The current economic collapse will dry up Sound Transit’s tax money to build more train and bus lines by 2028, unless elected leaders delay or cancel some projects they’ve promised to voters.
Just in 2020 and 2021, the regional agency could lose $1 billion, snowballing to a total fare and tax loss reaching $8 billion to $12 billion through 2041, Chief Financial Officer Tracy Butler predicted Wednesday, as the transit board kicked off its “agency realignment” program to cut spending.
Butler told members they need to begin trimming now to avoid going in the red later.
“We are burning through cash quickly, maybe as soon as next year,” she said.
Officials made no decisions about specific routes and stations, in what was a high-level discussion that will continue through the summer.
Sound Transit’s sudden austerity represents an upheaval. The three-county agency entered 2020 with the nation’s best credit rating, a $96 billion budget for a quarter-century of construction and services, and surpluses to absorb an ordinary recession.
But this downturn is extraordinary. After the retail business plummet, the agency could wind up suffering a permanent 23% drop in sales taxes, Butler said. Those are the largest of five main money sources in a $2.5 billion yearly budget.
Things would be worse, had not Sound Transit already locked down a $2 billion federal line of credit in November 2016, followed by $2 billion in federal grants, and a $166 million stimulus payment this year.
Those dollars assure light-rail extensions aimed at 2024 to Lynnwood, Redmond and Federal Way, where construction contracts are already underway, can keep going.
But as cash dries up, the agency would borrow more money, then hit a credit ceiling in state law by around 2028. Voters or legislators might be asked to approve extra borrowing.
Sound Transit has the legal authority to delay projects, or extend its debt payments, indefinitely beyond the 2041 goal to finish the ST3 expansion plan approved by voters in 2016. Even in good times, the finance model called for spending into the 2050s.
Don Billen, project development director, laid out two ways to stretch out the cost of new lines:
The board could break up corridors into phases, as happened in the agency’s early years. Because of unrealistic cost estimates, Sound Transit found itself $1 billion short for the light-rail line to the University of Washington promised by 2006.
The agency pivoted to an initial segment from Westlake Station to Tukwila International Boulevard Station that opened in mid-2009, followed by SeaTac/Airport, Angle Lake, University of Washington stations, and finally the 2021 U District Station, to fulfill the 1996 Sound Move plan.
During the last recession, the board postponed a light-rail segment to Star Lake in north Federal Way, along with park-and-ride garages in Kent and Auburn.
Or it could build routes with fewer features, such as the Sounder south commuter-train route from Tacoma to Seattle that opened in 2000, lacking a full-service Tukwila Station with parking and new platforms, which finally opened in 2015.
“If we keep our eyes on the prize, I know it will be difficult, but we will be able to deliver what the citizens of this county need,” said transit-board Chairman Kent Keel, a University Place city council member representing Pierce County.
An equally important question is how public transit will rebound from this spring’s stay-at-home orders that pushed Sound Transit’s own ridership down 86%. Last decade the Seattle metro area led the U.S. in big-city transit growth, reaching three-quarters of a million daily trips. Do travelers need the same station sites and capacity that voters approved in the tax measure of 2016?
“The trajectory for ridership is as uncertain as the trajectory for revenue,” CEO Peter Rogoff said.
In the wake of the novel coronavirus, staff are monitoring whether white-collar employees will work from home instead of commuting into downtown centers on transit. If lower-income people or “transit-dependent” non-drivers represent a larger share of the trips, that changes social equity, and the value of different projects, he said.