SAN JOSE
– The county’s bus and transit agency has raised fares again but
put off a devastating 21 percent cut to its operations budget – at
least for now – in hopes that it will be able to borrow against
future tax revenues as a short-term solution to an unprecedented
budget deficit.
SAN JOSE – The county’s bus and transit agency has raised fares again but put off a devastating 21 percent cut to its operations budget – at least for now – in hopes that it will be able to borrow against future tax revenues as a short-term solution to an unprecedented budget deficit.
During a three-hour-plus meeting Friday, directors of the Santa Clara Valley Transportation Authority decided to defer implementing a package of 21 percent service reductions until at least January, instead of this October as originally proposed.
The cuts will now loom menacingly on the back burner while the agency explores whether it can borrow against as much as $250 million in future revenues from Measure A – the half-cent sales tax for transit expansion and operations that county voters approved in 2000 – in order to eliminate most or all of the proposed cuts.
The proposal to defer the cuts and look more closely at Measure A was outlined in a memo by District 1 County Supervisor Don Gage, San Jose Mayor Ron Gonzales and three other board members. If it works, it could buy the agency up to two years of time to secure other, more stable revenues.
“There’s still a lot of work to do – it’s not over yet,” Gage said Friday. “We can’t consider it a done deal because we don’t have all of the information yet.
“At least we’ll either do it or know that we can’t, and if we can’t, we have to go with the cutbacks and still look for future funding.”
Specifically, the plan is now to secure a second legal opinion through a court ruling to determine whether the VTA can borrow against Measure A, the so-called “BART tax” that does not kick in until 2006. The VTA’s counsel has asserted that the funds aren’t available and are meant only for expanded service.
“It’s not that we don’t believe her, but we really need to find out for sure,” Gage said. “We have the one opinion and others that say we can do this. What we need to do is close it out.”
If permission to target the money can’t be secured by the first route, the agency would have to implement the cuts next January – and lose up to $18 million from the deferral.
However, it would then go to the ballot in the March election to ask voters for their approval to target the Measure A funds in a solution.
Friday’s move at least temporarily delays up to 400 layoffs and a series of cuts that officials said would have returned transit service to 1981 levels. The 21 percent cut package would reduce service on 63 of VTA’s current 69 bus routes – including at least five affecting South County – and eliminate 18 routes outright as well as light rail service on the Almaden Valley spur.
As outlined, officials said the borrowing plan would not affect the funding in Measure A for the BART extension to San Jose – which is a major item on the political agenda of both Gonzales and the powerful Silicon Valley Manufacturing Group that lobbied hard for Measure A’s passage.
Meanwhile, Gage said a special committee assembled to work on the issue of ongoing financial stability will begin meeting again to address longer-term issues.
The result will likely be a recommendation for increased revenues through taxes of some kind. Suggestions bandied about previously have included increased sales tax, a new payroll tax, parcel tax or gas tax.
The memo calls for a VTA board workshop to follow in October in order to build consensus on a new revenue source to put before voters in 2004.
“For the long term we need to talk about a permanent source of funding,” Gage said. “We haven’t made a determination on that yet.”
The agency is at an unprecedented financial crossroads. Officials have estimated the likelihood of a reoccurring $160 million annual deficit.
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.
If implemented, the 21 percent cut package would complete an overall suite of 35 percent in service cuts in roughly a year’s time. The agency already reduced bus and light-rail service 14 percent in the past two years. Besides the service reductions, to date officials have also cut 550 positions, raised fares by 15 percent, deferred $115 million in capital projects and made other moves designed to improve efficiency to help address the budget crunch.
