DART: A property tax funded amenity

Last year we looked at DART’s financials, and wondered aloud whether it would be sensible to think about the sustainability of the current funding model before committing to a major new project as represented by bus rapid transit (BRT). (See my January 2015 IowaBiz blog.) This $25 million project would carry an ongoing operating cost of about $1 million per year.

In May the BRT project was put on hold due to the unavailability of federal funds, but the community is using the time-out to review DART’s fundamentals.

There is now another year’s worth of data and it’s possible to see whether any of the trends identified last year have improved, and whether budget projections were met.

Property tax revenue continues to pay for an increasing share of DART operations, with operating revenues (fares, contracts with major employers and advertising) paying for a smaller share. This is partially by design, as property tax is replacing federal funds that have been phased out.

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At the same time, DART has been expanding service in a bid to connect large employment centers in the city and the suburbs with residential concentrations. Because there’s an 18- to 24-month lag time between when the service is first provided and when the ridership picks up, ridership (and revenue) increases don’t necessarily track with the expense increases. Allowing for the lag time, it does appear the service expansions are generating more ridership However, as was noted last year, property taxes are basically covering the cost of these additional riders. Total operating revenue was 10.1 percent below projections for the year that closed June 30th, 2015; with fixed route operating revenue being 8.65% percent short of budget.

The overall trends have not changed much from a year ago. Total operating revenue is still less than it was four years ago despite substantial service expansions and improvements since that time. Basically, as it weighs future improvements for DART, the community will need to decide if it is willing to continue to raise property taxes to fund them.

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Response from DART Commission – September 29, 2015

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