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Publication Date: Friday, May 02, 2003

The transit system that can't The transit system that can't (May 02, 2003)

2000 tax funds for working on the railroad, not running buses

By Candice Shih

Struggling to keep its buses and light rail trains running in a down economy, the Valley Transit Authority (VTA) is facing criticism for crippling service cuts and ongoing fare increases that are still not enough to stop a collision course with a freight train-sized deficit.

"What's stunning is that in a very short period of time, they are virtually bankrupt," said Santa Clara County Supervisor Liz Kniss, whose district includes Mountain View. Kniss said part of the problem is that the administration did not respond to the weakened economy fast enough. VTA board members aren't held accountable and some -- including those from the North County -- serve for only a year at a time, she added.

"In no way do I not think they are good people. My concern with that is that if they are not there for some period of time, how much influence do they really have?" continued Kniss. The board is made up of two county supervisors, five San Jose City Council members and five representatives from cities around the county who rotate each year; Mountain View does not currently have a representative on the board.

Kniss has said that this structure denies North County cities consistent representation; she suggests that direct elections be held for VTA's directors and that the system be entirely overhauled. As a representative of the North County, she is concerned that bus services, the most flexible means of public transportation in the area, will continue to be at risk. This October, bus and light rail services face a 21 percent reduction.

VTA, which is assuming an expense budget of $407 million next year, is facing a "true deficit of $160-$170 million per year," said General Manager Peter Cipolla.

In a Tuesday night interview, Cipolla agreed that the system needs a new funding structure if it is to maintain service. But, he said, given VTA's current dependence on sales tax revenue, there was little the agency could do to avoid its current shortfall.

"We're into eight quarters of reduced sales tax. Historically, that has never happened," he said, adding that those criticizing VTA for its decline in revenue "might as well criticize Cisco Systems and HP," private companies that have also been hurt by the bad economy.

On the charge that VTA's governing structure does not represent the North County, Cipolla said that as a "policy implementer, not a policy maker" it wasn't appropriate for him to take a stance.

"I can't go there. I'm not going to get into a debate about where our service goes and who gets what. ... That's a policy issue," he said.

"The way transit is provided is based on where it's utilized," he said; cuts will come where ridership is lowest.

A structural deficit

"Even with service reductions, a structural deficit remains," said Bob Carter, a consultant to VTA's board of directors.

Because of its dependence on sales tax revenue -- and resultant susceptibility to the floundering economy -- VTA, which operates county buses and the light rail system, will simply run out of money in 2004 unless it does something drastic.

The plan now is to continue to cut services while developing a ballot measure which, if passed by voters next year, will provide VTA with a new funding stream. But before that happens, about 21 percent of services and 350 to 450 VTA jobs will be cut in October, according to the current budget proposal. By that time, service levels will resemble those of 1981, when Santa Clara County was nearly 25 percent smaller than today.

Fare increases are also scheduled to help plug the $100 million hole VTA faces. As a result of these changes and Silicon Valley's continuing high unemployment rate, ridership is expected to plummet from an expected 46 million during this 2002-2003 fiscal year to 38 million next year.

Ridership on buses has been declining since 1999, and on light rail since 2001. According to Jane Kennedy, chair of the VTA board, increasing ridership cannot be addressed until "we get our head above water."

Cipolla said this is largely dependent on the ballot measure, the content of which will be up to VTA policy makers and ultimately the voters, whose decision on the measure could determine the agency's future success.

"We need to basically identify what kind of a system do people really want, and what kind of a system do they want to fund," he said.

Shifting funds?

As the board convened last week to discuss the next two years' budgets, members scrambled to find ways to put VTA in the black and keep it there.

One place to look was in capital projects. While VTA's primary service is public transit, it also takes on highway projects, such as the new Highways 85-101 interchange. But this year, many of these projects have already been cut back, deferred or entirely eliminated.

Although VTA has apparently become more efficient during the past year, "we deferred a lot of capital projects. That is not good business," Cipolla told the board. "I don't want you to think we're a slim jim operation because we're not there."

VTA board member and Los Altos City Council member Francis La Poll suggested using funds from Measure A, a 2000 ballot initiative, to restore transit services.

