A light rail train in downtown San Jose
VTA board members unanimously approved a new contract with Amalgamated Transit Union Local 265, while looking at ways to tackle a potential $14.9 million deficit in the upcoming years. File photo.

VTA plans to get more aggressive expanding its revenue sources with reserves expected to be depleted by the mid-2030s.

The VTA board of directors on June 5 unanimously approved its $599 million budget for fiscal year 2025-26 and a $610 million budget for 2026-27. Deficits up to $14.9 million are expected by 2027. Plans include strategies to cut costs, such as monthly furloughs and upping the public transit agency’s vacancy rate, as well as strengthening some revenue sources, such as expanding its transit-oriented developments or joining a regional sales tax measure.

Board members questioned the agency’s money saving strategies, sharing concerns about the impending deficit. Pam Foley, a VTA board member and San Jose vice mayor, said there are multiple options to generate revenue.

“There’s two ways to balance a budget, one is to reduce expenses and one is to generate income,” Foley said at the meeting.

More than 80% of revenues come from sales taxes and are expected to decline as consumer spending slows amid federal economic uncertainty.

Greg Richardson, VTA assistant general manager and chief financial officer, said the agency is exploring revenue options, but nothing will be in place to help bolster next year’s budget. He said developments on VTA land could bring in about $30 million annually, once they’re built.

“A lot of this that you’re seeing here is not necessarily immediate,” Richardson said. “This is us trying to mitigate issues that are longer term, to identify other revenue sources, to utilize our own portfolio, so that we’re not so reliant on sales tax in the future.”

To balance the budget, VTA instituted a hiring freeze in April and wants to maintain a 20% vacancy rate. The transit agency’s vacancy rate was at 8% in April.

VTA Controller Jayden Sangha said the agency could pursue furloughs to save money, but he and Richardson reassured board members furloughs would not impact employees who work directly on the agency’s public transit service, such as bus drivers, light rail operators and maintenance teams. Richardson said VTA will have to decide case-by-case whether to keep certain roles vacant.

“The goal is to get to the 20%,” Richardson said. “Every position that becomes vacant we’re going to have discussions as to the critical nature of that position.”

He added the agency’s four unions will be in the loop during the furlough discussions. Board members also unanimously approved a new contract with Amalgamated Transit Union Local 265, which represents more than 1,500 frontline workers. The union was on strike for 17 days in March after its contract expired, fighting for higher wages and an improved conflict resolution process.

Board members also discussed Senate Bill 63, a regional tax measure spearheaded by state Sens. Scott Wiener and Jesse Arreguín. VTA has until Aug. 11 to opt into the measure, with the board scheduled to make its final decision Aug. 7. While details of the bill are still being worked out, VTA Senior Policy Analyst Aaron Quigley said VTA could gain more than $250 million through a half-cent tax.
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The regional measure would allow the transit agency to pay off obligations to Caltrain, but board members’ biggest concern has been ensuring taxes collected in Santa Clara County return to VTA.

“Quite frankly, the concerns … remain — county control and decision making authority, as well as that return to source question,” Domingo Candelas, VTA board member and San Jose councilmember, said at the meeting. “I’m glad we’re standing firm on that line.”

Contact B. Sakura Cannestra at [email protected] or @SakuCannestra on X. 

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