San Jose transit agencies to receive millions in federal COVID-19 relief

Bay Area transit officials this month will decide how to allocate $975 million in federal COVID-19 relief funds to local transit agencies, including the Santa Clara Valley Transportation Authority (VTA).

“In the lens of the pandemic, it allows essential workers to keep their jobs and save money,” said Daniel Huynh, a member of Silicon Valley Youth Climate Action.

The funds, which come from the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, are meant to reimburse agencies for their lost revenues during the pandemic.

Currently, transit agencies operating in San Jose – including VTA, Caltrain and the Altamont Commuter Express (ACE) – are slated to collectively receive roughly $144 million of the $975 million awarded to the Bay Area, according to the Metropolitan Transportation Commission (MTC), which coordinates plans among transit agencies across the nine-county Bay Area. Transit agencies in San Francisco and Oakland will receive $819 million under this scheme, while Santa Rosa agencies are expected to receive $15.4 million.

Due to a decline in ridership amid the pandemic, VTA had considered deep service cuts of up to 30% last year to patch up a $100 million budget shortfall for fiscal year 2021. Residents rallied against the cuts, which would have reduced service on bus route 22 and completely eliminated bus routes 83 and 52. Instead, the agency announced this month it will increase the frequency of seven bus routes, including bus routes 23, 66 and 68, starting Feb. 8.

VTA’s operating revenue for fiscal year 2020 – drawn mainly from fares and toll fees – was $37.9 million or 15% lower than the previous year, according to the annual financial report presented at the agency’s Dec. 3 board meeting. The agency stopped collecting fares in mid-March amid reduced service due to COVID-19. It began collecting fares again in August.

Sales tax revenue – including from the 1976 half-cent sales tax, 2016’s Measure B and BART operating sales taxes – for fiscal year 2020 were $679.8 million, according to the report, a 12% decline from the previous year. VTA attributed the reduction in sales tax revenue to the decrease in business and consumer spending during the pandemic.

The federal relief bill stipulates that the combined total of these funds and money allocated from the CARES Act passed last year can’t exceed 75% of operating costs in 2018. That year, VTA’s operating expenses were $410 million, according to the National Transit Database. Using this formula, the agency would be eligible for roughly $307 million in funds from the CARES Act and the recent relief bill.

However, the formula is based on the operating costs of “urbanized areas” — such as San Jose — rather than specific operators like Caltrain or VTA. This makes the process of allocating funds more complex.

“It’s very, very complicated,” said Theresa Romell, director of funding policy and programs at MTC, during a recent meeting. “The way that the calculation was done depended on where the operator reported its operating expenses in the National Transit Database.”

So far, VTA has received $141 million from the CARES Act, according to VTA spokesman Ken Blackstone.

The agency plans to use CARES Act funds to cover budget shortfalls for the current fiscal year, which began on July 1, 2020 and ends on June 30. Blackstone said the agency will also use the CARES Act funds to cover revenue shortfalls for fiscal years 2022 and 2023.

MTC will vote on how to allocate the first distribution of the $975 million during its Jan. 27 board meeting.

The precise dollar amounts have not yet been determined, according to commission secretary Kimberly Ward. Commission staff plan to “true-up,” or adjust payments to transit agencies based on whether they received less CARES Act money than they should have due to inaccurate revenue forecasts.

Ward said the remaining funds will likely be allocated in February or March. Learn more about the relief package on the MTC’s website.