Yes, they have models that take in account of all this.
But these models all only have a short-sighted and short-term vision, they don't take in account how these service cuts may make people switch to other modes of transportation even when the service isn't changed, etc., which would result in additional revenue losses.
As usual, we forget to address the elephant in the room: how cars are a heavily subsidized mode of transportation compared to public transit, and how much money could be saved (both in taxes and individual spending) if these subsidies where more oriented toward more cost-effective modes of transportation....
For example, in Outremont borough in Montréal, pretty well served by public transit, it costs ~$120 per *year* to park your car on the street in front of your house, which is about $1/sqft/year: way cheaper than the value of the terrain used for that purpose, and way cheaper than if you'd like a permit for a (commercial) terrace, in which case it will be $25/sqft/year...