This is an archived article that was published on sltrib.com in 2014, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
I would like to clarify some information regarding UTA's proposed 2015 budget as described in the Salt Lake Tribune article, "UTA budget would dig $44.5 million into reserves." While we commend the article for reporting on UTA's customer focus initiatives such as adding service miles and hours, restoring holiday service on Memorial Day, Independence Day and Labor Day and improving the WiFi experience on FrontRunner, it leaves the false impression the agency poorly plans its financial affairs. The article indicates UTA is using a large amount of reserves to fund the 2015 budget, but a closer look at the facts provides a different story.
Rather than take a year-by-year approach to budgeting, UTA uses a 30-year financial forecasting model to enforce long-term financial discipline. As conditions change from year to year, we use this model to evaluate the long-term financial effects of decisions being considered today. As UTA weighed adding service in the proposed 2015 budget, it used this model to confirm that our long-term financial goals for the next 30 years would be met.
Of the $44.5 million use of reserves referenced in the article, $32.2 million reflects capital projects originally budgeted in 2014 that will instead be completed and paid for next year. This is a timing issue, common with capital projects, that simply represents spending budgeted funds in a different year, rather than an unplanned or excessive use of reserves. An additional $2.1 million, although shown as an expense in the proposed budget, will actually be placed into reserves to retire debt early.
After taking just these two items into account, UTA may only use up to $10.1 million of reserves in the 2015 budget. Reserves are designed to absorb year-to-year adjustments, and $10.1 million reflects a very small percentage of UTA's total reserves.
The article also makes mention of a recent Legislative Audit report cautioning about UTA's margin of error should sales tax revenues not match expectations in coming years. That is wise counsel. While we have experienced lean years as a result of the recession, UTA's financial situation is sound in the long-term and has improved since the audit was conducted. Current projections indicate that UTA's 2015 year-end reserves will be about $160.8 million, which is $9.4 million higher than the audit anticipated.
The proposed 2015 budget also proposes setting aside another $4.4 million to create new reserves for both fuel and parts, which can present volatile and unpredictable budget impacts. Establishing these reserves is another example of improving the agency's sound financial footing.
UTA has a well-established record of coming in under its annual budget, and we have diligently balanced our long-term fiscal stewardship responsibilities, long-term debt commitments, and capital needs in ways that provided the opportunity to add more transit service to the Wasatch Front. The agency's ongoing goal is to continue providing more and better service after ensuring UTA's long-term fiscal viability – precisely what the proposed 2015 budget reflects.
Michael Allegra, president and CEO of Utah Transit Authority, has more than 38 years of experience in the transit industry.