Helena’s Capital Transit faces $140K shortfall, could see higher fares or cut services

Whether it be higher fees, cutting services or creating a new transit district, Helena’s Capital Transit system needs reform as it faces a $140,000 budget shortfall, city staff said.

The figure came up in a budget review during an administrative meeting on Wednesday in which city departments presented fiscal overviews to prepare for fiscal year 2027.

Helena expects to deal with a yearly deficit in its transit budget after federal and state funding to the program was cut back. This coming fiscal year, the transit budget is expected to be $140,000 in the red, Transportation Systems Deputy Director Chris Couey said at Wednesday's meeting.

Much of the budget relies on a federal matching grant program. But while the Federal Transit Administration previously paid for 80% of the grant funding and the city put up a 20% local match, Helena is now working with a 50-50 split, Couey said. Between that and state funding cutting back, the bill is falling harder on the city than it can keep up with year after year.

Capital Transit usually gives 44,000 on-demand rides per year, and while the standard fare is $3 for a day-ahead scheduled ride and $5 for day-of rides, 67% of its current riders qualify for the discounted rate of $1 day-ahead, $2 day-of transit, staff said.

In practice, Transit is actually spending $40-50 per ride between gas, labor and equipment. With more of that cost falling on the city’s general fund, something needs to change, City Manager Alana Lake said.

For FY2027, Transportation Systems was able to shuffle enough of the funds around to only face an immediate deficit of $65,000, Couey said, but the tricks the department pulled would strain the general fund if doing so remained a habit.

“The path we’re currently on is not sustainable for this program,” Lake said.

“We are severely underfunded,” Couey said.

Transit districts and raised fares

Although the Helena City Commission made no decisions Wednesday, city staff explained some of the choices they’d have in the coming months.

“Short of a really good bake sale, the options ultimately kind of come down to a transit district,” Couey said.

That could look like either an urban transportation district, which would go through Lewis and Clark County and be similar to districts like one in Bozeman, or a local district mill levy.

“Neither of these districts would be very expensive by property,” Couey said. “On the very low end, we need to make that $140,000 difference in a typical year, but the goal is to save the general fund from having to make any contribution.”

But that’s not a fast fix; it would take at least several months to propose and execute, city staff said.

“The issue I see with a transit district is that it’s subsidizing a service that few utilize in the community,” Lake said.

Although a transit district was staff’s top choice, another of the immediate options is to raise ticket prices. With most riders qualifying for discounts, which are offered to seniors, veterans, students and those with disabilities, it would be a question of who gets their prices raised: non-discounted riders or all riders.

In a typical year, Helena makes $70,000 from fares, Couey said. It would be hard to squeeze $140,000 from fares on top of that without some extreme changes, like cutting the discount program, he said.

Shifting to a fixed course wouldn’t immediately solve the problem either, Transportation Systems Director David Knoepke said. Most of the discounted riders would also qualify for paratransit, or specialized curb-to-curb transportation that helps people with disabilities.

Even if Helena returned to a traditional bus system — which was described as “cumbersome,” with 40-minute roundtrip routes when they last existed — Helena would have to keep its on-demand service, Knoepke said.

Yet another option would be to reduce services, which is not staff’s preference, he said.

“Ultimately, any route we go is going to take time, other than looking in the short-term,” Knoepke said. “Again, it’s a myriad of things. We can increase rates, reduce services, which we would rather not do any of those. But understand we have a budget shortfall. … It’s not an easy answer.”

“We have a long-term issue here that we need to look at, but we need more data to provide to you so you can make an informed decision,” Lake said. She recommended researching other cities in Montana and their bus systems. “We can compare prices. We can get creative ways on how we do business.”

How to pay this year's bill

As for the immediate $65,000 deficit, the Commission is still on-call to find a fix by the time it passes the FY2027 budget.

“I know this is a difficult conversation,” Finance Director Sheila Danielson said. “Should the Commission choose to make up the shortfall in the general fund, the Commission will have to decide what service it wants to cut in the general fund.”

This year, Danielson recommended looking at transit cash reserves instead. But she doesn’t like it as an “ongoing recommendation,” she said.

Though the Helena City Commission didn’t make a decision Wednesday, they asked some follow-up questions and requested further details at a future staff meeting.

“I vehemently believe this is an essential service,” City Commissioner Melinda Reed said. She favored taking from cash reserves for the coming year and suggested higher bus fares for non-discounted users as a long-term solution. However, she said she wanted more information before she committed to a plan.

“There are people I know who are community members who have no other way to get to work,” Reed said. “If the increase has to go up for those who are able to afford it, I don’t love it, but it's better than cutting services.”

As of Friday morning, the Commission is scheduled to review Transportation Systems fees at this Monday's meeting. With the tight budget schedule, Danielson warned that this decision may not be fully detailed by the time the June preliminary budget is ready.

If it doesn’t make it by June, it can still be added in August when the final version of the budget is reviewed, she said.