Des Moines finds $3.5 million for bus services. DART says it's not enough to avoid cuts

Des Moines says it's found additional funding to help the public transit system avoid drastic cuts, though Des Moines Area Regional Transit leaders say it's not enough to keep service the way it is.

The city is considering allocating an additional $1.5 million from its general fund in fiscal year 2025, which starts July 1, and another possible $2 million for 2026. The prospective funding, presented at the city's annual budget workshop Thursday, marks the latest in the conversation over how Des Moines could avoid significant cuts in bus services over the next several years.

It does not include a franchise fee as proposed by DART.

DART officials say the latest proposal still would require a 20% to 25% cut to services starting in November — less drastic than its expected 40% cut should Des Moines do nothing — unless council members can agree to a franchise fee, according to a news release. That could mean busses would run less frequently on local routes, on top of DART's plans to stop providing Wi-Fi on busses and start charging credit card fees.

The funding is not committed since neither the city nor DART has passed their budgets, but City Manager Scott Sanders said the $1.5 million would keep up with what Des Moines currently is paying for the service. Next year's $2 million would help cover inflationary costs and pay for a consultant to improve the system, he said.

One of the DART art shelters is located on the Campus of Drake University at 27th Street.
One of the DART art shelters is located on the Campus of Drake University at 27th Street.

"We wanted to be able to have no less than what we had, in fact, a little bit more than what we put in in the current year. And then the opportunity to reserve the franchise fee for whatever the results are of the 'reimagining process,'" Sanders told the Des Moines Register.

For its part, DART had its budget presentation on Friday where officials presented multiple versions of its budget to account for different funding options from the city.

In the meantime, an increase on the city's franchise fee — an up to 2.5% tax on gas and electric bills to fund public transit — is not off the table, though city leaders say there may not be "appetite" on the Des Moines City Council to approve it.

“Unfortunately, the funding commitment from the City of Des Moines falls short of its expected contribution per the property tax formula agreed to in 2019 and is only slightly above its contribution last fiscal year," Russ Trimble, DART Commission Chair and West Des Moines mayor, said in the news release. "As a result, we will need to address this through service cuts that impact riders who depend on DART to get to work, school, and medical appointments."

The commission and staff members at the agency remain committed to providing as much service as possible while it looks to "reimagine" how it can sustainably fund the transit system, he added.

More: Des Moines bus riders could lose their 'lifeline' if DART cuts service to balance budget

What's the background on DART's financial problem?

DART officials have for months contended that the transit agency, which is primarily funded through property taxes, faces an estimated $2.7 million deficit in fiscal year 2025 if the city of Des Moines doesn't increase its share of funding.

This funding is based on a formula that takes into account the population and level of service in 11 participating cities and Polk County. Developed in 2021, the formula is being phased in to lessen the immediate blow to city budgets.

Because Des Moines uses about 74% of the system's services, the capital city is eventually supposed to fund the bulk of what participating communities pay in property taxes — about 49%. But the city already has reached the maximum 95-cent property tax levy for transit, set by lawmakers, which is the driving force behind the proposed franchise fee increase.

The city of Des Moines has contributed $9.8 million — or about 38% of the total amount of property taxes — to DART in fiscal year 2024. But it needs to reach $17.5 million in fiscal year 2029 under the new formula.

Without the additional funding, DART officials warned the transit system could see a 40% reduction in services over the next five years, with the first round starting in November affecting nearly all local bus routes in Des Moines. For most public transit users, the proposed cuts would likely mean longer wait times; less frequent bus service, with some routes running only at peak travel times; and limited weekend service.

Alternatively, the Des Moines City Council could vote to increase its franchise fee up to 2.5% to fund public transit, a step authorized last year by state lawmakers. DART officials say this solution would offer, at least temporarily, a reprieve from cuts to current bus routes and service levels.

The issue has taken center stage at recent City Council meetings, where dozens of community members have passionately urged council members to approve the franchise fee.

DART officials previously told the Register they were urging the council to make its decision sometime in the first few months of the year for DART to begin its budget process.

More: Why drive when you can walk? Alec Davis envisions a more pedestrian-friendly Des Moines

What are DART's two proposed budgets?

With the city's recent announcement that it could allocate $3.5 over the next two years, DART officials prepared a new version of its budget presented at the Friday workshop.

The two budget scenarios project three years of funding and potential impacts to service, with the goal of providing some years of stability to riders who rely on DART and allow the DART Board of Commissioners and staff to focus on overhauling the regional system.

One budget scenario, which takes into account the $3.5 million allocation proposed by the city, would force the agency to cut service by $3 million in fiscal year 2025 to balance its budget for the next three years, resulting in a 20% to 25% service cut starting in November, agency officials said in the news release.

DART would focus on maintaining most local routes but reducing frequency on those routes.

This level of service would last through fiscal year 2027 if DART does not receive additional funding beyond what has been committed, officials wrote.

In the second scenario, transit officials say DART would be able to maintain most of its services if the city passes the franchise fee by the end of May. This scenario would allow DART to start getting franchise fee revenue in fiscal years 2026 and 2027, and lower the "magnitude of service cuts" needed in fiscal year 2025 to a 10% reduction in service.

Either way, officials say they plan to cut administrative expenses by $500,000 in the coming fiscal year. This includes cutting amenities such as Wi-Fi on buses, the MyDART trip planner, and the next bus feature, which shows the real-time arrival of the next busses. The agency also will begin charging credit card fees to customers and could reduce customer service hours.

Sanders and city Finance Director Nick Schaul said the Des Moines City Council could still vote to implement a franchise fee, but it won't make it by the budget deadline for the upcoming fiscal year. If the franchise fee is approved within the next several months, the city and DART would have to amend their budgets to include it, Schaul said. Additionally, it would take some months to implement because the city would need to work with MidAmerican Energy to add it to utility bills.

In a meeting with members of the Northeast Neighbors Neighborhood Association on Wednesday, Des Moines Mayor Connie Boesen said the franchise fee is an option, but that there wasn't much of an "appetite" on council for a full 2.5% franchise fee raise — "possibly a 1.5%," she said.

During the election last year, council member Josh Mandelbaum and at-large council member Carl Voss said they would be in support of raising the franchise fee to fund DART.

Virginia Barreda is the Des Moines city government reporter for the Register. She can be reached at vbarreda@dmreg.com. Follow her on Twitter at @vbarreda2.

This article originally appeared on Des Moines Register: Des Moines finds $3.5 million for DART bus services. Is it enough?