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Recommended VTA Quarter Cent Sales Tax Scenario
Mr. Lawson noted that the VTA Board of Directors at their last meeting referred this item to all the Advisory Committees. Mr. Lawson directed attention to the two PowerPoint presentations entitled “VTA Scenario” and “Projections of Taxable Sales of VTA.”
Mr. Lawson noted that in 2000, the voters approved the 2000 Measure A Program – an all transit measure that involved a ½ cent sales tax. Projects included in this measures were BART, Airport Connector, accessible and zero emission vehicles, light rail throughout the county, expansion and electrification of Caltrain, and increased VTA services.
The economic downturn caused a negative impact on VTA, causing a dramatic decrease of 21 percent of annual sales tax revenues since FY 2001. As a result, the Board of Directors created the Ad Hoc Financial Stability Committee, which looked at revenue issues and completion of the projects promised to the voters.
Over the past two years, workshops were held to develop an expenditure plan (VTA Scenario) that will address the financial needs of VTA and delivery of Measure A projects. On June 2, 2005, the Board of Directors reviewed four scenarios. Over the summer of last year, the North Counties Cities Group, Silicon Valley Leadership Group (SVLG), and the City of San Jose requested additional scenarios. On September 16, 2005, the Board of Directors reviewed three scenarios and concluded the following: a 30-year, ¼ cent sales tax is required, pavement management should be included, BART should be completed by 2018, Dumbarton should be completed by 2011, and the plan should include flexibility in the balance amount. On November 3, 2005, the Board of Directors deferred the item due to concerns on the Airport People Mover and pavement management. On December 1, 2005, staff was able to find methods to put the pavement management and people mover back in the VTA Scenario. At the same meeting, the Board of Directors received additional input from the Cities of San Jose, Morgan Hill, and Gilroy. The Board of Directors decided to defer the action until February 2006 and directed staff to gather input from Advisory Committees and interested groups regarding the VTA Scenario.
Mr. Lawson stated that since then, VTA received a revised annual sales tax projection, which resulted in a revised VTA Scenario. Mr. Lawson emphasized that the sales tax projections are extremely important to VTA, as the organization relies heavily on sales tax revenues. The change in the projections was based from the Center for Continuing Study of the California Economy (CCSCE) report. CCSCE has worked with VTA since the early 90’s and at the request of VTA, CCSCE provides sales tax revenue projections over a ten-year period. Like in the past, VTA looks at the conservative and moderate projection and uses the mid point between the two. The revised VTA Scenario only made an adjustment to the years 2008-2015. Prior years are actual numbers and the years after 2015 uses the 4.8 percent projected increase. The slight adjustment resulted in a $2 billion increase that will be available for projects. Mr. Lawson directed attention to the projections of VTA and projections of VTA slides.
Jack Collins, Chief Construction Officer, noted that the major difference between the revised VTA Scenario and the 2005 version is the removal of the completion program. The new projections completes all of the Measure A projects, leaves a positive ending balance of $537 million, maintains VTA Reserves at 15 percent, advances BART to December 2016, advances of light rail to Eastridge by 2012, advances of light rail to Nieman by 2017, advances of light rail to Los Gatos by 2012, and accommodates single car light rail on Santa Clara/Alum Rock by 2021 if this mode is selected as the preferred alternative. Other projects include restoration of the ten percent funding cut for Caltrain, completion of Caltrain Electrification by 2018, Caltrain improvements, 8.4 miles of Caltrain double tracking in South County by 2010, completion of Dumbarton Rail by 2011, Altamont Commuter Express (ACE) upgrades, completion of Airport People Mover by 2018, initiation of bus rapid transit projects on Line 22, Monterey Road, and Stevens Creek by 2011, new $718 million for local streets and roads and bicycle and pedestrian program, new $130 million bus rapid transit in Sunnyvale/Cupertino, increased VTA service, new senior/disabled programs, and $2.7 billion in BART Operating subsidy to 2038.
Mr. Collins reviewed the next steps and stated that staff has met with the Santa Clara County Board of Supervisors. The decision regarding the VTA Scenario at that meeting was deferred for two weeks. Staff is providing presentations to the VTA Advisory and Standing Committees, and other interested parties such as cities of Milpitas, Cupertino, Morgan Hill, and Gilroy. Mr. Collins noted that the VTA Board of Directors is scheduled to make a decision on the VTA Scenario on February 2006. Mr. Collins clarified that the VTA Board of Directors is only considering the expenditure plan and the projects that are included in the plan. The tax ballot language will be decided later on.
Mr. Collins directed the Committee’s attention to the Projections of Taxable Sales for VTA from Stephen Levy of CCSCE. Mr. Collins noted that although Mr. Levy is not present, Roger Contreras, Chief Financial Officer, can answer the Committee’s questions regarding the report. Mr. Collins highlighted that the report projects that there would be more people living and working in Santa Clara County, thus, expanding the tax base. He added that the report also forecasts that business-to-business sales will be improving. However, the report does not project a huge expansion or increase in jobs.
