Sixteen months in the past, RTD leaders declared metro Denver’s public transit company financially strong with no warning indicators, however the newest information present RTD has fallen into the pink, which can drive cuts in routes and the frequency of buses and trains.
The company’s elected administrators met Tuesday and voted 13-1 to approve a record-high working funds of $1.5 billion, a 25% enhance over this yr. Their gap, estimated to be $100 million to $400 million deep this yr, and $228 million deep in 2026, is the results of a mix of higher-than-anticipated upkeep and restore prices and falling gross sales tax revenues, which fund 70% of RTD’s spending. The deficit spending, administrators stated, will drive a speedy drawdown of RTD reserves that have been earmarked for service growth.
“This got here as a shock to all of us,” director and board treasurer Karen Benker stated in an interview, calling the scenario “unhappy” and including she was “shocked” after a long time of labor on state authorities budgets that by no means hit such bother.
“As soon as we discovered how deep the deficit was, the board and finance committee didn’t get an opportunity to enter any actual depth as a result of the funds got here out so late. We had only some weeks to see it and ask questions,” Benker stated.
Over the previous six weeks, RTD managers’ discussions with the administrators revealed the troubling monetary predicament with tons of of hundreds of thousands of {dollars} a yr in prices for deferred upkeep and restore, largely alongside RTD’s rail traces. These prices are on high of the overhauls launched in 2024, together with the $152 million downtown monitor reconstruction and emergency fixes to cope with widespread deterioration of RTD’s104 miles of tracks.
RTD’s descent into debt means transit officers will probably be hard-pressed to maneuver ahead with deliberate service expansions to reverse the declines in RTD’s ridership, which has decreased from round 106 million in 2019 to a projected 60 million this yr.
RTD administrators are considering unspecified service cuts beginning in 2027.
“In the long run, we don’t manage to pay for to pay for service will increase,” RTD director and board secretary Chris Nicholson stated Tuesday earlier than the vote. “RTD is going through a long-term structural deficit of tons of of hundreds of thousands of {dollars} a yr in perpetuity if we don’t take motion that both cuts the funds massively or raises new revenues.”
Nicholson instructed fellow administrators after their vote that “onerous selections” on cuts within the coming months should deal with “not simply overhead” however “how we streamline routes now we have which are inefficient,” whereas prioritizing routes with probably the most riders.
The company’s exceptionally excessive reserves lately had enticed hypothesis that RTD might afford to broaden routes.
“Taking a look at our deficits now, we’re going to be utilizing these reserves quite rapidly,” Benker stated. “You’ve got to pay your payments.”
An company evaluation launched final summer season estimated the price of finishing FasTracks to Boulder, together with three different remaining routes, at $1.6 billion.
RTD’s reserves this week totaled about $1 billion, together with $382 million in restricted funds and $192 million in inner financial savings for FasTracks, officers stated in response to a Denver Submit request. The reserves embody $301 million to cowl working bills for 3 months. The whole reserves decreased by 11% from $1.12 billion on the finish of 2024, officers stated.
RTD’s reserves previously have stayed excessive, in contrast with Denver’s metropolis authorities reserves of $180 million, with an annual funds of $1.66 billion, in line with metropolis officers. Colorado’s state authorities maintains reserves of $2.1 billion with a funds of $47.9 billion, state officers stated.
The company’s rail and bus methods are greater than 30 years outdated, and upkeep is required, RTD director and normal supervisor Debra Johnson stated in an interview.
“That is par for the course. In the event you lived in a house for 30 years, do you assume you wouldn’t need to make some repairs? It’s not going to be in the identical situation as when the builder accomplished it. … That is precisely the place we’re proper now.”
In August 2024, a state audit deemed RTD financially wholesome. Former board chairman Erik Davidson, with Johnson, instructed state lawmakers that “RTD met all monetary well being ratios with no warning indicators.”
The turnaround has ignited frustration amongst state lawmakers charged with overseeing RTD, stated state Rep. Meg Froelich, a Democrat representing Englewood who leads the Home Transportation, Housing and Native Authorities Committee. Amongst her questions for RTD administrators: “Why has your complete upkeep plan for the previous 10 years been so inept?” Froelich stated, emphasizing the necessity for superior public transit to maintain state-backed, high-density, transit-oriented improvement.
“We’re going backward,” she stated, questioning whether or not company managers might be trusted. “Now are they going to seek out one other $300 million gap?”
Froelich additionally challenged the assertion that deficits have been unavoidable due to upkeep and restore imperatives for the equal of a 30-year-old home. “So that you didn’t know that, in yr 20, your boiler was 20 years outdated and also you have been going to wish a brand new boiler? And that, if there have been a hail occasion, you would possibly want a brand new roof? You didn’t plan for these items?”
The Larger Denver Transit advocacy group “is deeply involved about RTD’s troubling monetary place, particularly seeing how their story modified so drastically between 2024’s obvious near-term stability and at this time’s rising disaster,” stated GDT co-founder James Flattum, who additionally serves on a state oversight committee.
“It’s one factor for the company’s gentle rail division to have identified about restore prices the place earlier administration irresponsibly instructed them to attend for many years,” Flattum stated. “It’s one other problem solely for the sunshine rail division to have missed tons of of hundreds of thousands of {dollars} in repairs for years — to the purpose the opening grew so deep that RTD must begin reducing its already skeletal post-pandemic bus providers as quickly as 2027. That is mismanagement.”
On Tuesday night time, company administrators additionally authorized a 4% pay elevate for Johnson, a lump sum $17,197 fee on Dec. 19, including to her base wage of $402,325, after a board evaluation discovered she met expectations underneath her five-year contract that ends this yr.
In latest months, RTD staffers knowledgeable administrators that, as an alternative of finishing up a deliberate shift of the 955-bus fleet from diesel to cleaner, quieter electrical automobiles, company officers have been planning to tackle $539 million in new debt over the following 5 years to switch getting older diesel buses with new diesel buses. RTD’s administrators additionally discovered that RTD managers didn’t apply for a share of the $1.5 billion in federal authorities grants for brand spanking new buses that have been doled out within the days earlier than Thanksgiving. Different Colorado transit businesses obtained a complete of $60 million for 13 bus substitute initiatives, Sens. Michael Bennet and John Hickenlooper introduced.
A Nov. 26 e mail from Johnson to board members confirmed that RTD didn’t apply “as a result of it was not eligible for the funds” due to a ratio of backup “spare” buses to buses in service too excessive for federal grant specs. On Tuesday night time, administrators voted 9-4 to take away a proposed $20 million expenditure for brand spanking new buses from the 2026 funds earlier than they authorized it.
The company’s monetary issues additionally might put in danger plans for RTD to assist pay for intercity rail service linking Denver to Boulder, Longmont, Loveland, Fort Collins and different northern Entrance Vary cities. RTD leaders had authorized a “joint service” collaborative strategy working along with the Colorado Division of Transportation and the Entrance Vary Passenger Rail District.
However RTD board chairman Julien Bouquet stated any RTD assist for that mission “should make sense” for the company.
“I perceive the frustration in relation to lawmakers. … The RTD has finished the perfect we are able to with the assets now we have. We’re trying into the choices,” Bouquet stated. “We knew there can be the potential for monetary onerous instances. We’re making ready for that and defending the core of our enterprise. We’re going to be ensuring we are able to shield our service and shield our operators.”
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