New BART plan will bet on steady sales tax gains to raise
billions
New BART plan will bet on steady sales tax gains to raise billions
n By Matt King Staff Writer
Morgan Hill – The promise of steady economic growth the Santa Clara Valley Transportation Authority will make to sell a new BART sales tax to county voters does not reflect Silicon Valley’s volatile history.
Struggling to find a way to build a $4.7 billion BART extension to San Jose and provide numerous transportation improvements to other parts of the county – to make the new quarter-cent sales tax palatable to voters outside San Jose – the VTA announced two weeks ago that a resurgent valley economy would add $2 billion to the agency’s coffers over the next 30 years.
With the new projections, the VTA restored several transit improvements, including expanded Caltrain service to Morgan Hill and Gilroy, that were to be cut or delayed in favor of BART.
Under previous forecasts the VTA’s full complement of sales-tax funded transit projects was about $1.2 billion short. The lack of financing for other projects has divided the VTA board, which will vote in February to place a quarter-cent sales tax measure on the November ballot.
But the new projection, based on steady 6 percent growth from 2008 through 2015, doesn’t match the unstable history of growth in the county.
“That’s why I want to hear their explanation,” Santa Clara County Supervisor Don Gage said. “If you look at the overall average it looks good, but if you go back 10,15, 20 years it doesn’t. The question is, do you trust the numbers?”
Accounting for Silicon Valley’s boom and bust cycles, with phenomenal sales tax growth rates exceeding 20 percent followed by equally disastrous contractions, the average annual growth in sales tax revenue back to 1981 is 5.52 percent. Adding a boom in the late 1970s pushes that figure to 7.37 percent, according to Santa Clara County Executive Pete Kutras.
“Sales tax projections are at best difficult to make,” Kutras said. “What I’ve tried to do is provide a look backwards and the question is, do we think the future will have similar activity or not? That’s an open question. … I don’t have a crystal ball, but the conventional wisdom says that the further out you go, the more conservative you should be.”
Today, county supervisors will decide whether to support a new quarter-cent tax.
Supervisors Gage and Liz Kniss, who sit on the VTA board, may vote in accordance with the supervisors’ decision, and despite the new, optimistic economic forecast, the supervisors are not certain to back the tax. They may reject it or impose conditions on their approval. A year ago, the board voted in favor of a scaled-back BART plan, though that plan was eventually rejected by the VTA board.
“Over the years the Board of Supervisors and the VTA have had a rocky relationship,” Morgan Hill Mayor and VTA board member Dennis Kennedy said. “You never know which way the board is going to go. It should be interesting to see.”
The VTA’s forecast is based on figures provided by the Center for Continuing Study of the California Economy in Palo Alto, which is predicting growth of at least 7 percent in that time period.
In recent times, the center’s projections have not held.
Had the county adopted the center’s predicted steady 6.3 percent sales tax revenue climb over the life of the 1996 Measure B 10-year half-cent sales tax, which went toward, among others, improvements on Highway 152 by Gilroy Foods, its actual $1.3 billion Measure B budget would have been 18 percent shy of the forecast.
And the numbers used by the VTA in 2000 did not meet expectations. That year, voters approved Measure A, a half-cent transit tax meant for BART, Caltrain improvements and myriad other projects.
The Measure A tax, which began this year, will not provide enough revenue because sales tax revenue has fallen far short of the VTA’s predictions, which were lower than the new growth forecast. Since 2000, county sales tax revenues are off 2.05 percent.
Stephen Levy, director of the center, said the long-term growth figures support his organization’s projections. He said anybody would have failed to predict the colossal downturn at the start of the new century.
“The first four years don’t tell you everything that’s going to happen,” Levy said. “We are not saying this is going to happen each and every year. It’s an outlook over 10 years accounting for good years and bad years.”
The center’s projections are based on a promising outlook in wage growth and increased business to business transactions. Levy said wage growth has been very stable at about 5.8 percent since 1990.
“We do not have a lot of jobs growth in the projections,” he said. “It’s not the jobs growth that’s driving it, it’s the wage growth and business to business spending.”
Without a new tax, the VTA will not be able to build BART. Last month, VTA pulled BART from federal consideration because it was going to receive poor marks from the Federal Transit Administration, which could provide up to $750 million to build the rail extension.