Measure A is noted primarily for being the impetus behind a BART connection to San Jose, but it also provides for increased bus and light rail service.

Yet because the measure was aimed at new VTA service, rather than maintaining current transit, its ballot language allows it only to support bus service above the level provided in November 2000, when the measure was passed, said Cipolla and VTA General Counsel Suzanne Gifford. At that time, buses totaled 512. Although there are 504 now, there will only be 433 this July.

La Poll, an attorney by trade, suggested bringing the issue before a judge, who could rule that the Measure A funds are more flexible than currently assumed. Cipolla said he is not opposed to this, but until such a judgment is handed down, Measure A funds are limited to new light rail service in San Jose, the BART connection between San Jose and the East Bay, some service for disabled riders. If such a judgment is not made, it may be some time or never until Measure A benefits bus riders. The collection of sales tax on behalf of Measure A is intended to last 30 years.

"I voted for Measure A, hoping to get more bus service. ... People voted for more than BART service. To quote one of my members, 'What good is a BART extension when the only way to get there is by a car?" said Eugene Bradley, founder of the Santa Clara VTA Riders Union.

For the North County, the costly BART extension will provide little benefit, as those in Mountain View and surrounding cities are unlikely to use a network that links San Jose to the East Bay.

A more drastic approach, privatizing all of VTA's services, is not an option due to federal regulations and the labor agreement it has with its employees, added VTA spokesperson Anne-Catherine Vinickas.

According to a memo written to VTA employees, Cipolla wrote that "privatization is being pushed by one element of the business community."

Staff cuts

While VTA's directors prepare to find workable solutions before time and money runs out, they are using stopgap measures, including drawing on reserves and raising employees' benefit costs.

During the last fiscal year, when the recent pattern of service cuts and layoffs began, more than $34 million was spent from the reserve fund. Nearly that same total was expected to disappear again during this fiscal year, but halting some capital projects, selling property, refinancing, and the coming service cuts will actually raise reserve levels from $42 million to $76 million.

It is only a temporary measure, however, since reserves are expected to completely run out in a few years. As the proposed budget report states, "The recommended budget for the next two years merely buys us time. ... The November 2004 election is the last opportunity to gain voter approval for new revenues that could stave off further drastic reductions in VTA services."

VTA is not only betting on its future with its reserves but on its employees as well. While many have lost their jobs, those who stay will have to pay higher health care premiums and battle realistic fears of losing their jobs later. Singles and families pay $4 a month or less on an HMO plan; VTA is considering raising it so that singles pay up to $50 and families up to $100 each month. Payments for doctor visits and prescriptions are going up, too.

This will result in a net savings of $2.4 million to $3.5 million; this compounds the worries of a workforce already concerned about more layoffs after October. As Cipolla wrote in an employee memo, "We can't predict what will happen. It is difficult to offer concrete advice or recommend what an employee should do or where they should go."

Bankruptcy could even be an option, although Cipolla stated VTA would not shut down operations, but restructure.

Said finance chief Scott Buhrer, "It's increasingly clear that VTA cannot do everything everyone wants."

Speaking after a meeting with VTA staff on the budget Tuesday night, Cipolla said this budget crisis is taking a toll on everyone at the agency, with the stress of potential cuts being compounded by the extra work involved in addressing the financial problems. "This is not where I expected to be at this point in my career," he said.

VTA is holding public meetings regarding its 2003-2004 and 2004-2005 budgets from May 1 until May 8. The board of directors will receive a final draft of the budget for review and approval on June 5.

E-mail Candice Shih at [email protected]
Justin Scheck contributed to this report

Service cuts

As of the end of last year, VTA was operating 491 buses to serve Santa Clara County's 1.7 million residents. That is the fewest buses in service since 1981, when the agency ran 494 buses to serve about 1.3 million residents.

The much-hyped light rail service -- which began running in 1987 and came to Mountain View in 1999 -- has seen a major drop in ridership over the last two years, and has cut back its late night service and train frequency. VTA plans to raise base fairs from the current $1.40 to $2.00 in fiscal year 2006, even as service may see more cuts.


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