Alternate Member Tripousis inquired about the Santa Clara County Board of Supervisors discussion on the VTA Scenario. Mr. Contreras responded that the issue has been clarified and noted that the adjustments were only made from 2008-2015 and 4.8 percent was used after 2015 until the end of the 30-year period.
Alternate Member Collen inquired if there is any polling for the governor’s bond. Mr. Collins replied that VTA does not do polling and that traditionally, it is the SVLG that does the polling.
Upon inquiry of Alternate Member Oliva, Mr. Collins clarified that the new projects added in the revised VTA Scenario is funded, will be programmed every year, and includes escalation to address increased costs. Mr. Collins noted that the cities will review their own projects and TAC could possibly determine the project criteria and selection.
Chairperson Yoshino requested clarification on the City of San Jose’s offer to bond. Mr. Collins responded that with the new projections, the proposed City of San Jose bond is no longer necessary.
Chairperson Yoshino inquired if it is a standard practice for VTA to review the projections annually. Mr. Collins responded that because of the lesser tax sales revenue in 2002, VTA commissioned an annual update from CCSCE and CCSCE has been doing it since then. Mr. Collins reiterated that CCSCE provides VTA with ten-year projections.
Member Kass commented that projections are uncertain and noted that Santa Clara County has a cyclical economy. He commented that VTA has been diligent and has done a good job in coming up with projections. He inquired about a built in process in the scenario that deals with project selections or priorities, in the event that projections are not realized. He noted the concern that bigger projects will take all the monies.
Mr. Collins responded that staff plans to follow the 1996 Measure B Program and conduct annual review of Measure A projects. Mr. Collins stated that it is important to evaluate projects each year to determine status and funding, including funding partner issues. Mr. Collins noted that based on the annual review results, the Board of Directors could have flexibility and decide which projects could be moved forward.
Alternate Member Tripousis noted that the plan lacks a sense of “institutional memory” and inquired about a method that can be incorporated in the plan that will remind future board members and staff of what has been done before to address several issues. This way, he noted, the wheel would not be constantly re-invented.
Mr. Collins referred to 1996 Measure B and noted that under that program, staff prepared a public report on the annual revenue and expenditures that reflected all the adjustments the Board of Directors approved. In addition, staff prepared semi-annual reports. Mr. Collins expressed concern that since passing of Measure A in 2000, there is still no Expenditure Plan and staff is working diligently to have an approved plan by February 2006. He reiterated that staff intends to prepare annual updates that will memorialize all of the decision that has been made regarding Measure A.
Mr. Lawson noted that VTA recognizes the responsibility of reinforcing the institutional memory. He noted that with the annual update, VTA’s Citizens Advisory Committee (CAC) review as Watchdog Committee, and staff’s diligent work will address the issues raised by Alternate Member Tripousis.
Upon query of Alternate Member Oliva, Mr. Collins explained that if the ¼ cent sales tax fails, the VTA Board of Directors will have a big challenge of prioritizing projects without the additional revenue.
Member Kass referred to the Litter Control Program discussed at the previous TAC meeting and noted that the report suggests that to address litter, there should be effort in any future revenue measure that creates a minimal amount set aside for litter control. He expressed concern that the County is focused on building capital assets and yet, Caltrans does not have the capability to maintain these assets/facilities due to funding issues. Member Kass inquired about the possibility of examining any future revenues to create or set aside a minimal amount to address litter and landscaping. He recognized that litter control is not part of the expenditure plan, but inquired if there is flexibility built in the VTA operating subsidy that could allocate monies in maintaining capital assets.
Mr. Collins acknowledged that the Litter Control is a good program but pointed out that VTA does not own the facilities. He noted that it is the State’s responsibility to maintain these facilities and there should be efforts to make the State maintain these facilities.
John Ristow, Programming and Project Development Deputy Director, explained that the Litter Control Study was conducted due to the Board’s direction in the Valley Transportation Plan (VTP) 2030 to find strategies that will address litter. He noted that funding strategies for the program is a separate issue.
Alternate Member Tripousis commented that Santa Clara County and individual cities have the opportunity to make Caltrans address litter control by advocating that any infrastructure bond that goes forward be structured in a way that establishes categories of funding. Another alternative is to work with local legislative delegation to ensure that they are aware of the problem and ways on how to address the issues.
Member Witthaus commented that Alternate Member Tripousis’ approach is more prudent as the litter control effort is on the operating side.
On order of Chairperson Yoshino, there being no objection, the Committee reviewed and forwarded recommendations on the Recommended VTA Scenario to the VTA Board of Directors.
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