The Sonoma-Marin Area Rail Transit slashed over $11 million this week from its 2024 budget to keep pacing with spending.
In a unanimous vote, the SMART board approved the amendments at its Wednesday meeting to reduce the budget for the 2024 fiscal year by $11,316,823.
The decision, which brought the total budget down from $134.9 million to $123.5 million, was prompted by projections that expenses would outpace revenue.
Heather McKillop, chief financial officer for the agency, said this is the sixth time the budget has been amended, but that this round represents a mid-year evaluation. The budget is divided into two areas: the passenger rail and pathway, and freight.
“This is the time where we look at where we’ve been through December and we look at any changes that we may need, we look at any project’s status and if we need to move money around, either bring it forward or push it back,” McKillop said.
Passenger rail and pathways revenue is estimated to be around $111.6 million and total expenditures about $120.7 million — $9.1 million more than is generated in revenue.
Changes to SMART’s revenue included a lower sales tax forecast — around $50 million — than previously given, federal and state funds that will be spent next year instead of this year, and a $500,000 state grant for a Sonoma County Airport shuttle service for fiscal year 2024, which ends June 30.
Expenses to passenger rail and pathways rose thanks to increases in the debt service amount, by $51,776; the services and supplies budget, which includes IT services and software, by $600,457, to a total of $20,381,904. The largest projected increase was in salaries, benefits, services, and supplies, which jumped to $982,102, totalling $46,289,210.
Some funding for capital projects was shifted to the next fiscal year, which impacted the budget. The funding for pathways also decreased because the design, permitting and construction phases of various projects were moved to the 2025 budget.
The impact to the 2024 budget is $8.9 million, leaving just $13.5 million. While the design and permitting processes on segments of pathways in Sonoma and Marin counties are already underway, some funding will be shifted into the future fiscal year.
McKillop said the freight budget had to change significantly. This year’s beginning balance, money that rolled over from the previous fiscal year, was $1.7 million. McKillop said SMART needs to use $1.4 million of those funds for 2024.
The goal is to end the fiscal year with $500,000 left over in the freight fund, however with the budget changes, there will be around $259,000 left over, staff said.
“So we do have a shortfall going into next year and we will be looking for opportunities to decrease expenditures as we can,” McKillop said.
A major change to the freight revenue in the 2024 budget is due SMART’s inability to match a state grant state of good repair on the freight line; the funds require a 50% private match. The repair project was deferred. The agency also is estimating $200,000 less in freight movement fees than were budgeted.
“I had to make some pretty major changes as it comes to revenue on the freight side,” McKillop said.
Freight movement fees were reduced from $1 million to $800,000. Storage fees were increased. McKillop said SMART has secured a new contract with Caltrain. The company will be storing some vehicles with SMART, resulting in about $24,000 in revenue. The contract extends through June 2025.
Director Chris Coursey, a member of the Sonoma County Board of Supervisors, asked if more storage contracts could be executed in the future. Staff said a contract regarding vegetable oil cars is currently under discussion, but that storage contracts alone would not be able to make up for the $300,000 deficit.
Director Barbara Pahre, with the Golden Gate Bridge, Highway and Transportation District, asked if the storage rates are by types, and size, of cars. Staff confirmed they are.
Freight train spending was actually less than anticipated, McKillop said. In services and supplies, about $149,000 less than previously estimated is needed.
Sonoma County Supervisor David Rabbitt, said the freight budget will be a challenge next fiscal year, but understood the needed changes.
“It would be a shame to have the consequences of losing freight for a variety of reasons,” Rabbitt said. “I appreciate very much the adjustments to the budget to take into account all the realities that we’re dealing with.”
