’08 budget to draw $370,000 in reserves
The bus between Crested Butte and Gunnison may be free for passengers, but it’s the second largest operational expense for the Gunnison Valley Rural Transportation Authority, the group that organizes the service. The RTA recently approved its 2009 budget with an expected increase in operational costs and the awareness of a potential decrease in revenues.
During the RTA’s regular meeting on Friday, October 10, director Scott Truex presented the board with the budget for 2009, and an update on how the 2008 budget was holding up.
The RTA is expecting to use approximately $373,000 in reserve funds in 2008 to cover several unanticipated expenses.
Ground transportation expenses for the RTA jumped more than $100,000 this year over last year. Board member Bill Babbitt noted the jump was a 40 percent increase.
Truex said one reason for the jump was the RTA had originally budgeted for the free bus service to offer three trips a day in the summer, but that was eventually switched to nine trips a day.
Due to fluctuations in the price of oil, the RTA also got hit with a hefty fuel surcharge from Alpine Express, which provides the drivers, maintenance and fuel to keep the buses running.
To prevent a fuel surcharge in 2009, Truex said, the RTA was setting up a separate fuel account for its bus service, rather than having Alpine Express buy the fuel and ask for a “surcharge” for increases in fuel prices. The RTA is budgeting approximately $150,000 for fuel expenses in 2009. The board is also considering dropping summer bus trips to six a day to keep other expenses in check. But altogether, ground transportation costs are expected to increase more than $60,000 next year.
The RTA was also hit with a loss of revenue in 2008.
The RTA had budgeted $1.3 million in tax revenues in 2008, but Truex estimated that only $1.03 million would come in. The decrease in revenue is due to a tax glitch discovered this spring by Gunnison County Electric Association, which had mistakenly charged the 0.6 percent RTA sales tax to its customers. Energy providers and grocery stores are excluded from the RTA tax, and GCEA offered refunds to its customers after discovering the error. More than $200,000 of mistakenly charged tax revenues were included in the RTA’s original 2008 budget.
“That was a one-time hit,” Truex said.
For 2009 the RTA is budgeting $1.2 million in tax revenue, and about $400,000 in grant funding.
Board member Hap Channell said he thought the estimated 2009 revenue seemed high, given national economic factors. “It seems to me that’s pretty ambitious,” he said.
Board member Stu Ferguson suggested developing a contingency plan if revenues fell through. “I would urge you to be very cautions in budgeting,” he said.
In addition to the aforementioned ground transportation expenses, the other big-ticket expense in 2009 will be an $800,000 performance guarantee for airlines flying into the Gunnison Valley this winter. The RTA provides airlines servicing the local airport with operational guarantees in case ticket sales fall through. CBMR is also contributing $600,000 in guarantees to secure airline service this winter. If ticket sales are good, the RTA and CBMR may not have to pay the full guarantees next spring.
Truex said the current guarantee cannot be changed, but there’s always a hope that they won’t have to pay the full sum. Unfortunately, Truex said, “there’s a reasonable expectation we will this year.”
If the RTA is forced to pay the full airline guarantee next spring, it could result in a $321,000 budget deficit in 2009. That could potentially leave the RTA with only $261,000 in reserves at the start of 2010. The RTA started 2008 with a $955,000 reserve.
Channell said he wanted the RTA’s meeting minutes to be clear that, “We’re aware of the cushion of our fund balance, but it’s important for us to be cautious.”
The 2009 budget was then approved unanimously.