vta 2003-2005 recommended budget
TRANSCRIPT
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SANTA CLARA
VALLEY TRANSPORTATION AUTHORITY
( VTA)
RECOMMENDED BUDGET
FISCAL YEARS
J ULY 1, 2003 thr ough J UNE 30, 2004
AND
J ULY 1, 2004 thr ough J UNE 30, 2005
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2003 Boa rd of Directors Thomas Springer General Manager
J ane P. Kennedy Mayor Pet er M. Cipolla
Chairperson City of Gilroy
VTA Board of Directors General Coun sel
Council Member Man ue l Valer io Suzann e Gifford
City of Campbell Council MemberCity of Sunnyvale Board S ecretary
Don Gage Sandr a Weymouth
Vice-Chairperson For re st Williams
VTA Board of Directors Council Member Chief Adm inis trat ive
Supervisor City of San Jose Officer
Santa Clara County Kaye L. Evlet h
Board of Supervisors Board Mem ber Alternates
Pat ricia Dixon Chief Constru ction
Blanca Alvarado Vice Mayor Officer
Chairperson City of Milpitas J ack Collins
Santa Clara CountyBoard of Supervisors Fr ancis La Poll Chief Developmen t
Council Member Officer
Cindy Chavez City of Los Altos Michael P. Evanhoe
Council Member
City of San Jose Pet e McHugh Chief Fina ncial Officer
Supervisor Scot t Buhrer
David Cort ese Santa Clara County
Council Member Board of Supervisors Chief Operatin g Officer
City of San Jose Fra nk T. Mart in
J oe Pi rzynskiPat Dando Council Member Controller
Vice Mayor Town of Los Gatos Jerry Rosenquist
City of San JoseKen Yea ger Budget Department
Ron Gonzales Coun cil Membe r Victor Chan
Mayor City of San Jose Liza Chuapoco
City of San Jose Christ ine HuynhEx-Officio Pau line Man
J ohn McLemore J ames Beall, J r . J im McCutchen
Council Member Chairperson, Metropolitan Linda Schwart z
City of Santa Clara TransportationCommission (MTC)
Dena Mossar
Mayor
City of Palo Alto
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TABLE OF CONTENTS
Page
General Managers Budget Message .......................................................................... i
I . Introduction
Budget Resolution ............................................................................................. 1Executive Summary .......................................................................................... 4
Vision, Mission, and Strategic Plan ................................................................. 5
Current Operations ............................................................................................ 7
II. Oper at ing Budget
Operating Budget ............................................................................................... 15
Major Budget Assumptions and Explanations ............................................... 18
III . Division Budget s
FY 2002-03 Accomplishments & FY 2003-04 Goals ....................................... 31
Office of the General Manager ......................................................................... 43Office of the General Counsel .......................................................................... 47
Operations:
Administration ............................................................................................. 49
Transportation ............................................................................................. 53
Maintenance ................................................................................................. 56
Administrat ive Services .................................................................................... 61
Construction ....................................................................................................... 65
Development & Congestion Management ..................................................... 71
Congestion Management Program and Highway Project
Development & Administ ration .... 80Planning & Development and Marke ting & Customer Services ............ 83
Fiscal Resources ................................................................................................ 85
Other.................................................................................................................... 88
IV. Cap ita l Budget
Introduction ........................................................................................................ 89
Capital Budget Schedule ................................................................................... 90
Major New and Augmented Capital Projects ................................................ 91
1996 Measure B Transportation Improvement Program .............................. 96
2000 Measure A Transit Improvement Program ........................................... 104
Other Programs ................................................................................................. 106Other Local Projects .......................................................................................... 107
Appendices:
A. Employee Posit ions by Division and Pa y Ranges ............................................. 111
B. Budgete d Positions by Division an d Classificat ion ......................................... 112
C. Population Data for Sant a Clara Count y by City............................................. 113
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D. Ten Year Summa ry of Sant a Clar a Count y Employment In format ion ......114
E. Projects Closed or Scope Reduced by Capital Improvement Program
Oversight Committe e ............................................................................................... 115
F. FY 2003-04 Capit al Budget Su mmary .................................................................. 116
G. Additiona l Informat ion on Non -Revenue Vehicle Purcha se ......................... 118
H. FY 2003-04 ATU Pen sion Fund Ex pen ditu re Plan ........................................... 119I. Propo sed FY 2003-04 Basic Fare St ru ctu re for Bus, Light Rail and
Para tr ansit Ser vices, and E CO Pass Pricing Informat ion ............................ 120
J . Fee Schedules .............................................................................................................. 122
Glossary ............................................................................................................................... 124
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GENERAL MANAGERS BUDGET MESSAGE
Last years budget message opened with the necessity for a service reduction, a fare
increase and most d isturbing, a reduction in our workforce. At that time I also stated If
we dont effecti vely address the si tuati on over the next several m onths, well be faced
wi th an even m ore criti cal issue next year at this tim e.
