Two years after facing plummeting ridership and pandemic-related financial constraints, the SMART board approved a budget that includes near-restored train service and an $8.2 million surplus.
The Sonoma-Marin Area Rail Transit board voted unanimously Tuesday to approve the Budget for the financial year 2022-23which will come into effect on July 1. The budget includes $88.4 million in revenue and $80.2 million in expenses.
The forecast surplus revenue of $8.2 million will be added to the agency’s fund balance, which will total $45.4 million.
The surplus is the result of a projected 10% increase in sales tax revenue, nearly $9 million in federal stimulus dollars from the American Rescue Plan Act, and agency expectations that there will be a significant increase in traffic over the next 12 months.
“We’ve been able to recover from the pandemic with respect to sales and use taxes,” Heather McKillop, SMART’s chief financial officer, told the board.
Novato Mayor Eric Lucan, a SMART board member, said while the board will have to decide how to use the excess funds, the extra money could be used as matching funds for state and federal grants.
“It really puts us in a good position to continue to deliver what we hear in the Marin and Sonoma communities,” Lucan said Thursday. “One of the things we’ve heard loud and clear is to continue the expansions, with the completion of the multi-use trail.”
Launched in August 2017, SMART provides 45 miles of passenger rail service between Larkspur and Santa Rosa. It began operating freight services on the North Coast last year. Passenger service is primarily funded by a quarter-cent sales tax in Marin and Sonoma counties, which provides 58% of its total revenue.
SMART’s freight budget includes $5.5 million in revenue and $4.5 million in expenses. About $4 million in revenue comes from a state grant that will be used to operate and maintain 62 miles of freight railroad between Napa and Windsor in Sonoma County.
The budget assumes SMART will also experience a significant recovery in ridership that would nearly double its fare revenue to $2.3 million from $1.2 million in the 2021-22 budget. The agency is targeting a total of 594,000 passengers in the next 12 months, or about 49,500 passengers per month. SMART welcomed nearly 274,000 passengers from July to April, an average of approximately 27,400 passengers per month.
To attract passengers, SMART has lowered fares by 40% since May 2021. The reduced fares are expected to be reviewed in August. Additionally, SMART restored weekday service to 36 daily trips, two fewer than before the pandemic. SMART restored full weekend service earlier this year.
The budget assumes SMART will receive $2.3 million in farebox revenue, up from $1.2 million in the current budget. Farebox revenue represents approximately 4% of SMART’s revenue.