Memo to the VTA Board
August 7, 2008
After eight years of planning, VTA still does not have the financing lined up to pay for the construction and operation of the Silicon Valley Rapid Transit project. Each proposal for new money, when granted, ends up surprising the VTA board when it learns the new funds are inadequate. At that point the usual course has been for the VTA to go out again for more money. As you will see from our attached analysis, the proposal for a new sales tax (one– eighth of a cent) will not raise enough money, and VTA will have to go out again for yet another tax.
Voters and the VTA Board need to know what BART will really cost, both for capital and operating.
In 2000, VTA asked voters to approve Measure A, a tax that was to raise $6 billion. The Expenditure List assigned $2 billion to the BART project.
In 2001, after Measure A was approved, VTA began negotiations with BART over a “buy–in” fee. BART’s figure was about double what VTA had estimated. It was agreed to begin at $48 million a year, and increase at the rate of Santa Clara County sales tax collections, in perpetuity. The base year is 2002, six years ago. The current buy–in figure is higher now than the initial $48 million.
In 2002, VTA acknowledged that it had a long–term, 25–year operating deficit of $6 billion. VTA continued to cut bus service while continuing to move the BART project forward.
Also in 2002, VTA agreed to have the BART buy–in figure taken directly from its TDA allocation, unless VTA could come up with a sound alternative source of funds. The TDA is used to run VTA’s buses, and VTA has not yet come up with a reliable alternative to providing the TDA funds to BART.
In 2003, the Chief Financial Officer of the VTA released a report to the “Ad Hoc Expenditure Committee” that showed for the first 22 years of the 30 years of Measure A, VTA’s expenditures would exceeded its revenues. The principal driver of this situation was the cost of building BART. The CFO wrote to the VTA Board about financing alternatives: “The end result of this was that the BART project would be completed in FY 2026 and we were still
unable to maintain a positive cash flow.”
In 2006, VTA worked the county to ask voters for one quarter of a cent to solve its financing problems. That was probably not enough money, but the voters said No.
Now in 2008, with costs rising, VTA is prepared to ask voters for one eighth of a cent, to fix its problems and move BART along. But if one quarter of a cent was inadequate, how will a one eighth of a cent tax solve the problem?
We estimate that, WITH a new one eighth of a cent tax, when the BART line opens in 2017, that VTA will be underwater by at least $15 million a year with the buy-in. And the red ink continues through the life of Measure A. That is because the tax is inadequate to the task.
Before more money is assigned to the BART project, shouldn't everyone agree on what it will cost and on what funds are available to pay for it?
Attachments:
VTA memo: BART Operating Subsidy
VTA cost estimate by BayRail Alliance
Relevant pages from the Comprehensive Agreement between BART and VTA
BayRail Alliance
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VTAMemo to the VTA Board regarding the proposed 1/8 tax increaseWhat is a CMA (Congestion Management Agency) ?
Prop. 111, passed by California voters in 1990, doubled the state gas tax and directed revenue to the state Congestion Management Program. It specified among other things that each county designate a county-wide body, i.e. a Congestion Management Agency (CMA) to put programs in place to keep traffic levels manageable. Whereas state gas tax revenue had historically been used to fund highways, the idea behind Prop. 111 was that the additional revenues would fund road, bicycle, pedestrian, and public transit projects in addition to highways to help manage congestion, i.e. they would be used for multi-modal purposes. The CMA was charged with helping to coordinate land use, air quality and transportation planning among the local jurisdictions and to prepare a Congestion Management Program to spend these funds. Among the duties they still carry out today is to monitor levels of congestion on major roads and analyze the impacts that a proposed development will have on future traffic congestion.
The creation of such a plan required creating a governing body that is representative of the local elected councils and agencies. The accepted method of ensuring this representation is to appoint elected officials from these entities to the governing board. In many cases an existing county-wide transportation agency that was already programming transportation funds from a variety of sources became the CMA after Prop. 111 passed. In practice many CMAs only grudgingly became multi-modal agencies, and many continued to emphasize road and highway improvements to "manage congestion". CMAs did not have direct authority over land use -- only local city councils, and the county (over its unincorporated lands) had that power -- and while in theory they could deny funds to a local government whose plans were not in compliance with the coordinated land use, air quality and transportation plans, they found it difficult to enforce such. Local decisionmakers serving on these boards often engaged in mutual back-scratching so that each jurisdiction could receive funds for their pet projects. Eventually state laws were changed to weaken the enforcement power of the CMAs. While Prop. 111 requirements for the establishment of CMAs were overturned by subsequent California state legislation, in practice it is necessary for urbanized counties to have such a governing body in place in order to program state and federal transportation funds. Additionally, the Metropolitan Transportation Commission (MTC, the Bay Area’s federally-designated Metropolitan Planning Organization) has required the preparation of a countywide transportation plan, and also a prioritized expenditure plan, to include in its regional transportation plan in order to meet federal requirements. Through the continued establishment of a CMA, the county is able to receive state transportation funds, federal Surface Transportation Program (STP) funds and other funds that are apportioned to Urbanized Areas. It is also able to enjoy certain benefits as well as comply with the additional requirements of being a designated federal Transportation Management Area. Sources: Barbour, Elisa. Metropolitan Growth Planning in California. Public Policy Institute of California, 2002, p. 75-76. San Francisco CMP Nov. 2007, p. 9 MTC Library Glossary 
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