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SCVTARU Analysis of VTA's Fiscal Crisis Solutions

[Robert Carvalho turned in the following analysis of VTA's "Obtaining Sustainable Financial Stability" to the SCVTARU email list the morning of November 7, 2002.]

The news just keeps getting worse. As many of you saw on the front page of this morning's Mercury, VTA has suddenly found themselves short $160 million dollars a year in operating money (so why did they ask us to take away a large chunk of money for the next 34 years?). On my way home yesterday, I did manage to stop and pick up a copy of the Report on Obtaining Sustainable Financial Stability. It is just full of bad news for everybody. We need to speak out on this now! If you can, go to the board meeting tonight or tomorrow morning. If you can't, call or write your local VTA board member. To provide you with ammo, here are some highlights:

• Starting off on page 4. If no new major sources of funding ($160 million a year) are found soon, VTA will go bankrupt in FY2005 (Calendar year 2004). So to make their financial planning work at all, they are dreaming that they will be able to find this money by then from somewhere.
• On page 14, their baseline projections still include increasing fares by 10% every other year. Eugene and I spoke out against this along with Board Member Alvarado at a February workshop on this topic, but the planners are still counting on it. To make it even more ludicrous, on page 52, the same baseline assumption includes that their ridership will grow by 1% a year even with these huge fare hikes.
• On pages 20-21, they indicate that they plan to save some costs by cutting benefits for staff. Their direct words are: "utilizing shared costs between VTA and employees (e.g. increased co-pays for health insurance, employee pension contributions, etc.)"
• On page 23, they say they won't pay for any portion of operating the Caltrain SF Downtown extension, because VTA pays all the cost of operating San Jose to Gilroy, then they say that they expect SF and SM counties to pay an equal share of operating costs for additional Gilroy service that is planned (because we pay our share of the Giants trains).
• On page 28, they indicate that they want to increase the annual operating reserve from 15% to 25%. How do you save money you don't have, and why do you save it when you're putting painful cuts on your staff and customers?
• On page 50, one of their choices to get the extra money they need is Cost Efficiency by cutting the level of service. However, they say: "This could be an uncomfortable strategy to pursue if reductions in service appear necessary because of the added future expenses associated with an expanded rail capital program." So they are just "uncomfortable" with cutting busses to build and run BART?
• On page 51, they say that they could save money by delaying Capital Costs. "Delaying a capital program allows sources of funds to build healthy balances which when drawn down less rapidly accommodate the match between revenue and expenditure patterns." It's only when you look at their spreadsheets that you see how much savings this can provide. The payments on the bonds they are planning on issuing for BART are half of their estimated shortfall of funds starting around 2011. And the $42M for operating BART is another 25% of the shortfall. If they delay BART, their annual shortfall would go from $160 million dollars a year to $40.
• On page 54, they indicate that part of their plan is to have less drivers, but work the remaining ones harder. Specifically, they have 955 operators this year, but plan for only 944 next year. This year they get 1603 bus hours per operator, next year they plan on 1631 bus hours per operator and after that it goes up to 1634 hours per operator per year. How do they plan on doing this, further cutting drivers break time? Forcing them all to work overtime?

Go, speak out, and let's try and save our transit. --Robert

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