Decision delayed to give county lawmakers more time to further
negotiate the issue
San Jose – County lawmakers Tuesday criticized the latest financial plan to extend BART to San Jose, but put off a decision on whether to support a new sales tax to fund the Santa Clara Valley Transportation Authority to allow time for more negotiations.
“I’m very reluctant to support any additional sales tax for the VTA,” Santa Clara County Supervisor Blanca Alvarado said. ” [We can’t] consider increasing sales tax for another 30 years without an honest dialogue that would consider living within our means.”
In February, the VTA will vote to place a quarter-cent sales tax measure on the November ballot.
If approved by voters, the VTA believes the tax would provide enough revenue to fund the $4.7-billion BART project and a host of other transit improvements first promised to voters in Measure A, a half-cent sales tax approved in 2000.
Support from county supervisors is critical because two board members, Don Gage and Liz Kniss, also serve as VTA directors. Selling the new tax – which will require a two-thirds majority – to voters may prove impossible if the tax doesn’t have broad support from county politicians.
“It’s going to be tough because some cities aren’t getting anything and they’re not going to sign up,” Gage said. “The projections [the VTA] gave us, there’s no proof they’re accurate.”
Gage was one of several supervisors to take issue with the VTA’s latest economic scenario, which forecasts a decade of consistent 6 percent growth in sales tax revenue. The forecast adds $2 billion to the agency’s coffers over the next 30 years and restores several transit improvements, including expanded Caltrain service to Morgan Hill and Gilroy, that previously were to be cut or delayed in favor of BART.
“This seems like a panacea because all of a sudden we found $2 billion and can do everybody’s projects. I’m very skeptical about that,” Gage said. “I’m very uncomfortable with the numbers.”
Under previous forecasts the VTA’s full complement of sales-tax funded transit projects was about $1.2 billion short. Gage and Morgan Hill Mayor Dennis Kennedy, who has called the new scenario “too good to be true,” have threatened to withhold support for the tax if it doesn’t provide additional funds to South County.
In response to questions from supervisor Jim Beall, County Executive Pete Kutras said Tuesday that the projections are overly optimistic. He said 5 percent growth is more likely than 6 percent growth.
“I would be more conservative if I was projecting sales tax growth,” Kutras said. “I certainly wouldn’t want to have a planned set of expenditures based on growth I didn’t think would come. I’d be leaning more toward 4.9 than 5.9.”
The average annual growth in sales tax revenue back to 1981 is 5.52 percent. A boom in the late 1970s pushes that figure to 7.37 percent over 29 years, but sustained periods of growth have been rare. Typically, short periods of dramatic growth have been followed by equally sharp contractions. Since 2000, county sales tax revenues are off 2.05 percent.
In an interview, VTA officials defended their projections. CFO Roger Contreras said the agency’s 30-year forecast of 5.0 percent is less optimistic than the historical averages.
“We are very sophisticated in how we forecast sales tax,” Contreras said. “This is a reasonable and conservative approach to sales tax.”
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. But recent projections made by the center and the VTA have not held.
The center predicted a steady 6.3-percent sales tax revenue gain 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 and the widening of U.S. Route 101 to Morgan Hill. Had the county adopted that projection, 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 also failed to meet expectations. The Measure A tax, which began this year, will not provide enough revenue because sales tax collections have fallen far short of the VTA’s predictions, which were lower than the new growth forecast.
Only Supervisor Pete McHugh voiced strong support for the tax. Alvarado and Kniss indicated Tuesday they will vote against the measure, but the full board may support it with some conditions, such as spending caps on projects and a promise that other projects won’t be sacrificed for BART.
“We’re going to have to set some parameters,” Gage said. “If you’re going to make everybody happy, you’re going to have to limit the dollar amounts so people won’t feel, if times turn bad, that their projects are going to get pushed out.”
