2014 Proposed Budget October 17,

 Sales Tax receipts are up 6.8% YTD from 2012  The move from self-insurance to AWC health insurance reduced expense approximately $1.1m  Stability:  Expenses are $1.5m below budget  Operating revenue is $1m more than budget  Fuel cost is on target  Ridership is stable 2

 Biggest threat: US tax & budget policy  Whatcom County housing market improves, although higher interest rates could affect affordability  Local Employment improves  Local construction activity and car sales are up  Slow steady sales tax revenue growth expected  Cross border economic exchange continues  Overall: less risk (see first bullet) 3

4 Revenue Sales tax increases 3% Fare revenue remains at 2013 levels due to flat ridership and service levels. No 2014 fare increase.fare increase Operating grants increase 5% Expense No Health Insurance increase PERS rate remains at 9.1% of wages 3% Workers Comp increase anticipated Flat fuel prices 10% employee turnover Fleet composition remains at 2013 level; no major procurements Salary and Wage Increases: Non-Reps: 2.0% Paratransit Operators: 3.25% Other Represented Employees: 2.25%

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 Smart Bus Planning  MAP21 Compliance  Business Process Improvement (Lean) Training  Trapeze PLAN & InfoAgent version maintenance  Fleet Diesel Mechanic intern  Two additional staff positions:  IT Applications Administrator  Revenue Analyst 7

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