On Thursday December 6, while making decisions to address a $25M operating deficit and underlying structural problems, the VTA board chose to look at an elephant in the room, clearly examining capital projects that could benefit or harm long-term financial sustainability.
Tactical first steps
The VTA board took several recommended tactical steps to close the budget gap in the coming year, includingÂ reducingÂ proposed Next Network service hour increases from ~10% to ~2%, to index fares to inflation, and providing voluntary incentives for workers to take early retirement.
Sharpening recommendations to revisit capital program to speed transit, identify obsolete projects
The VTA board decided to sharpen recommendations to address the role of capital spending in addressing the structural deficit.Â Â Director Larry Carr of Morgan Hill, summarized the conclusion to bring issues to the Capital Programs committee that he chairs: Â â€œwe will look at whether we have capital projects on the books that will deepen the operating hole, and we will look to projects that will improve operating efficiencyâ€ (enabling more service and more riders per dollar).â€Â Â Carr’s summary followed comments by Director Bruins, who chaired the Financial Sustainability Committee, Director McAlister from Mountain View, and persistent questioning from Director Peralez of San Jose.
The sharpened recommendation to look at the capital program complements the boardâ€™s direction to increase emphasis on real estateÂ development on land that VTA owns, and to contemplate support for legislation to allow denser zoning in station areas. Transit-supportive land use could help VTAâ€™s finances and ridership – and VTA can use land use to assess whether old projects on the books are still worth doing.
Identity crisis – are we in the public transportation business?
Director Cindy Chavez raised the alarm that the structural deficit was a symptom of fundamental questions about transit in Santa Clara County. Â Said Chavez,we have a decision to make – continuing to run public transit, or handing the business over to private sector players such as Lyft and Uber. We need to think about process to take on these big issues. Â Incorporating Chavezâ€™ comments, VTA staff will come forward with an explicit work plan to deal with these strategic concerns.
This direction a step forward wasnâ€™t as comprehensive as SPURâ€™s recommendation for VTA to develop a long-term Business Plan by May 2020. SPURâ€™s recommendation included: Â â€œa visioning process for future service levels and product types, the development of a business model, the development of strategies to improve operations and reduce their costs, a strategic plan for VTAâ€™s network expansion (that considers costs, benefits and workforce implications).â€
Also, the board didnâ€™t address some financial recommendations from labor-backed policy nonprofit Working Partnerships to conduct a top-to-bottom review of its contracting practices specifically focused on long-term contracts, repeat contracts, and contract delays and failures. These were sharper than the staff reportâ€™s recommendation to â€œconduct a comparative study to identify opportunities for contracting in and outâ€
However, an explicit work plan to address VTAâ€™s strategy and processes can provide more opportunities to advocate for stronger steps.
Caltrain funding recommendation raises governance questions
The boardâ€™s recommendations also included examining agreements to contribute funding to partner transit agencies, explicitly calling out Caltrain. Â Â When discussing future Caltrain funding, Santa Clara County board members have repeatedly suggested that if Caltrain passes a ballot measure for dedicated funding, this should replace the current county-based funding and get Santa Clara County off the hook from contributing to Caltrain. Â This option raises some logical questions about how Caltrain should be governed if the county transit agencies are no longer the main contributors of public funding. Watch for an upcoming blog post for more on the topic.
Which routes will get cut?
The tactical recommendations approved by the board also included shifting service focus to 90% frequent service designed to support higher ridership and 10% coverage service from 83/17.Â It’s not clear how VTA will handle outreach regarding lower ridership routes that would be on the chopping block.Â