Hillsborough transit hit by double blow of coronavirus, stalled sales tax

TAMPA — Hillsborough transit authority board members listened to grim presentations from staff Monday about declining ridership, proposed service cuts and budget shortfalls.

Underlying the bad news are two unknowns: the future of a 2018 sales tax that would nearly double the agency’s budget and a national search to find a new chief executive to steer the agency through uncertain times.

The Hillsborough Area Regional Transit Authority has watched expenses climb while reserves have largely declined since 2014.

“The bottom line here is, again, expenses are exceeding our revenues year after year,” transit authority chief financial officer Cyndy Stiglich told the board. “Since (2014) through this fiscal year, that equates to almost a $26 million deficit.”

The agency was projected to face a $4.5 million shortfall next year if it weren’t for coronavirus relief money provided by the federal government.

The CARES Act sent $39.8 million to the transit authority. Of that, $24.4 million is slated for next year’s operating budget, helping offset rising personnel costs, rebuild cash reserves and cover a projected $2.3 million loss in fare revenue.

The agency can spend the money on costs that may or may not be related to COVID-19, Stiglich said, including those typically covered by property taxes. Property tax revenue, in turn, can be shifted to reserves and capital expenses. Agency staff said the federal money will help the agency replenish its reserves, moving the budget from a projected $4.5 million deficit to $22.3 million in the black.

“While it’s not a long-term solution by any means ... it’s definitely a short-term salvation for us considering those trends you saw,” Stiglich said.

The agency’s operating and capital budget for next year is expected to be $146.8 million. Public hearings are set for Sept. 14 and 28.

Board members and transit supporters had hoped a transportation sales tax approved by voters in 2018 would buoy the agency and help maintain service while also running buses more often, expanding the locations they reach, and creating opportunities for new technology like dedicated bus lanes or light rail.

But revenues from the sales tax, collected for the past 18 months, remains unspent as the county awaits a ruling from the Florida Supreme Court on whether the levy is constitutional. Meantime, staff and board members have turned their attention to another funding option — raising property taxes.

The agency currently taxes property owners .5 mills or 50 cents for every $1,000 of taxable value.

The Florida Legislature allows transit authorities to levy up to three cents per $1,000 but raising the rate would require approval from county voters. Stiglich told board members if such a measure were proposed and passed in 2022, it would be 2025 before the county would see any new revenue.

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Each additional tenth of a mill could generate another $13 million for the agency, which Stiglich called “a significant amount.”

“Sales tax varies significantly, and this organization needs a steady operating budget it can count on,” board member and county commissioner Kimberly Overman said. “The less volatile revenue source we can count on is millage.”

Fellow commissioner and board member Pat Kemp called for a balanced approach using both sales tax and property tax revenue, noting that sales tax brings in more money.

“I think this is about acknowledging that vast transit deficit that existed two years ago and exists today even worse,” Tampa city council member Luis Viera said. “We have to remedy that gap.”

Board members also discussed potential service changes that could start Jan. 1 — cutting 11 express and flex routes, reducing frequency on seven routes and adjusting the stops and directions of nine others. If the changes were approved, the agency would no longer have any routes running at 15-minute intervals. The shortest wait between buses would be 20 minutes.

The proposed changes, amounting to a 10-percent service cut, would save $4.3 million a year.

“This is really simply reflective of our current situation,” director of service development Chris Cochran said. “It would be our goal to bring these frequencies back in the future as soon as possible.”

Staff will conduct public outreach on the changes through September and hold a public hearing in October. The board would then vote on the changes in November.

Earlier in the meeting, the board discussed a national search for a new chief executive that is supposed to take at least three months. The agency is seeking a permanent leader after Ben Limmer resigned over an investigation that found he violated agency rules on purchasing and vendor relations. Limmer was on the job less than a year.

The agency hired GovHR USA to conduct the search after the firm said it could do the job for about $25,000. Nine firms applied, but six were ruled out for failing to meet requirements. One such requirement is a two-year warranty that would force the firm to conduct another search if the new chief executive didn’t remain in the job for two years.

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