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TRANSACTIONS NEWSLETTER ONLINE

June 2002

Facts & Figures

VTAThe plunge in sales tax revenues has been exacerbated by a dip in transit fare box revenues stemming from rising unemployment and falling ridership.
Photo: Valley Transportation Authority
Sales Tax Downturn Triggers Budget Crisis
Here's a novel way to support public transit: Buy a new car. Or a big-screen TV, a new couch or an extravagant appetizer the next time you dine out. Since sales tax money accounts for roughly 40 percent of Bay Area transit agencies' operating funds (covering fuel, drivers' and mechanics' salaries, and the like), the sharp downturn in taxable sales over the past year has set off a full-scale budget crisis among bus, train and ferry operators. And a dip in fare box revenues — stemming from rising unemployment and falling ridership — makes the fiscal squeeze even tighter.

Fare Hikes and Service Cuts
But just as the economic downturn has hit some counties harder than others, Bay Area transit riders will not share the pain equally. Some North Bay transit systems such as Sonoma County Transit, Santa Rosa CityBus and Vacaville City Coach anticipate no major budget problems in the year ahead. Meanwhile, budget troubles at San Francisco Muni, Caltrain, SamTrans and Santa Clara County's Valley Transportation Authority (VTA) largely reflect the dot-com meltdown and other high-tech calamities that have battered San Francisco, Silicon Valley and the Peninsula.

Click to enlarge chart
(Click to enlarge chart)

After several years of steady growth, taxable sales in the Bay Area plunged in 2001, and are slipping further in 2002. This trend translates to a double whammy for the region's public transit operators: a sharp decline in revenues from half-cent transportation sales taxes plus a drop in Transportation Development Act moneys, which are fed by a quarter-cent statewide sales tax.
Source: Association of Bay Area Governments (figures are inflation adjusted)
For the VTA, the drop in revenue has been so severe that the agency has declared a state of fiscal emergency. Faced with a roughly $30 million budget shortfall for fiscal 2002-03, VTA will discontinue five bus routes and change service hours on 49 bus and light-rail routes beginning in July. At the same time, the South Bay agency will raise fares.

BART already is running shorter trains and is weighing fare hikes and/or parking fees along with several other budget-trimming proposals. Caltrain has imposed a one-year freeze on filling vacant positions, and plans to cut the number of weekday trains while raising fares by 10 percent. Parking fees also are going up.

Confronting a $31 million budget gap next year, the Golden Gate Bridge, Highway and Transportation District (which includes Golden Gate Transit) is considering a hike in bridge tolls as well as a range of cost-cutting measures and future fare increases. Other transit operators planning or considering fare increases include AC Transit, SamTrans, County Connection, Tri Delta Transit and WestCAT.

MTC Seeks Creative Solutions
Since higher prices and reduced service make a lousy recipe for attracting new customers, the tight-rope transit systems must walk is very thin indeed. "We haven't found the magic button for boosting retail sales," commented MTC Executive Director Steve Heminger. "But we're looking for creative ways of helping our transit partners get through the lean times."

MTC successfully lobbied the state Board of Equalization to protect State Transit Assistance funding (Transactions, May 2002), and negotiated cost- and revenue-sharing agreements between

BART and its feeder bus operators. MTC also is allowing some transit agencies to divert capital funds to preventive maintenance, which is normally financed with operating money.

A rebound in retail sales and transit ridership, though, would be the surest way to reduce transit agencies' fiscal danger.
— John Goodwin

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