TO: AC Transit Board of Directors
FROM: Michael A. Hursh, General Manager
SUBJECT: Seven Year Financial Projection
BRIEFING ITEM
AGENDA PLANNING REQUEST: ?
RECOMMENDED ACTION(S):
Title
Consider receiving a report on updated operating financial projections.
Body
STRATEGIC IMPORTANCE:
Goal - Financial Stability and Resiliency
Initiative - Financial Efficiency and Revenue Maximization
This report presents updated financial projections to inform the Board, staff, and the public of the District's financial future.
BUDGETARY/FISCAL IMPACT:
There is no budgetary impact from this informational report. Implementation of initiatives to reduce deficits would have budgetary impacts, but additional analysis is needed to determine changes to cost.
BACKGROUND/RATIONALE:
AC Transit has faced turmoil and uncertainty resulting from the COVID pandemic over the last two and a half years. The pandemic has impacted everything from how and where employees work to how much service the District is able to provide. A tight labor market and spikes in COVID cases have made hiring operators and increasing service levels very difficult. Supply chain problems and the war in Ukraine are causing sharp increases in the price of fuel and other goods.
High inflation is increasing the price of many goods and services, and the initial hopes for "transitory" inflation have been dashed. Federal Reserve officials are adamant that inflation must be brought under control. However, the tools proposed by the Federal Reserve to curb inflation could potentially cause a recession and result in the reduction of many of the District's revenue sources.
A significant amount of federal emergency operating funds have and continue to support the District and allow for the continuation of bus service, albeit at a lower level compared to pre-pandemic conditions. Unfortunately, this operating support will not continue, and the District may be heading toward financial deficits once all these...
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