Staff recommends the Policy Coordinating Committee approve the Billings MET Transit Financial Sustainability and Governance Study based on the recommendations of the City-County Planning Board, the Yellowstone County Board of Commissioners, and the Billings City Council. 

Billings MET Transit undertook the Financial Sustainability and Governance study to examine whether its current governance structure and funding approach are sufficient to sustain transit service into the future, as well as support growth of the system. In recent years, MET Transit improved service, including a network redesign that increased frequency and reliability, which resulted in significant ridership growth across the City. At the same time, the City of Billings and the surrounding area continued to grow with the potential for the Billings Urbanized Area to absorb the Laurel Urban Cluster in the upcoming census. Because of these factors, along with growing interest in additional service both within and outside of Billings, the study was commissioned to provide insight into future potential actions to sustain and grow transit service. The study explores alternative governance models, recommends potential funding sources including a transit fare analysis, and briefly explores return on investment factors for transit service. The City of Billings City Council, Yellowstone County Commissioners, and Planning Board all received presentations of the Billings MET Transit Financial Sustainability and Governance Study and forwarded recommendations to PCC. 

Billings MET Transit operates as the designated direct recipient of Federal Transit Administration (FTA) transit funds within the Billings Urbanized Area (UZA), a small urban designation applicable to urbanized centers with populations between 50,000 and 200,000. As the designated recipient, MET administers and utilizes federal funding under a wide range of FTA regulatory requirements, with several sources of funding directly tied to the UZA boundary and the population and land uses within; this boundary is updated with each Federal Census. The boundary is currently separated from the Laurel Urban Cluster by less than two (2) miles; however, development along the I-90 interstate corridor has the potential to merge the Billings UZA and the Laurel Cluster within the next census cycle. The absorption of the Laurel Cluster by the Billings UZA would introduce an additional jurisdiction into the urban transit framework as Laurel currently operates public transit service, which has direct implications for funding, service delivery, and governance.

Regarding funding, MET Transit receives local funding from a number of sources but primarily through a dedicated property tax mill that has been in place since 1978. Recent state level legislation significantly impacted mill revenues across the entire City, leading to stagnating revenue supporting transit. Stable local funding is essential to continue to provide required local match to federal dollars received and to support both transit operations and capital. Facing decreased revenue and recent cost escalations. including labor costs, general inflation, and fuel price increases, MET's most recently approved budget requires significant reserve fund use to cover expenditures for the upcoming year. If no action is taken, reserve accounts are projected to decrease to insufficient levels within 5 to 7 years. Without additional funding opportunities, MET Transit will not only be prevented from expanding service, but may also face reductions to existing service. 

In response to these challenges, MET Transit commissioned a study to explore alternative governance models appropriate for a multi-jurisdictional urbanized area and identify potential funding opportunities to support long-term transit sustainability.

The MET Transit Financial Sustainability and Governance Study included a study review committee that included members of the Aviation and Transit Department of the City of Billings, the Metropolitan Planning Organization (MPO - City of Billings), Billings City Council, the Lockwood Steering Committee, the City of Laurel, Yellowstone County, Allies in Aging, and School District 2. The study also included outreach to the area community regarding desire for transit service relative to current service areas.

PCC may:

• Approve the study based on recommendations from the City-County Planning Board, the Board of County Commissioners, and the Billings City Council; or,
• Not Approve, in which case the study would not be accepted as an official planning study to support future actions.

The study explores potential governance and funding scenarios supporting transit service; no direct fiscal effects will result from approval of the study.