Silicon Valley transit agency anticipates net losses over next decade

Facing net losses over the next decade, the Santa Clara Valley Transportation Authority plans to spread more than $180 million in federal COVID-19 relief over several years—which transit riders say endangers the agency’s operations.

“If VTA does not provide high-quality service as the county reopens, we risk disillusioning our riders and returning to a death spiral of falling ridership,” said Campbell Planning Commissioner Adam Buchbinder during the agency’s budget workshop last week.

VTA Chief Financial Officer Kathleen Kelly reviewed the agency’s budget proposal before the board Friday, showing expenses will exceed revenues by increasing amounts for the next 10 years. In fiscal year 2022—which starts July 1 and ends June 30, 2022—VTA projects expenses to exceed revenues by $6.9 million, with the excess growing to $47.5 million by 2031.

Most of the transportation agency’s costs come from labor, with worker salaries and benefits accounting for roughly $330 million of the current year’s budget. The majority of VTA’s operating revenues come from sales taxes, including a 1976 half-cent tax, the 2000 Measure A half-cent tax and 2016 Measure B half-cent tax.

Sales tax revenues fell by 11.8% in 2020 compared to 2019, and VTA projects revenues will be 0.7% lower in 2021. Revenues from fares, which fell dramatically during the pandemic, constitute only 2% of projected revenues for this year.

Kelly said VTA expects sales tax revenues to grow by 13.7% in fiscal year 2022. But the agency is still unable to increase service back to pre-pandemic levels due to the slow pace of hiring for bus drivers.

“If we increase service hours without having sufficient new drivers, we would be unable to operate all the service that is scheduled,” Kelly said.

Over the course of the pandemic, VTA received $189.9 million in coronavirus relief funds through the CARES Act and the Coronavirus Response and Relief Supplemental Appropriations Act. The agency stands to receive millions more through the American Rescue Plan Act signed by President Joe Biden last month. Transit agencies in the San Jose urban area—including VTA, BART, Caltrain and the Altamont Commuter Express—will receive about $259 million of these funds, according to a fact sheet from the Metropolitan Transportation Commission.

The VTA board has 12 voting members, including two representing Santa Clara County, five representing San Jose and one from each of the remaining cities.

San Jose Mayor Sam Liccardo said the widening difference between revenues and expenses over the next decade signals a structural issue beneath the persistent shortfall.

“This sort of chronic gap here between revenues and costs… clearly, there needs to be some disruption in this,” Liccardo said. “I know we have one-time money now from the federal government, but that will run out.”

Mountain View Councilmember Margaret Abe-Koga said federal funds issued to individual cities came with deadlines for spending the money, and asked whether VTA had a similar deadline. Kelly said she did not know and would look into it.

Numerous transit advocates spoke against the budget plan, calling for COVID-19 relief funds to be spent as quickly as possible to restore service for vulnerable populations.

John Courtney, president of the Amalgamated Transit Union Local 265, said VTA could expand training dates to include weekends and enact other creative solutions to quickly train more drivers.

“We can increase training… we can do it every single day, seven days a week,” Courtney said. “There’s so many things we can do that we’re not doing.”

VTA is operating at 80% of the level of service offered before the pandemic. The agency reported more than 1,000 passenger pass-ups—where riders get left at a bus stop due to lack of capacity—per day in March.

Shane Weinstein, president of the Local 1575 GGTransit union, said it’s unconscionable to delay spending the relief funds when riders are left behind.

“How would you feel if it were you getting passed up and being late for work, and knowing that VTA is sitting on this money for years on end?” Weinstein asked.

Resident Hoai-An Truong said by sitting on the funds, VTA would hurt Santa Clara County’s most vulnerable residents.

“VTA riders are 80% people of color and mostly low-income,” Truong said. “This is about an equitable pandemic recovery for transit riders.”

Contact Sonya Herrera at [email protected] or follow @SMHsoftware on Twitter.