TARC will face financial insolvency in 2032 without new revenue

Louisville's Transit Authority of River City (TARC) may not be "fiscally sustainable" by 2032, even if the public transportation agency makes "aggressive" changes — unless the organization finds new sources of revenue.

This is despite TARC introducing a new budget proposal for fiscal year 2025, which includes a schedule of fewer buses scheduled every hour on most routes during the week.

With the decrease in route frequencies, there will be layoffs, said interim executive director Ozzy Gibson. This "blindsided" some TARC drivers who say they heard about it for the first time from a press conference where Mayor Craig Greenberg called it an "opportunity" to fix the Jefferson County Public Schools' driving shortage.

Monday, Gibson said he'd know the exact number of layoffs in about a month, but told Louisville Metro Council members it could be as high as 25% of drivers. At the Government Oversight/Audit and Appointments Committee meeting Tuesday, he said he anticipates 60-80 out of approximately 325 drivers will be let go.

Gibson and finance committee chair Steve Miller spoke to the Louisville council members a day after TARC released its budget proposal, outlining the agency's financial status and plan for the future, including the decrease in route frequency plan. It is deemed the "Saturday Plus" plan since weekday frequency will be reduced to the same level of service as on Saturdays.

No routes are expected to be eliminated. There will be no changes to TARC's four most popular routes and there will be no changes to TARC3, a paratransit service.

After a tense start to the meeting — in which a member of the TARC board was up for reappointment and called "complicit" in the organization's "silence" about its financial situation, but was ultimately approved — Gibson and Miller delved into TARC's financial situation.

"Make no mistake council members, if we stay on our current course, TARC is headed down the path of insolvency," Miller said.

By implementing the Saturday Plus plan, the public transportation agency may be able to delay the fiscal cliff until 2028. A community-focused network redesign process called "TARC 2025" will kick off this summer, and would ideally improve the financial situation, too — but only temporarily, unless other funding sources are found.

"What I think I'm seeing here is even if you do both (Saturday Plus and TARC 2025), it's not fiscally sustainable by fiscal year '32," said Councilman Anthony Piagentini, who represents parts of eastern Jefferson County. "Am I reading this incorrectly?"

"You are reading it correct," Gibson responded. "If there is no new monies found, you see where we still end up."

Approximately 20% of TARC's budget relies on COVID-19 relief funds, but that money is set to run out by July 2025. This would leave a $28-$30 million gap in annual funding of TARC's roughly $110 million budget.

The Stronger Communities Through Better Transit Act proposed by U.S. Rep. Hank Johnson (D-Georgia) could boost public transportation around the country, which took a significant hit during the pandemic, but it has "stalled," Gibson said.

He hopes to work with the Kentucky state government to develop a funding formula similar to the one used by Indiana. Kentucky gives TARC between $300,000 and $1.5 million annually. With a funding formula based on mileage and passengers, that number could go up to $7 million based on a preliminary analysis by Gibson and a consultant.

Miller said voters could choose to increase the local occupational tax, which has been at the same level for 50 years, but many council members view that as a non-starter.

TARC receives 9% of the occupational tax revenue, Jefferson County Public Schools receives 34% and the Louisville Metro Government receives 57%. Those percentages could also shift, but money would have to be pulled out of other services and given to TARC.

Ridership fares account for just 5% of revenue.

"Even if we doubled ridership, it's not even close to the amount of money we need to deal with the structural operational budget deficit," Miller said.

Approximately 6,000-8,000 people ride TARC daily, said Miller. For many, it is their only option for transportation.

Reach reporter Eleanor McCrary at EMcCrary@courier-journal.com or at @ellie_mccrary on X, formerly known as Twitter.

This article originally appeared on Louisville Courier Journal: TARC facing fiscal instability in 2032 even with "aggressive" changes