Sonoma-Marin Area Rail Transit’s chief financial officer presented a bleak report last week on the financial health of the rail agency.
At a meeting of SMART’s Board of Directors in Petaluma on Wednesday, Erin McGrath outlined the challenges SMART faces on two fronts — the failure of a ballot measure in March that would have extended a quarter-cent sales tax until 2050, and the economic impact of the COVID-19 pandemic and its subsequent shutdowns and shelter-in-place orders.
McGrath said the immediate impact of the shutdowns is a $90,000 weekly loss of fare revenue.
“What is certain is that the shutdown will impact (the) sales tax dramatically in the short run, which means it will affect almost 90 percent of our revenue,” McGrath said.
McGrath said the shelter-in-place orders caused significant impacts on businesses from cars to retail.
“We also have lost most of our fare revenue starting in early March as our ridership fell below 300 daily,” McGrath said.
SMART originally planned to make $3 million in reductions in the 2020-21 budget that starts July 1, McGrath said.
“We are now working toward a higher target of up to $6 million in fiscal year 2020-21,” McGrath said.
SMART is exploring three major strategies for budget reductions — one-time savings by deferring expenses on machinery and equipment and extending the replacement cycles for vehicles, reducing ongoing salary and non-salary expenses including train Wi-Fi service, and reducing ongoing expenses by running fewer trains and decreasing full-time staff.
McGrath presented some good news for SMART. The rail agency is in line for an initial grant of $10 million of a $1.3 billion federal grant for Bay Area transit agencies.
The money has been allocated specifically for retaining transit staff and a reasonable level of service. The money will backfill lost revenue and reimburse expenses that are a direct result of COVID-19.
The SMART Board of Directors will discuss a preliminary budget on May 20, and can consider adopting a final budget on June 3 or June 17.