The county
’s transit agency is at a financial crossroads, and Santa Clara
County citizens and businesses could potentially face decisions
about new taxes – or whether to borrow against existing taxes in
the short-term for a new purpose – to help remedy the financial
quagmire.
The county’s transit agency is at a financial crossroads, and Santa Clara County citizens and businesses could potentially face decisions about new taxes – or whether to borrow against existing taxes in the short-term for a new purpose – to help remedy the financial quagmire.
Officials with the Santa Clara Valley Transportation Authority say they face an estimated $100 million annual deficit, and warned that the agency will run out of money within two years’ time unless dramatic steps are taken.
That budget hole is forcing officials to consider major changes to how the agency’s buses and light-rail trains are funded – and a centerpiece question at the moment is a search for new revenues.
Cutbacks in service went into effect Monday and included cuts to 65 of the system’s 72 bus lines and cuts to both light rail lines.
Nearly 85 percent of the VTA’s operating budget is comprised of sales-tax revenues, which tend to be volatile and fluctuate dramatically along with the economy.
With the current downturn, agency revenues have dropped 33 percent in two years after seven consecutive quarters of declining sales taxes. That’s a bad drop, stressed VTA spokeswoman Dina Braun.
“It’s tough,” she said.
So far, in response the agency has cut bus and light-rail service 8 percent in the past two years, laid off workers, raised fares and made other moves designed to improve efficiency.
Another 9 percent service cut began Monday, and modifications to paratransit service are also in the works.
And agency officials across the spectrum admit they need to boost efforts to make the system pay for itself.
Mayor Dennis Kennedy said the goal is to raise enough revenue to avoid cuts as high as 21 percent.
While officials say so-called “farebox recovery” hovers around roughly 12 percent today, they say it needs to be at least double that – or higher – in order to compare with other agencies.
Meanwhile, if the public wants to maintain the same type of system and expansion plans, officials say they’ll need a new source of revenues.
The VTA board has formed a special committee to work on the issue of ongoing financial stability, including Gage, Gilroy Mayor Tom Springer and several non-voting stakeholder groups. Kennedy, a former board member, is such a stakeholder, and represents the County Cities’ Association.
One is the possibility of another half-cent sales-tax increase for transit operations. That would require a two-thirds vote of county voters.
Another idea raised is a tax on county businesses in the range of a one-half to 1 percent levy on their payrolls. Small businesses and governments would be exempted from the tax.
Gage has raised the idea of asking county voters to allow the agency to borrow against revenues expected from Measure A, the half-cent transit tax that voters approved in 2000 for capital improvements.
When it becomes effective in 2006, that tax is expected to eventually generate over $6 billion for transit, including $2 billion to help bring BART to San Jose, over $325 million for Caltrain improvements in South County and other funds for projects such as expanded light-rail and zero-emission buses.The rough idea is to borrow against those future revenues in order to help fill the existing service gap and restore them down the road. The idea is that if the agency doesn’t have the money to support existing operations and levels of service, launching into an expansion could be a hairy proposition, Gage said.
“It doesn’t make sense to me to do the future projects if we don’t have the money to keep existing bus service running,” Gage said. “How do we get people to Caltrain if we don’t have buses to get them there and take them home?”
Ideas for parcel and gas taxes have also been cast into the fray.
Parochial interests will need to be set aside, Springer said.
“It doesn’t matter what part of the boat you’re in if it’s sinking …” he said.
