Sound Transit will see a sharp decline in funding as the coronavirus outbreak erodes tax revenue and keeps transit riders at home, CEO Peter Rogoff warned Thursday.

The sudden downturn appears far worse than the 2008 Great Recession that forced the agency to delay some projects, including the light-rail extension to north Federal Way, officials said.

The agency doesn’t have enough information yet to consider spending or project reductions, beyond temporary cuts to train and bus service announced Thursday, Chief Financial Officer Tracy Butler told the board’s finance committee.

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But Sound Transit’s looming drop in sales taxes, which provided 58% of its revenue last year, could jeopardize the agency’s ability to sustain the largest transit expansion in the country, executives said.

“What we are currently experiencing is nothing like we have ever experienced before, because some of the industries simply came to a halt in a matter of days,” Butler said.

Sales tax revenue could fall as much as 75%, she said.

The dramatic economic hit is being felt by transportation agencies across the country, as businesses close and people stay home to limit the spread of the novel coronavirus.


King County Metro estimates it is losing $1.3 million a week in fares and $5 million a week in sales tax. Metro intends to reduce service by one-fourth, said Metropolitan King County Councilmember Rod Dembowski.

The American Public Transportation Association asked Congress this week for $13 billion in federal bailouts for transit agencies nationally. In New York City, the Metropolitan Transportation Authority is looking for $4 billion in federal help.

Around the Seattle area, formerly the nation’s fastest-growing transit market, ridership has nose-dived 60% on Metro buses. Sound Transit ridership on both trains and buses is down 69% compared to normal.

Losses around the country are proving “quick and dramatic,” said Paul Lewis, vice president of policy and finance at the Eno Center for Transportation, a think tank in Washington, D.C. “A few weeks ago, nobody was really thinking of this.”

Sound Transit collects $1.40 in sales tax per $100 purchase, while Metro takes in 90 cents per $100 purchase. Seattle collects another 10 cents per $100 purchase to help pay for additional bus service.

Fares cover about 26% of Metro’s bus operations. Sound Transit recovers about 38% of the cost of operating light rail from fares, with slightly lower shares on buses and commuter trains.


Historically, revenue losses have pushed agencies to dip into their reserves, tighten schedules, cut service or reduce staffing.

After the 2008 recession, Metro enacted a series of five 25-cent fare hikes between 2008 and 2015, though  more recently local politicians have leaned the other direction, to freeze fares and expand low-income discount programs.

“It’s going to be impossible for this to not have an impact on the rider,” Aaron Golub, a Portland State University professor who studies transportation planning, said about the current downturn.

If the agencies were to reduce staff, “that means fewer people get paychecks, fewer people are able to make rent payments,” said Lewis, from the Eno Center. “There are some ripple economic effects that come.”

Agencies and unions in the Seattle area haven’t revealed — or perhaps haven’t yet figured out — any details about how or whether employees might be laid off.

Given the massive numbers of construction and operating jobs, leaders may well hearken back to the New Deal era, and position transit as an economic stimulus program.


Former Seattle Mayor Greg Nickels made such arguments to promote the Sound Transit 2 ballot measure in 2008. Rogoff resurrected that theme this week in a letter to Sen. Patty Murray, D-Wash., the agency’s leading patron in the Capitol, asking her to support federal aid for transit agencies.

Transit construction a decade ago “was a critically important employment engine when much of the construction industry was dormant,” Rogoff wrote. “As we rebound and regain strength from the downturn we are about to experience, our ability to continue our capital expansion will be a critical part of recovery in the Puget Sound region.”

Unlike the 2008 recession, Puget Sound-area contracting just a few weeks ago was so feverish Sound Transit executives warned of inflation caused by labor and contractor shortages.

Sound Transit continually runs finance models and “stress tests” that include a recession, but not a downturn this sharp.

The picture would be less dire if the region avoids a prolonged economic slowdown. Metro has a reserve fund of about $258 million for short-term recessionary impacts. At Sound Transit, passenger fares bring in only 5% of income, so the regional economy and resulting tax collections is a greater factor.

Even if Sound Transit sees a shortfall, the agency will likely be able to continue paying back its debts, the credit rating agency Moody’s said Wednesday.


Sound Transit has some advantages. For instance, it won more than $2 billion in federal grants for Federal Way and Lynnwood light-rail lines, and millions more through cheap, deferred-interest federal loans, so it doesn’t need to sell more bonds until 2023.

It has a top-quality credit rating and uses only half of its debt capacity — leaving room to survive a brief downturn.

But rail projects in the 2030s and beyond, reaching Everett, West Seattle, Ballard or Issaquah, could be in jeopardy if a slump lasts.

“A protracted regional economic slowdown and shortfall in tax revenue could force [Sound Transit] to scale back or delay elements of its large capital plan,” Moody’s wrote.

The state won’t have good information about March sales tax revenues until mid-May. A white paper commissioned by the Seattle Metropolitan Chamber of Commerce predicts “difficult budget choices will playout in Q3 and Q4.”

There are other sources of uncertainty.

A $60 car-tab fee and supplemental city sales tax that funds some Metro bus service in Seattle are set to expire this year. King County considered a regional tax measure to replace that funding — but then balked, citing the outbreak.

Seattle has not yet indicated whether it will go to the ballot alone.