Bad economy putting a dent in UTA budget

The Utah Transit Authority had a $7.5 million budget shortfall for the first seven months of this year because of diminished revenue from sales tax, and the agency could be $14 million short by the end of the year.

Sales-tax revenues are down because the economy is soft, consumer confidence is low, and people are spending less. A $14 million shortfall would be a 2.8 percent drop in the transit authority's $503.2 million operating and capital budget, said Kenneth D. Montague Jr., UTA's chief financial officer.

In the first seven months of 2008, UTA received $109.4 million in sale taxes from Box Elder, Davis, Salt Lake, Tooele, Utah and Weber counties. That was $7.5 million less than UTA had originally anticipated for January through July, Montague said.

In recent months, the economy has tumbled: Some residents along the Wasatch Front have lost their jobs or homes, and the value of their investments has fallen. Many people are tightening their purse strings and are shopping less.

"The downturn in the economy has hurt our sales-tax receipts," Montague said.

If sales-tax revenues continue to be soft, Montague said, a revenue shortfall could be as high as $14 million by the end of 2008. UTA's projected revenue from sales-tax revenue is $206.5 million.

UTA is confronting its revenue shortfall with a soft hiring freeze, meaning that managers are only allowed to fill essential positions.

To save money, UTA also has cut back on travel. The agency is considering eliminating some contracted janitorial services. And UTA has suspended its "UTA Academy," a workshop offered each week to 20 alternating employees. UTA decided it couldn't afford the overtime pay for drivers and mechanics to cover for their colleagues at the workshop.

UTA's financial officers also asked managers to find ways to trim their budgets, Montague said.

"We went to every manager and said, 'You've got to give up a certain percentage of your budget and you figure it out,'" he said. "All together, after 60 to 70 managers put their efforts together and contribute a little bit, it all comes together and adds up."

Compounding UTA's budget concerns about sales-tax revenue has been unexpected increases in the cost of fuel. UTA has implemented two fuel surcharges, in July and October, to cover fuel costs. Each fuel surcharge was 25 cents per fare. A basic monthly pass has risen from $54 to $74.

But high gas prices have also brought about $3 million in new revenues to UTA, generated from people who have opted to use public transportation rather than paying for gas for their personal vehicles.

In addition to fuel surcharges, fares and sales tax, UTA gets money from the federal government, interest on savings and advertisements on public transportation. "We're doing pretty good on achieving all of our revenue goals, except the sales tax," Montague said.

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E-mail: lhancock@desnews.com