June 25, 2004


Golden Gate Bridge, Highway and Transportation District
Board of Directors
Continue Reducing Budget Shortfall

FY 2005 Budget Adopted


On Friday, June 25, 2004, the Golden Gate Bridge, Highway and Transportation District (District) Board of Directors (Board) adopted its Fiscal Year (FY) 2005 budget with an operating budget of $142.4 million and a capital budget of $63.4 million.

The $142.4 million FY 2005 operating budget is 0.3% less than the $142.8 million budget adopted for FY 2004. While many cost reduction and revenue enhancing strategies have been implemented in FY 2002, 2003 and 2004 (see examples on page 2) aimed at bringing budget deficits into balance, the FY 2005 budget reflects both these cost reduction strategies and offsetting cost increases for items such as health insurance, fuel costs, insurance, and labor.

The FY 2005 budget includes three essential actions taken by the Board over the last few months to reduce the $131 million projected fiveyear shortfall:

1. On July 1, 2004, Golden Gate Transit bus and Golden Gate Ferry transit fares will be increased by 10% to generate approximately $6 million in additional revenue over the next five years.
2. On July 1, 2004, new and more cost effective Golden Gate Ferry schedules will take effect and 10 positions (1 vessel master and 9 deckhands) will be eliminated saving about $7.4 million over the next five years.
3. A phased reduction in force resulting in another 21 positions being eliminated will save approximately $7.4 million over the coming five years.

The $131 million five-year shortfall is based on projections made in January 2004 for FY 2005 through FY 2009 and will be revised in September 2004 when new projections are calculated based on budget assumptions for FY 2006 through FY 2010.

ADDITIONAL BACKGROUND
The Districts bridge, bus and ferry operations are funded with just four funding sources: (1) Golden Gate Bridge tolls, (2) Golden Gate Bus and Ferry transit fares, (3) limited government grants, and (4) revenues from sources such as advertising and concessions.

Total District Operating Budget for FY2005, ending June 30, 2005 is $142.4 million and will be funded: $83.8 million from tolls (59%); $7.4 million from toll reserves (5%); $21.2 million from fares (15%); $23.3 from grants (16%), $6.7 million from sources such as concessions, advertising (5%).
Transit Only Operating Budget for FY05 is $88.5 million and will be funded: $34.6 million from tolls (39%); $7.4 million from toll reserves (9%); $21.2 million from fares (24%); $23.3 million from grants (26%); $2 million from sources such as concessions, advertising (2%).

Actions Taken in FY 02, 03, 04 to Reduce 5-Year Shortfall from $454 to $131 million, a 71% Reduction


Cost Reduction Strategies
1. Implemented a hiring freeze in FY 2002 that remains in effect.
2. Reduced staff by 169 positions in FY 2003 and FY 2004.
3. Provided no salary increases for two years for 2/3 of all employees.
2. Implemented bus service reductions in March and November 2003.
3. Negotiated medical cost containment.
4. Board members cut annual meeting expenditures by half and retained their maximum earning potential of only $5,000 each year.
5. The District has also pursued regional partnerships to achieve savings. These include consolidating backroom financial operations for FasTrak with Caltrans and joining the Translink consortium that allows for seamless electronic transit fare collection throughout the Bay Area.

Revenue Enhancement Strategies:
1. Raised tolls from $3 to $4 for FasTrak and $3 to $5 cash on September 1, 2002.
2. Increased Bus and Ferry fares on July 1, 2003 and 2003.
3. Instituted expanded paid-parking program and voluntary Bridge access fee donations.
4. Initiated efforts to increase Bridge Gift Center sales through implementing an online gift store and developing an Annual Holiday Ornament Program.

Why a $131 million five-year shortfall?
Financial projections calculated in January 2004 for the five-year period, FY 2005 through FY 2009, resulted in an estimated five-year shortfall of $131 million. This shortfall is due to a combination of economic factors. In the period leading up to this problem, the Bridge toll remained at $3 for 11 years, transit fares were raised in small annual increments, and costs were climbing slowly. In 2001, many things changed. With the economic recession, traffic and ridership fell sharply and at the same time, costs rose at an exceptionally higher rate, and revenues decreased due to the lower ridership and traffic. Costs are continuing to rise for items including security, insurance, benefits, and workers compensation. The cost of fringe benefits (medical, retirement, etc.) increased about 20% and cost of Insurance increased by about 70%. These factors coupled with the necessity to now perform more than $330 million of improvements on the 66-year Bridge and the continued downturn in traffic and ridership, bring us to this difficult financial crisis. Bridge projects needed now include Seismic Retrofit Phase III, Main Cable Recoating, Fort Point Arch paint rehabilitation, Floorbeam Rehabilitation.

Transit Ridership Trends: Transit ridership is now beginning to show signs of recovery in select markets, specifically ferry ridership and local Marin bus service. Compared to FY00 and FY 01, FY02 ridership declined sharply. The November 2003, bus service reductions of 22% of service hours did resulted in decreased bus ridership and the reductions is in keeping with what was projected, a loss of about 14%. Bus Ridership was down 11.1% cumulatively FY 2001-2003, the lowest since 1990; Ferry Ridership was down 13.3% cumulatively FY 2001-2003, the lowest since 1998; and Bridge Traffic was down 8.5% cumulatively FY 2001-2003, the lowest since 1984
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