VTA Connections

Court of Appeals Decision

Dear Friends,

I am writing this message at the end of another busy week that started with meetings on the East Coast, and ended with a short summer break with my family in Boston.  The time off has been a much needed rest and chance to catch my breath, clear my mind, and reflect on recent events impacting VTA.  As with the national economic situation, I see occasional glimmers of light through the fog, but, at this time we are still far from reaching blue skies and calm waters.

One of the “glimmers of light” that you may have heard about was the recent decision by the Third District Court of Appeals in the case of Shaw v. Chiang.  You will recall, this is the California Transit Association (CTA) lawsuit that was initiated following the diversion of transit funding to the General Fund as part of the 2007-08 state budget.  After reviewing the extensive record of the lower court decision and applicable law, the Court of Appeals ruled that the entire $1.189 billion diversion violated state law – a 100 percent victory for public transit!

The court’s ruling hinged on three key determinations:

•   That voters did not intend to give the Legislature carte blanche to alter the transit funding statutes in ways that did not advance transportation planning and mass transportation purposes without such changes being subject to subsequent voter approval

•   That by “mass transportation,” voters meant “public transportation” or “public transit,” and that such programs as home-to-school transport, regional center transport and repayment of bond debt do not meet that definition

•   That voters created the Public Transportation Account as a trust fund to which revenues intended for the account should be directly allocated, not diverted through the “Mass Transportation Fund,” a shadow account created by the Legislature to give the diversions a veneer of legitimacy

Following this ruling, Department of Finance spokesman H.D. Palmer was reported as saying that the court’s decision could force the state to repay as much as $3.4 billion. That figure accounts for $2.5 billion the state has taken from the PTA since 2007 and $952 million the administration is planning to divert in the 2009-10 fiscal year.

CTA has contacted legislative leaders and key administrative staff to get a sense of how this ruling may impact on-going budget discussions, as well as how and when transit funding will be restored.  As a practical matter, it appears unlikely that a solution will arise soon, as the State continues to grapple with a $26 billion deficit, and the Governor’s office has indicated that the state will appeal the ruling to the State Supreme Court. 

If an appeal is filed, a stay could be issued and the Superior Court ruling would be in effect, pending a final Supreme Court decision.  The prospect of this appeal and the continued state fiscal crisis make it unlikely that a repayment plan could be worked out any time soon.  Transit agencies have been warned that it would be imprudent to budget for any level of state funding that does not reflect the current suspension of the State Transit Assistance (STA) program and other PTA funds, at least for the remainder of 2009-2010. 

Should a Supreme Court ruling be issued quickly and in our favor, the Association will seek a midyear correction to the 2009-2010 budget. However, at this point, any relief for VTA’s budget is still just a “glimmer” on the horizon. 

Due to the uncertainty of any restoration of state funding for transit in the coming months, and the continued decline in sales tax revenues, VTA must now being the painful process of evaluating service reductions for the coming year.  We have already reduced expenditures across the agency, implemented furloughs and wage freezes, adopted a fare increase, and tapped our reserves. Unfortunately, this simply isn’t enough. Starting in August, there will be a number of public meetings to discuss the proposed changes and VTA will be reaching out to the community for their input as we look for ways to minimize the impact on our customers.  Details about the proposed service reductions and public meetings are available on the VTA website at www.vta.org.  I encourage you to take a look at the recommendations and send me your thoughts if you are not able to attend one of the upcoming meetings.

I am thankful for the time I have had to spend with my family this week, and hope that you have had some time to enjoy with your friends and family as well.  I feel recharged, and ready for the hurdles ahead.

Michael T. Burns
General Manager

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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.