VTA is in dire financial straits, yet has major expansion plans
A projected $22 million deficit in June exploded into a $98 million shortfall in October as sales tax revenues took an unprecedented plunge and the state took millions in transit aid to reduce its budget deficit. To help cover that gap, bus and rail service will be cut back 8 percent starting today, the latest in a series of emergency moves to shore up VTA's finances.
"We're struggling for our life here," said Santa Clara County Supervisor Don Gage, a VTA board member for a decade. "I don't care how crazy an idea is to run this system cheaper; we have to look at everything."
Yet the VTA is marching ahead with expansion plans. The BART-to-San Jose extension appears to have gained favor in Washington and is now a candidate for federal aid, potentially as much as $900 million. Studies to extend light rail to Eastridge Mall and to Los Gatos are moving ahead despite high costs and modest ridership projections.
But given the VTA's drastic financial problems, can it afford all this?
Tom Rubin, the former chief financial officer of the Southern California Rapid Transit District, has studied agencies across the United States and calls VTA the "worst transit agency in the country."
Thirty years ago, when the county began its push to create a regionwide bus system and build light rail, backers said tickets would cover 85 percent of the cost of a train trip. They scaled that back to 35 percent a few years later.
Today, it's a dismal 14 percent, one of the worst margins in the nation.
"It has the potential of getting far worse," Rubin said. "They can't run the bus system, so what is the plan? Build light rail. That hasn't worked, so what's the latest plan? Let's build heavy rail — BART."
For the first time since light-rail trains began running through San Jose, the VTA is taking a top-to-bottom critical look at how the 23-year-old system works. Gage will be the chairman of a newly created financial committee that by the year's end will recommend what options VTA has.
"I hear everybody say we deserve light rail," Gage said. "What we deserve is a solid, reliable transportation system — something that works. I think if we had gone to buses, we would have been a lot better off. Why not go cheaper? Why spend all that money to put rail in when we can run buses?"
Last week, the VTA took that path — nixing plans to run light rail along Alum Rock Avenue and San Carlos Street. Instead, buses will cover this stretch.
Two years ago, General Manager Michael Burns pushed through the most radical change to the valley's transit service in three decades. Buses stopped running to every corner of the valley to pick up one or two passengers. Service was beefed up downtown. The priority was placed on those who relied on transit the most.
It helped — but only for a while.
By October 2008, light-rail ridership exceeded 38,000 each weekday, marking an 18 percent jump from the previous year. Bus ridership rose 6.1 percent, and the combined 162,000 weekday trips was the highest since the dot-com boom in the late '90s.
Then the deep grip of the recession took hold. The agency burned through its reserves, furloughed workers and put off new bus purchases. Still, fares had to be raised, and ridership tumbled 13 percent in October 2009, when the increases took effect.
Cuts and fare increases have helped reduce the $98 million shortfall to $30 million over the next two years. But long-term worries continue. No major transit agency in the Bay Area relies so heavily on volatile sales taxes to cover day-to-day costs.
When the VTA prepared its budget last spring, a 5 percent drop in sales tax revenue was predicted. But fourth-quarter receipts declined 27 percent. The agency that took in $183.5 million in sales tax in 2001 expects to take in $126.4 million this year.
Burns estimates the VTA needs an extra $75 million a year to pay its bills. Where will the money come from?
"We can't look at fares," Burns said. "They are already high enough."
The coming year could bring big decisions. One possibility is turning over some operations to contractors. There could be more cuts in service. The VTA may also raise cash by developing property along transit routes. And next year, money will begin to trickle in from opening some carpool lanes to solo drivers for a toll — funds that may go to transit.
But given the hemorrhaging the VTA has experienced, will such measures turn out to be Band-Aids?
Some say it's time to throw the brakes on big expansion plans.
Rubin and Stuart Cohen, executive director of the Oakland-based transportation advocacy group TransForm, say more buses are a better idea than BART.
"VTA has all this expansion planned," Cohen said. "At the same time, they have to find ways to bring down costs. Buses will do that."
And many question the wisdom of extending light rail to Eastridge or Los Gatos, given the low ridership projections, but those plans have the backing of influential politicians.
BART remains at the top of VTA's agenda, but the plans have been scaled back. Trains would initially run from Fremont to the Berryessa area of San Jose, cutting the $6.1 billion project to around $2 billion.
Even those cuts come with political risk. Since 2006, taxpayers have been paying for the BART extension through a half-cent sales tax — but voters were sold on BART to downtown San Jose, not to Berryessa.
Population projections show at least 400,000 new residents coming to Santa Clara County over the next few decades. Better plan for them today and not 30 years from now, said VTA Chairman Sam Liccardo.
"We still have ambitious plans," Liccardo said, "because we will be growing in Santa Clara County more quickly than in most other areas. Everything about our future says we need more transit infrastructure and not less. We can't afford to stop building for the future."
Contact Gary Richards at 408-920-5335.