By Joe Calabrese
RTA CEO and General Manager
Revenue from a one percent countywide sales tax, approved by the voters in 1974, is the backbone of RTA’s budget. Historically, this revenue provides about 70 percent of needed operating funds -- more than $218 million in 2016.
In 2016, Medicaid informed 8 States, including Ohio, that effective July 1, 2017, it would no longer pay sales tax on managed health-care costs, because these states did not apply sales tax to similar services paid for by those other than Medicaid.
For RTA, that means that revenue will be reduced an estimated $20 million annually, and Cuyahoga County will lose an additional $25 million annually. This loss of $20 million annually would be devastating to RTA, our customers and our workforce, as it represents seven percent of our operating budget, and could mean the elimination of up to 200 jobs.
With a 7 percent or $20 million loss in revenue
- 1.8 million fewer trips would be provided to work,
- 700,000 fewer trips would be provided to local schools, and
- 300,000 fewer trips would enable Greater Clevelanders to travel to health care appointments.
While the seven other states broadened the sales tax base to include other health-care related services resulting in more and not less revenues, Ohio decided that it would not. The budget proposed by the Governor addressed the loss in revenue that would have impacted the State budget, but did not address -- in a long-term way -- the impact to Counties or Transit Systems. The Governor determined that this resulting problem should be addressed locally.
An attempt by legislators to include a corrective fix into the budget was short-stopped by a Governor’s veto that was ultimately over-ridden in the House, but not by the Senate. The State budget did allocate an amount, however, to mitigate the loss of revenue for 2018.
On Dec. 19, 2017, the RTA Board of Trustees passed a temporary 2018 operating budget. Once final sales tax numbers are confirmed in Columbus, RTA will present an amended budget to the Board early in 2018 that must match anticipated expenses to this new economic reality. The RTA Board also created a Public Outreach and Advocacy Committee, to help guide our efforts in seeking more funding.
Reduce expenses by $55,000 a day
RTA serves about 44 million customers annually. Surveys show that 60 percent of them use RTA to travel to work, 23 percent travel to school and nine percent travel to healthcare.
To meet those demands, RTA invests approximately $800,000 per day to provide our current level of services. As a result of this funding loss, RTA will need to reduce its expenses by approximately $55,000 per day going forward.
Our goal is – and always will be – to provide as much first-class transportation service as possible with the revenues we generate.
To that end, we will work diligently through the first quarter of 2018 to develop a plan to either find new revenue sources or reduce expenses – or likely both – in order to have a sustained and balanced budget. All options are being considered.
Effect on the community
A viable public transit system is critical to maintaining and growing our employment base. With robust, reliable public transit, our region can attract new employers and encourage the growth of existing businesses, but a diminished public transit system could all but destroy future economic development potential.
During a time when people are asking RTA to do more and to provide better connectivity to jobs, education and health care, we may be forced to provide less.
We thank all Northeast Ohio Legislators – Republicans and Democrats in the House and Senate -- for their support and efforts to find a permanent replacement for this loss of revenue. We also thank Cuyahoga County officials, who have been meeting regularly to explore solutions to this issue.
We will continue to work hard toward finding a solution, but we know the current economic reality means RTA and seven other transit systems in Ohio will need to look to new revenue sources or plan to reduce needed services in the upcoming months if this situation is not addressed. We will keep you posted.