VTA hit by lagging sales-tax revenue and lower ridership
Financial distress breeds more of itself. That’s what the Santa Clara Valley Transportation Authority is seeing.
In a week’s time – between Jan. 9-15, both California’s new governor and the federal Transit Administration weighed in against giving money for a Bay Area Rapid Transit extension to San Jose, threatening to cut $1.5 billion for the roughly $4 billion VTA project that 70 percent of this county’s voters approved back in the robust economic times of 2000.
The reason wasn’t that the feds thought BART was a bad project but that they didn’t think the VTA was on strong enough financial footing to get it done, VTA General Manager Peter Cipolla said.
The FTA, which labeled the project “not recommended” in its report to Congress, has not confirmed this, but new VTA Board Chairman Don Gage agreed with Cipolla’s words on Friday.
VTA officials agree their agency is in trouble money-wise. But despite lagging sales-tax revenues, the agency remains committed to road, rail and bus projects – BART being the most expensive – that voters mandated during the boom years before the more recent high-tech bust. Yet even if these capital projects were to magically disappear, the agency would still have to deal somehow with a $100 million annual operating deficit for its existing bus and light-rail service.
“I can tell you right now it’s going to be a tough year,” Gage, also District 1 Santa Clara County supervisor, said of his term as VTA chair. “We’re going to face some challenges, and we’re going to have to make some tough decisions, and they’re not all going to be positive.”
State and federal BART money isn’t dead yet, but it’s a long shot. Congress has the final say over payment of the federal government’s $830 million BART contribution.
The state is in worse fiscal straits. Among numerous cuts in a proposed budget released on Jan. 9, Gov. Arnold Schwarzenegger would suspend $630 million for BART, the remainder of $760 million promised under former Gov. Gray Davis. About $130 million has been paid already.
If both the federal and state legislatures back these recommendations, that would leave BART with 30 years’ worth of future revenue from a half-cent sales tax voters approved in 2000, set to begin when a current half-cent tax expires in 2006. Voters were told this tax would rake in $6 billion and pay for BART as well as new light-rail lines in San Jose, but if the current recession continues, that projection could drop by as much as $2 billion.
For now, Gage’s recommendation for BART is to “shelve it.”
Gage said he doesn’t want to kill the BART project, just postpone it. He now wants the VTA to pay $170 million for BART’s preliminary engineering, money he wanted frozen as recently as this fall.
“Do what you can do right now to have it ready to go,” Gage said of BART. “Instead of taking 10 or 12 years, it’s going to take maybe 20 years. … I don’t want to invest dollars in BART right now unless there’s something we could use in the future.”
The still-sluggish Silicon Valley economy has had a lot to do with the VTA’s troubles. The VTA relies on a 30-year-old, half-cent sales tax to subsidize 80 percent of its day-to-day operations, yet sales-tax revenue has dropped for the last 10 straight quarters. Ridership has also dropped about 31 percent over the last three years, a time period that coincides with massive layoffs in the high-tech industry.
Before its board raised rates in December, the VTA recovered only 11.6 percent of its costs from fares – extremely low compared to other cities. The VTA’s goal is now to cover 20 to 25 percent of its costs with fares. Fare hikes are part of that effort.
Gage admitted the VTA loses ridership as it increases fares, “But that ridership will come back, because it’s still cheaper than driving a car.
Gage doesn’t want to cut too much in the way of service, particularly bus service.
“Buses especially serve the majority of the population, and that’s where you find a lot of your low-income (people). … Once a person leaves the transit system and goes to a car, it takes a lot to get them back. … They don’t trust it for a while.”
Even when the economy recovers, Gage said the VTA will probably need a new revenue source for its daily operations. Another half-cent sales tax would get the job done, he said, but that’s not an option right now because recent polls show voters would not approve one.
The VTA has also polled voters on yet another new half-cent sales tax to pay for BART and light-rail projects, and that idea also did not meet the two-third’s requirement.
