Arbor Update

Ann Arbor Area Community News

AATA FY2006 Funding Issues

25. August 2005

From Chris White, AATA

August 24, 2005

AATA Funding and Increased Costs

In 1998, AATA was receiving 50 percent of its operating costs in state funding. Since that time, the percentage has been steadily declining, with the available funding level for Fy 2005 at 34.6 percent. There is a possibility that the state share could be reduced further to fund just 33.3 percent of AATA’s operating costs. This level is equal to the 1997 level and is the statutory floor.

In 1999, AATA was paying 65 cents per gallon of fuel. The current cost is $2.08 per gallon as of August 24, 2005. For every 10 cents that the cost of fuel increases, the annual expense to fuel AATA vehicles goes up by $70,000.

Health care costs have increased by an average of 12-15 percent each year since 1999.

Over the next two fiscal years, 27 AATA buses will be due for replacement. In the past, federal capital funds paid for 80 percent of the cost of new buses, with the state paying for 20 percent. The state is proposing to reduce the share of capital funding from 20 percent to 13 percent. This 7 percent reduction represents $567,000 in lost revenue for the purchase of buses over the next two years.

Measures Taken by AATA

In the face of these constraints, AATA has implemented the following measures to reduce costs and find alternate revenue sources:

  • Increased the full bus fare in 2002 from 75 cents to $1.00.
  • Consolidated A-Ride services under one service provider to realize expected savings of $500,000.
  • Reduced service by 5 percent in 2002.
  • Reduced the size of the work force from 215 in 2003 to 191 for FY 2006 through attrition and the elimination of 9.5 positions.
  • Reduced the cost to produce the Ride Guide and other customer information by bringing most of the design work in-house. Plans call for making additional changes to the Ride Guide to realize a reduction in printing costs.
  • Contracted for the placement of advertisements on AATA buses to realize expected new revenue of $200,000.

    Funding for Fiscal Year 2006 and Beyond

    The attached document on AATA FY 2006 budget proposals and their implications further details the funding situation and proposed state legislation that could impact the funding that AATA receives. AATA encourages you to review this information and contact your state representatives to support House Bill 4831 and oppose Senate Bill 281 and further transfers of Comprehensive Transportation Fund money to the state’s general fund.