RT entered into a SILO/LILO arrangement, the majority of the interest income is offset by interest expense paid for the transaction, thereby leaving the District with less than $300K of interest income to be used for operations.

Sacramento, CA:  Can you tell me how the makeup of the RT Board was determined? I see from your website that the RT Board has four Sacramento City Council members, three members from the County Board of Supervisors, and one person from the City Council of each of the other four cities. I ask because the advisory committee I work with has been trying to find an acceptable formula for representation on a solid waste authority board; i.e., how many board members each jurisdiction should have.

Reply:  Each of the municipalities we serve are apportioned a share of a 100 votes, based primarily upon their funding contributions to the transit district. Those votes are divided among the members appointed by that jurisdiction. As an example, the city of Sacramento contributes 36 percent of the local funds for RT. They appoint four members, who each have nine shares to vote.

rancho Cordova, CA:  I ride the 30 in the afternoons to amtrack. There is one driver who is always early at 14th & L. They are not suppose to leave 29th & L until 3:50. I am at the 14th & L street stop by the community center at 3:50 and I have had them pass us by or have already come & gone. This causes me to have to take a later train. Plus the 21 only runs every half hour. It ends up taking me 2 hours to get home some nights. Is there some way to ensure that these drivers stick to the schedules?

Reply:  I've forwarded your complaint to our Customer Advocacy team. They will work with operations to insure that the drivers are not running hot (early) from the 29th and L stop.

sacramento, CA:  I like your idea of charging for parking at RT Stations, but it's probably bad timing. Have you considered free parking for riders who buy monthly passes? Maybe have a transperant sticker on the monthly pass that can be removed and attached to the dash or inside windshield?

Reply:  Charging for parking at Light Rail Park and Ride Lots was one of the many ideas floated to help fill our budget gap. The board choose to authorize a pilot program as a way to measure how well this would be executed and the impact on ridership. We considered a bundled monthly pay and parking pass. Because we are only doing a pilot, this option was tabled for consideration at a later date should we expand the program.

Roseville, CA:  Are you in charge of Roseville transit. I tried to utilize Roseville transit, but it shows up late then the schedule time or it doesn't show up at all. If you could address this issue, I would appreciate. Thanks,

Reply:  No, Roseville Transit is a separate transit provider operated by the city of Roseville. As a courtesy, we list their information in the RT Bus and Light Rail Timetable book. You may want to check the RT book for the phone number and call the customer service line for an answer to your question. Their operations manager is Mike Wixon.

Sacramento, CA:  Is RT offering any free LT services during free museum day tomorrow, February 6?

Reply:  No. With all of the budget pressures, RT cannot afford to offer any free service.

Sacramento, CA:  RE: Lawsuit question... Is there any recourse to force the Governor to return the funds? He's ignoring a direct order from the Supreme and Superior courts. Why is he being allowed to hold the funds and defy the court?

Reply:  The courts move at their own pace. The CTA's lawyers are working with the courts to seek resolution. On the other hand, the state's attorneys are working to avoid returning the funds that were illegally raided by the Governor.

sacramento, CA:  I'm wondering what bus / light rail service cuts you will have to make?

Reply:  We are looking at a wide variety of service reductions, but are trying to identify internal cost savings before we determine the extent to which we will need to reduce transit service.

Sacramento, CA:  What is SILO LILO? The question and response below make no sense out of context... thanks.

Reply:  The abbreviation for SILO/LILO is Sale in Lease out/Lease in Lease out. Essentially, these transactions occur when an agency enters into a headlease with an equity investor in which the agency leases vehicles or equipment to the investor and the equity investor simultaneously subleases the vehicles or equipment back to the agencies. This type of arrangement allowed the equity investor to receive future tax benefits. These benefits are estimated and then shared with the agencies and equity investor.

Comments from Mike Wiley: 

Thank you for your participation today. Due to the unusually high volume of questions, we were unable to get to many of your inquires. Please check back next month when we may be able to revisit past questions. Our next session will be held on March 5, the first Friday of the month.