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File #: 2025-0381   
Type: Program Status: Passed
File created: 5/5/2025 In control: Finance, Budget and Audit Committee
On agenda: 6/18/2025 Final action: 6/26/2025
Title: CONSIDER: A. RECEIVING AND FILING status report on the Workplan to Address the Fiscal Cliff; and B. ADOPTING the Principles for Addressing the Fiscal Cliff (Attachment A).
Sponsors: Board of Directors - Regular Board Meeting
Indexes: Advertising, Alignment, Audit, Budget, Budgeting, Capital Project, Cleaning, Council Of Governments, Flexible Funds, Grant Aid, ITS Initiatives, Landscaping, Mitigation, Operating revenues, Program, Regional transportation, Safety, Short Range Transportation Plan, Strategic planning
Attachments: 1. Attachment A - Guidelines for Addressing the Fiscal Cliff, 2. Attachment B - Eligibility and Allocation of FY26 Funding, 3. Presentation
Meeting_Body
FINANCE, BUDGET, AND AUDIT COMMITTEE
JUNE 18, 2025

Subject
SUBJECT: ADDRESSING THE FISCAL CLIFF

Action
ACTION: APPROVE RECOMMENDATION

Heading
RECOMMENDATION

Title
CONSIDER:

A. RECEIVING AND FILING status report on the Workplan to Address the Fiscal Cliff; and

B. ADOPTING the Principles for Addressing the Fiscal Cliff (Attachment A).

Issue
ISSUE

Metro's near-term forecast is developed based on the availability of eligible funding. The projected shortfall will depend on the availability of these funding sources. As Metro continues to monitor the funding uncertainties and as newer information becomes available, a comprehensive assessment will be conducted to evaluate funding, schedule and scope to mitigate the impacts of any losses or interruptions in funding. The mitigation strategies will be dependent on the type of shortfalls and the eligible funding available. Through the Equitable Zero-Based Budget (EZBB) process, the FY26 Budget is balanced and is structured to continue investments in an expanding rail system, enhancing the customer experience and keeping projects moving.

However, Metro's near-term forecast does signal financial challenges ahead with a cumulative financial gap in Metro Transit of $100 million by FY27, that grows to $2.3 billion by FY30 due to major cost drivers projected to outpace sales tax revenue growth under current economic assumptions. In addition, Metro is faced with large increasing capital project costs which further aggravate the financial challenges ahead. Given these significant challenges, at its April 2025 meeting, the Chair of the Finance, Budget, and Audit Committee, Director Sandoval, asked staff to develop a work plan for addressing the fiscal cliff as FY26 will be a critical time for the Board to consider major decisions for the FY27 Budget to change course on the projected deficit in the coming years.

This report outlines Metro's workplan and timeline, which will be incorporated into the...

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