1. 2018 – 2023 Strategic Budget Plan
4/15/2018
2018 – 2023 Strategic Budget Plan
Financial Administration & Audit Committee
May 16, 2017

2. SBP Components
SBP includes only service and projects funded from the Base System 0.6% sales and use tax, and FasTracks Operations activity
Cost allocation to FasTracks Operations for West Line, DUS Bus Concourse, Free MetroRide, I-225 Rail Line
FasTracks expense and projects (non- operational) are included separately in the FasTracks Annual Program Evaluation (APE) financial plan

3. 2018-2023 SBP Parameters Fiscal management
Requirements to operate per specified performance measures
Strategic goals for the General Manager
Maintain a balanced budget
Continued building of reserves
Continued refunding of Board-appropriated fund and capital replacement fund
Operating reserve fund development – established in 2017
Sufficient reserves to withstand economic fluctuations
Maintain service levels for bus and light rail systems
Service hours in 2018 expected to be comparable for Rail and flat for Bus

4. 2018-2023 SBP Parameters (cont’d.)
Baseline is 2017 Amended Budget
First draft cash flow will change from Adopted to Amended
Diesel fuel lock for budget certainty in 2018
Monitor futures for opportunity, use 2017 lock price of $1.69/gallon and escalate by national CPI over SBP term
Forecasted price may change based on market conditions
SOGR of facilities and equipment
Prioritization of capital and expense projects
First draft SBP is fully-loaded with all capital and expense project requests
To balance first draft SBP, will require elimination, reduction, or deferral to outlying years of over $400 million in project requests if no other funding sources identified
CBA negotiated costs through 2017, then escalated at area CPI, to be updated for final agreement
Planned fleet expansion/replacement funded by previously issued COPs (associated debt service), grant funds and local funds

5. SBP Variables Uncontrollable factors Controllable decision areas
Sales/use tax revenue
Fuel price volatility
Inflation rate
Continued nature of economic growth
Interest rates on debt
Ridership
Grant revenue/Federal appropriations
Controllable decision areas
Fare rate increases/decreases
Service levels
Operating costs/expense projects
Capital investment in projects
Fund balance development

6. 2018-2023 SBP Revenue Assumptions
4/15/2018
SBP Revenue Assumptions
Sales and Use Taxes
SBP uses CU-Leeds Business School March 2017 forecast
Actual ytd March collections: 6.3% over March 2016
CU-Leeds School forecasts 4.0% increase over 2016, 5.5% increase over 2017 (baseline forecast)
Over 6-year SBP term, negative difference between baseline forecast and low forecast is $188 million for Base System
Including 2017, the negative difference is $208 million
Year
Baseline
Low
Annual Difference
Cumulative Difference
2017
4.0%
-2.1%
-$20,588
2018
5.5%
4.3%
-$25,743
-$46,331
2019
4.1%
3.8%
-$27,873
-$74,204
2020
3.3%
3.0%
-$30,164
-$104,368
2021
2.6%
2.3%
-$31,979
-$136,347
2022
2.4%
-$35,140
-$171,487
2023
4.5%
-$36,897
-$208,384

7. Sales and Use Tax – Base System
4/15/2018
Sales and Use Tax – Base System

8. 2018-2023 SBP Revenue Assumptions
4/15/2018
SBP Revenue Assumptions
Passenger Fares
Per RTD Board policy, a 10% fare rate increase is considered by Board every 3 years
Next scheduled for 2019 and 2022
Fare revenue assumed flat in 2017 for Base
Ridership assumed flat in 2017 for Base
No escalation other than rate increases
Federal Grants
Based on actual 2017 appropriations
Recognized as awarded
Assumed to increase at rate of inflation or as identified

9. 2018-2023 SBP Expenditures Assumptions
4/15/2018
SBP Expenditures Assumptions
Operating and Maintenance Costs
Inflated at Moody’s Denver-Boulder CPI rates (2.8% in 2018)
National Moody’s CPI rate applied to fuel costs (2.5% in 2018)
Includes one-time expense projects
Includes CBA, fixed through 2017 then escalated at CPI, to be updated to actual negotiated contract
Fuel Costs
Diesel budgeted at $1.69 gallon (2017 lock price) and escalated at national CPI
Gasoline budgeted at $2.65/gallon (2017 budget) and escalated at national CPI
Debt Service
Interest and debt payments on existing debt based on debt amortization schedules
Proposed interest payments on possible future debt issues would be based on treasuries rate forward curves
Future debt issuance based on rolling stock COPs, both bus and rail, and potential facilities construction
Capital Expenditures
Over $400 million of project requests (capital and expense) will need to be eliminated, reduced or deferred in SBP first draft absent other funding sources

10. Diesel Fuel Cost per Gallon
4/15/2018
Diesel Fuel Cost per Gallon

11. SBP Summary Cash Flow – Base System

12. 2018 Base System Sources of Funds $655.5M
4/15/2018
2018 Base System Sources of Funds $655.5M

13. 2018 Base System Uses of Funds $745.9M
4/15/2018
2018 Base System Uses of Funds $745.9M

14. SBP Opportunities and Challenges
Board strategic priorities and GM tactical plans
Fuel lock for favorable outcome
Challenges
Sales/use tax volatility
Fuel price uncertainty
State of Good Repair commitments and needs
Project prioritization and project deferral
Financing capacity, funding constraints
Continued refunding of fund balances
Increased O&M costs, CBA negotiations

15. Next Steps
June 20 – Presentation of 2017 Amended Budget for Board adoption, SBP Update, and APE update
July 18 – Presentation of SBP update and APE update to FAAC
August 8 – Presentation of final SBP and APE for recommendation to full Board
August 15 – Board adoption of SBP and APE
August 22 – Board Study Session on 2018 Budget
Financial Administration and Audit Committee Transit Development Program April 13, 2010