Bellevue’s hopes for an expensive downtown light-rail tunnel may be in jeopardy as Sound Transit tries to overcome a growing budget gap expected to reach $3.9 billion.
The agency’s board of directors is preparing to make cost-cutting decisions this fall, with the sputtering economy cutting into revenue projections for the voter-approved Sound Transit 2 package.
“Things like the tunnel are going be up for discussion,” said Sound Transit spokesman Bruce Gray. “Being down 25 percent on a revenue forecast sure puts the spotlight on all your projects.”
The downtown tunnel through Bellevue is expected to run upwards of $300 million, although the city has pledged $150 million toward that cost.
“We (the city) still have a term sheet, and we’re still going to work hard to live up to that and give it a go,” said Bellevue City Council member Claudia Balducci, who also holds a seat on the Sound Transit board.
The $3.9-billion shortfall that Sound Transit’s financial experts have predicted is $767 million – or 5 percent – more than the deficit they projected last fall.
The board already ordered cost-cutting measures following that first grim revenue forecast. The agency cut into its reserves by $2.1 billion, trimmed administrative costs by $90 million, and implemented a sort of go-cheap policy that officials call “managing toward the low end of cost estimates.”
“We have the ability to scale up and scale down to match our revenues, but we’ve trimmed all the fat,” said Sound Transit finance director Brian McCarten. “There are going to be some tough decisions for the board.”
Sound Transit also came up with a new routing option for Bellevue light-rail that would save an estimated $75 million on East Link.
Another plan board members might consider for the chopping block is a proposed $40 million extension of light rail from Sea-Tac airport to a park-and-ride facility at South 200th Street in Seatac.
Other options for dealing with the shortfall could include extending the timeline for ST2 projects, Gray said.
The $18 million ST2 package that voters approved in 2008 aims to expand transit service in the Puget Sound region, most notably by extending light rail to Bellevue, Lynnwood, and Federal Way.
McCartan says the agency is projected to bring in only $11.9 billion over the next 15 years.
Budgets and timelines are a sensitive area for Sound Transit, which missed its targets for the Sound Move transit plan by 10 years and $3 billion due to overly optimistic estimates.
The situation is different this time around, with unexpected economic factors surprising the agency.
“The depth of the recession and the length of time it has taken to get back to normal levels has taken everyone by surprise, not just Sound Transit,” Gray said.
Reversing course on potential project cutbacks will prove difficult should the economy recover sooner than expected. Any reductions in project scope could be permanent.
“The more complicated projects are going to be less able to turn on a dime,” McCarten said.
Sound Transit will update its financial plan next month, and its board of directors will review that plan through November. An initial budget workshop is scheduled for September 16.
