VTA Connections

Staff Budget Message

Dear Friends of VTA,

At the Board Workshop Friday, VTA staff presented an overview of the recently enacted State budget, and the Federal Stimulus Package, along with a preliminary analysis of how each will impact VTA programs and projects.   Staff also provided the Board with an update on the BART project, and outlined a proposed 2-year capital budget for Measure A.  Throughout the meeting, VTA Board members and staff expressed their unwavering commitment to the Mission of VTA, and the host of projects that are included in our long-range plan.  Nevertheless, it was clear to all at the meeting that there is no escaping the devastating effects of the global financial crisis, and it is imperative that VTA take decisive steps now to successfully navigate these extraordinary, highly volatile economic times. 

The country’s bleak economic outlook is projected to hit VTA hard this year and even harder in the next two fiscal years.  Economic experts predict that the current recession will be prolonged, and that we will not turn the corner until some time in 2010.   The root causes of the recession—the housing collapse, credit crunch, and international financial turmoil—do not lend themselves to easy or quick fixes.  Unlike economic downturns in the last decade, where families often tapped the equity in their homes to get through temporary job loss, or to make major purchases, many households are no longer in a position to borrow against their property.  As a result, sales tax receipts, which support nearly 75% of VTA’s operating budget and a major portion of the Measure A capital program, have come in below budget and are expected to continue to decline over the coming year.  In FY09 sales tax revenues are projected to decline 6.76% from FY08 actuals.  VTA proposes to tap our operating reserves to offset this loss of revenue, however, this still leaves an operating deficit of $4 million this year.  Given the continued decline of revenues and a limited reserve, this is not a sustainable strategy for closing our budget gap; the operating deficit is estimated to balloon to $28 million in FY10, and a staggering $50 million in FY11.   

In light of this serious downturn in our operating revenues, the Board has given clear direction that VTA continue to take steps to aggressively manage expenses in the coming months, and to explore all options, including service reductions and fare increases, to bring operating expenses in line with our declining revenues.  In addition to managing expenses, VTA will continue to pursue stimulus funds and other federal funding for a number of capital projects, unfortunately, this will do little to reduce the operating deficit. 

VTA has already implemented a number of cost savings efforts, such as reducing the volume of printed materials that we produce, closely managing the use of over time, and enhancing the efficiency of our lighting and landscape watering system.  In addition, the following policies have been put into effect:

• Labor – requests to fill vacancies will be considered only for positions deemed critical to maintaining VTA’s core mission and service plan.  My goal is to achieve labor savings through attrition rather than layoffs.
• Capital projects – in many cases, funding for capital projects is as constrained as operating funds.  Project managers are directed to focus expenditures on key near-term tasks that will advance projects to the next decision point, at which time a decision whether to continue can be made.  My goal is to increase the utilization of VTA labor over outside resources, to the extent possible.
• Travel – travel requests will continue to be subject to my approval, with the goal of limiting the number of staff attending the same conference and restricting out-of-area travel and overnight expenses.  For local area travel, utilize public transportation or carpool when feasible.
• Equipment/Supplies – staff should make every effort to reduce new purchases by consolidating and sharing existing equipment/supplies before placing new orders.
• Vehicles – the Fiscal Resources Division will be reviewing the assignment of vehicles to staff. 
• Professional &Specialized Services – Perform work with in-house staff where possible.  Evaluate added value of service in current economic climate before engaging contractors.

As VTA develops the FY10/FY11 capital and operating budgets, we will be guided by a near term focus, while recognizing long term commitments.  By maintaining rigorous cost controls and deferring non-essential purchases, we hope to delay the need for more drastic steps, which would impact services.  We will also remain firm in our commitment to deliver the capital projects that the residents of Santa Clara County have pledged their taxes to support.

We are fortunate to live in the Silicon Valley, where innovation and hard work has historically been rewarded with a thriving economy that provides VTA with a solid tax base.  I have faith that we will come through this downturn, and that all VTA employees are committed to doing their part to manage our resources wisely, to get us through the coming months, which will be extremely challenging.  As always, I hope you will feel free to contact me if you have questions or wish to share suggestions for ways to improve our service during these difficult times. 

Michael T. Burns
General Manager

 Go To Top

About VTA
Santa Clara Valley Transportation Authority (VTA) is an independent special district responsible for bus, light rail and paratransit operations; congestion management; specific highway improvement projects; and countywide transportation planning. As such, VTA is both an accessible transit provider and multi-modal transportation planning organization involved with transit, highways and roadways, bikeways and pedestrian facilities.