Soaring gas prices and a possible impending recession could put the brakes on services Lane Transit District will offer in 2009 and beyond. Items on the chopping block could include the number of service hours for buses, bus frequency and route coverage.
While political pundits debate whether a recession is on the horizon or if the county is already waist-deep in one, LTD officials are bracing themselves for a possible cut in revenue that would affect the level of service they can offer the community.
“The question is whether it is going to hit us, how hard it is going to hit us or if we are going to skate through it … it’s all a big balancing act,” said Andy Vobora, spokesman for LTD.
Students living in areas where ridership is high need not worry, LTD General Manager Mark Pangborn said.
“We’ll save the services that carry the most customers … such as Martin Luther King Jr. Boulevard and Duck’s Village – man, those places are packed,” Pangborn said. “EmX is also very popular in getting students to class, and that wouldn’t be affected either.”
Ridership numbers have skyrocketed this year, up by 12.8 percent in the past 12 months. However, the majority of revenue funding LTD’s operational costs comes from a payroll tax on local businesses and self-employed people rather than rider fares.
The payroll tax accounted for $28 million of LTD’s $33 million in operating costs this year, while fare revenues brought in most of the remaining $5 million.
If local businesses and the metropolitan area’s economy are adversely affected by the county’s slowed financial momentum, then LTD will have less money to draw from and will likely need to find other sources of revenue.
One resource it could dip into is a reserve fund, but that can only last for so long.
“The bottom line is that an additional $3 million in operating costs will need to be taken out of reserves next year,” which would leave no reserve money left, Vobora said.
Fares will also rise from $1.25 to $1.50 on July 1 to help bring in more revenue, Pangborn said. But increasing the price any more than that could leave some riders “displaced” and ridership numbers would decrease, Pangborn said.
LTD faced a similar funding difficulty in 2002 and had to reduce the service hours of buses by 9 percent. In 2004 it had to reduce service hours again by 4 percent because of revenue shortfalls. A service hour represents each hour a bus is out on the road and in operation; to reduce these service hours the transit district cut some early morning routes and late night trips to offset financial hardships in those years.
LTD is currently expanding some of its other services, as a new route has recently been added that will reach Sacred Heart Medical Center at RiverBend in Springfield, and new EmX lines are being considered that would reach into west Eugene and Pioneer Parkway.
However, the belt is tightening on other projects such as the pushed-back plans to expand LTD’s headquarters in Glenwood, and some bus routes are targeted to possibly be cut in the fall 2009.
Recession woes are being compounded by exploding gas prices that have set record highs at pumps across the state in recent weeks. LTD budgeted for gas prices at $2.35 per gallon, but is currently paying nearly $2.75. Projections have them paying a little more than $3 next year, Vobora said.
LTD officials have looked into replacing the current diesel buses with hybrid-electric buses to counter the rising fuel prices. However, Pangborn said that while the hybrid-electric buses could reign in fuel expenditures and have positive environmental impacts, the exorbitant cost of each new bus would not make it feasible.
Each hybrid bus costs $190,000 more than a diesel bus, and the price tag for a hybrid bus is around $520,000, Pangborn said. “At current gas prices it does not pencil out, at a purely cost perspective, to invest in hybrid buses,” he said.
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