COVID-19 wrecks funding for Nevada transit & roads

Nevada’s roadways and transportation systems face long-term budget challenges as the pandemic’s impact on revenue exacerbates long-standing problems, officials said during a Legislative Committee on Energy meeting Monday.

Public transit systems at both ends of the state are grappling with plummeting ridership and revenue caused by the COVID-19 pandemic.

With no clear indications about when most riders will feel safe enough to return or when the state’s economy will fully bounce back, public transportation networks are preparing for difficulties ahead.

Pre-COVID-19, the Regional Transportation Commission of Southern Nevada (RTC), the 14th busiest public transit system in the United States, was already facing a budget deficit due to declining gas tax and farebox revenues, but the pandemic has worsened those projections.

Before the pandemic, the agency estimated a $6 million budget deficit in fiscal year 2020. Now that estimate has grown to a projected $35 million shortfall. 

That number could be even higher next year, chief executive officer of the RTC, M.J. Maynard said during the committee hearing.

“Our two main funding sources—sales tax and passenger fares—have seen a severe decline because COVID-19 and has greatly impacted our deficit,” Maynard said.

The anticipated deficit for fiscal year 2021 has grown from $20 million to $75 million based on current projections, according to Maynard. In response the RTC has frozen hiring, cut bus services, cut pay for existing employees, imposed a 15 percent reduction in total workforce, and made reductions in operating costs.

A $112 million infusion of federal funds from the Coronavirus Aid, Relief, and Economic Security Act passed by Congress has helped address those shortfalls through 2022 but is only a temporary solution to the agency’s financial troubles.

“Unfortunately past fiscal year 2022 the situation does not improve and continues to remain dire,” said Maynard. 

Growth in population and job density in Southern Nevada in recent years led to a need for several new bus routes and expansions say transportation officials, but a lack of funding and plummeting revenue held back any improvements even before the pandemic.

There are over 176,000 persons in Las Vegas valley households without access to a vehicle and many of those who live in areas underserved by transit fall within or below the poverty line, Maynard said.

“We know that these people do not have access to any jobs available that are beyond the reach of the transit system,” Maynard said.

The total cost to maintain existing service and add much-needed improvements to transit services is about $250 million over the next five years.

The RTC’s roadway funding program is facing major shortfalls too. Roadways in Southern Nevada are largely funded by a combination of state gas taxes and revenue streams such as sales taxes and federal funds.

Weak revenue from fuel taxes which are used to fund roadway projects and maintenance, however, have undermined attempts to stabilize transportation funding in the state for years, forcing legislators to consider raising gas taxes or exploring other ways to increase transportation spending.

For the 2021 fiscal year the RTC was anticipating $75.9 million in fuel tax and $118.2 million in fuel revenue indexing, but the pandemic has created a major shortfall with a projected total loss of $41.4 million in revenue. 

The Regional Transportation Commission of Washoe County is facing similar funding issues, said Bill Thomas, executive director of RTC Washoe.

Due to COVID-19 the agency saw a 55 percent drop in ridership in April. Farebox revenue makes up nearly 13 percent of funding for transit operations in Washoe.

“We’re really concerned about our ability to not only grow our ridership but to get back to where we were before,” Thomas said. “We’ve done everything we can to make it safe but we are still challenged by the fact that coming out of the pandemic people are nervous about getting on anything with multiple people.”

The unpredictability of sales tax and declining fuel tax revenue make it difficult to take on needed projects, Thomas said.

The agency has an estimated $85 million in unfunded transit needs over the next 20 years and would need about $25 million annually to cover unfunded roadway needs.

“We are really concerned about maintaining an increase in funding for our transportation system that includes not only transit but our roadway construction and roadway maintenance,” Thomas said.

Both transit agencies recommended Utah’s roadway and transit funding model be adopted in Nevada.

The Utah Department of Transportation launched the Road Usage Charge program aimed at giving drivers of alternative-fuel vehicles the option of paying by the number of miles driven instead of paying an annual fee. 

The Nevada Department of Transportation (NDOT) recommended using a road usage charge model to fund roadway needs like Utah, however, the director of NDOT Kristina Swallow said it was too premature to select a specific model without more discussion.

NDOT needs a new plan

During the committee hearing, Swallow laid out a 5-year plan to develop and recommend a long-term transportation and funding model to the governor and Legislature for consideration and possible adoption during the 2025 legislative session.

The plan would involve tasking local and state agencies with fiscal and environmental data monitoring and collection with regular reports to the Legislature before presenting a unified plan.

Despite declining revenue from fuel tax, road use has only grown in Southern Nevada thanks to population growth and an increase in daily distance driven on average due to urban sprawl.

Between 2008 to 2018 vehicle miles traveled increased by about 30 percent. Projections indicate that over the next 10 years it will go up by another 30 percent, fueled by a 14 percent increase in miles traveled per citizen.

“This growth puts an increased burden on our already challenged infrastructure system and funding,” Swallow said. ”Unless development patterns change the vehicle miles traveled will likely continue to increase and we need to plan for that.”

Since 2008 lane mile growth in Nevada has expanded from 72,000 miles to over 102,000 miles, representing a 42 percent growth from 2008 to 2018.

Historically NDOT has had a goal of keeping 95 percent of their roads in fair or better condition, but as of now, only 72 percent of roads meet those conditions due to a lack of sufficient funding.

“While I would love to have 95 percent of our roads in fair or better condition that’s simply not realistic given our current resources,” Swallow said. “So we are going to maintain our system as it is.”

There is currently an annual roadway shortfall of $505 million and $25 million in unfunded transit needs, including for safety, bridge preservation, and transit.

“The highway fund is simply not keeping up with the changes in our economy, the changes in our fuel economy, and we need to do something to address it,” Swallow said.