| | | | | | | |  | STAFF REPORT
For Meeting of November 26, 2018
MAYOR AND MEMBERS OF THE CITY COUNCIL | Agenda Item # 8.A.
TITLE: Resolution No 2116 Senior/Disabled Taxi Program Changes |
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| | | | | | | | Subject
This resolution increases the price paid for Senior & Disabled Taxi Tickets for the first time since 2009 to account for increased costs.
Summary and Background
The Senior & Disabled Taxi Ticket Program currently costs users $2 per 1-way ticket. Resolution 2116 will increase the user’s cost to $2.50 per 1-way ticket. The last price increase raised the rider’s cost from $1.75 to $2.00 in 2009.
The City of Hermiston subsidized approximately 17,500 taxi rides in 2016 & 2017, but has seen a large jump in 2018; putting the program on track for almost 23,000 this year. The current redemption value paid to the taxi company per ticket is $6.60, which has risen from $6.15 per ticket in 2009. This resolution will increase the redemption value to $6.75.
Labor Cost Issues
The Taxi Program is a labor-intensive service. Most taxi drivers earn approximately $11.00 per hour currently. The current minimum-wage as of July, 2018 is now $10.50 per hour. The local minimum wage is set to climb each year, for the next four years, reaching $12.50 per hour in July, 2022, when it will begin to index annually with inflation.
The local labor market is very tight. The Umatilla County Unemployment rate is currently the lowest on-record (4.4%), and has been under 5.1% since October, 2016.
The City Council, in May, 2015, adopted Ordinance No. 2230, which, among other things, established very strict criteria to become a licensed taxi driver. These criteria, combined with the pressures from labor availability, and minimum wage increases, are making it very difficult to find quality drivers at an affordable price.
Mitigating Services
One of the main uses of the Senior & Disabled Taxi program, historically, was to attend medical appointments. The hospital’s CareVan began operating in full in early 2007, added a second van in 2008, and now has a third which is used for backup. The CareVan has really grown to fill much of this need.
HART Bus Service
The Taxi Program is a high level of service; picking up customers almost on-demand, and delivering them directly to their destination. The opposite end of the spectrum is a fixed-route service, where the service sets the schedule and the stop locations.
The HART bus service, Operated by KAYAK Transit, began operating within Hermiston at the beginning of 2017 and now offers hourly stops around Hermiston between 9am and 5pm. KAYAK is currently planning to expand the service to operate between 7am and 5pm, starting in January, 2019. The HART provided 8,000+ rides in 2018 through October, which is on pace to nearly triple the ridership from the program’s inaugural year.
The HART bus service is free to riders, and costs the City $125,000 per year in subsidy. Users of the Senior & Disabled Taxi program can, and are actively encouraged to, use the HART bus service in combination with their taxi tickets. For example, if a rider needs to make an appointment at a certain time, but they’re unsure how long the appointment will take, they can use HART to get to the appointment, and then call a taxi when they are done. Not only does this make both systems more useable from a scheduling perspective, but it also helps to stretch the useable hours of the HART (i.e. using a taxi before or after the HART hours, but using the bus during its operating hours).
Utilization of HART Bus Service by Taxi Program Users
KAYAK keeps track of raw numbers of users of the HART, but is unable to accurately track how many riders are using the system in-lieu of taking a taxi. Therefore, we have to rely on anecdotal information from our taxi provider, who indicates that very few of the taxi program users are utilizing the HART, favoring the higher level of service of the taxi.
Taxi Program Ridership in 2016 (the last year prior to HART operation) was 17,700. Ridership remained steady at 17,500 in 2017, but has jumped to 19,500 through October of 2018, on track for ridership nearing 23,000 by year end. These numbers back up the assumption that most of the HART riders are new transit users who are ineligible for the Taxi Ticket program, and few Taxi Program users have switched to the HART.
Original Assumptions Used in HART Development
A major assumption underlying the financial forecast of the HART was originally that the price of Taxi Tickets would increase, and encourage users to utilize the HART. The Public Transit Advisory Committee, in the Fall of 2016, recommended holding off on a taxi ticket increase until the HART had been operating for some time.
Public Transit Advisory Committee Recommendation
The PTAC, at their November 13, 2018 meeting, heard a proposal from City Staff to increase Taxi Ticket Prices to $3.00 each, due to the issues outlined above related to labor cost issues. The PTAC discussed and understood the issues associated with the rapidly rising minimum wage, but recommended that the City Council adopt a rate increase to $2.50 for now, with the understanding that the rate can be raised in the future as costs increase.
Tie-In to Council Goals:
Fiscal Information
The surge in Taxi Program riders in the second half of 2018 means that the Taxi Program is currently trending over-budget on expenses as well as revenues. However, it is important to keep in mind that for every $1 we bring in in revenue, we must spend out $3.30. If the trend continues, and we end the fiscal year with 23,000 rides, we will be approximately $27,000 (17%) over budget on expenditures.
The proposed ticket price increase will result in several things which will impact the budget variance:
1. We will see a surge in tickets purchased in December, as riders try to “stock up” on $2 tickets.
2. We will see a drop in tickets purchased after December, both from riders using their stockpile as well as riders opting to use other transportation as a result of the increase.
3. Utilization of the program (and the corresponding expense paid out by the City) is likely to decline in the first half of 2019.
As a result of December stockpiling, it is highly unlikely that this change in ticket pricing will bend the demand curve enough over the final six months of the fiscal year to end the year under budget. A budget supplement in the Spring is likely to be necessary unless the Council wants to implement a temporary cap on the number of tickets sold to discourage stockpiling.
Alternatives and Recommendation
Alternatives
1. Approve Resolution 2116 and prepare for a supplemental budget request
2. Approve Resolution 2116 and implement a cap on number of tickets sold to keep expenses under budget.
3. Deny Resolution 2116 and implement a cap on number of tickets sold to keep expenses under budget.
Recommendation
Approve Resolution 2116.
Requested Action/Motion
Motion to approve Resolution 2116 as presented.
Submitted By: Mark Morgan |
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