Here we are, one year later. The economy is showing no sign of recovery. Weve just
completed seven quarters of negative sales tax performance (unprecedented at any time
during the past 25 years). And, in spite of a great deal of good intentions, discussion,
discovery and dedication, we still dont have a viable solution. The result will come as no
surprise to those who have been working closely with us this past year.
And once again, we are facing a service reduction, a fare increase and another reduction
in our workforce. This time, however, the required service cut is so deep that it will take
us back to l981 levels of service. Can VTA survive? We hope so, as do the thousands of
customers we will impact, along with those talented, dedicated employees we will beforced to lay off as well as those who will remain.
The fare increase is designed to generate a t least $4 million in necessary revenue, (before
considering the effects of the proposed service reductions). Raising fares when we are
also making significant service cuts is not an ideal approach , but we have little choice. In
combination with several expenditure cuts and efficiency measures, this revenue will
help us improve our farebox recovery ratio. In truth, thats secondary to the primary
need to generate cash. Without this cash, additional services would have to be cut.
The loss of ridership with fare increases and service reductions is usually temporary. Butthese are unusual times and recently historical trends havent exactly reflected what
actually happens in the future. We can only hope our customers will understand and
remain loyal to VTA during these extremely difficult times. We will continue to do
everything we can to earn, and hopefully retain, their loyalty.
The loss of any employee through a layoff is difficult, but th is one cuts very deep into the
heart of this organization. These are highly skilled, well-trained and extremely loyal
individuals who have served to energize VTA. This is not just a job to them. They believe
in what they do and in the people they serve. It is incumbent upon those of us who can
impact this financial crisis to resolve the issue of additional revenue, restore effective
and efficient services, and get our people back to work as quickly as we can, serving thepublic, our customers, as only they can do.
Those who have taken the time to look carefully at VTA these past two years of
economic turmoil should realize how skillfully this organization has been able to manage
its way through this fiscal crisis up to this point. There are fiscal heros everywhere.
The multitude of individuals who have found ways to save VTA moneythe two
individuals who discovered a $750,000 error in diesel fuel billingthe review, re-review
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and subsequent deferral of over $120 millions of capital projects so that we can keep
more service on the streetthe series of unique (and often one-time) financial
transactions that have or will serve to keep us going a bit longerthe effective use of
VTAs reserves these past months, enabling us to keep funding as much service as
possible. Some may recall that at one point, two years ago, VTA was criticized for having
too much in our unrestricted reserves. While we acknowledged their comments, wereglad we reta ined our reserve program.
As a result of the above and much, much more from those within our organization and
those affiliated with us (such as input and suggestions from our financial advisors) we
have been able to protect our customers from major negative impacts until this past
April. While to some, this may not seem like an accomplishment, I would say it is. In fact,
I believe it is a major accomplishment and directly a result of the commitment of VTA
employees.
While much of our focus has been on VTAs enterprise fund (that supports transit
operations) this past year, the impact of the economy on the 1996 Measure B Programand State supported major capital projects has sent us back to the drawing board
several times this past year. Through the judicious use of swap funds, Garvee bonds and
other unique approaches, we have been able to keep the bulk of the major capital
program moving ahead, most of which is forecast to be completed below budget and
ahead of schedule.
As you look through this document, you will have the opportunity to review a short
synopsis of the myriad of activities and accomplishments VTA has had or undertaken
this past year. Please take the t ime to look them over. It is very easy and unders tandable
for these to be overshadowed by our fiscal situation. They are, nonetheless, a criticalpiece of this past year s history and reflective of VTAs impact on our community.
In developing this budget effort, many are aware, we modified our normal approach and
focused on developing a two-year financial plan for FY 2003-04 and FY 2004-05. We fully
realize it will change, perhaps a great deal over the next two years, but we felt it critical
to develop a financial program that would provide an opportunity to identify and
implement a long-term financial strategy for VTA in concert with our stakeholders who
reside and work within our county. It is, after all, really their transportation organization.
This budget scenario will help us buy a little time. Weve deferred many programs and
projects, many of which should not be deferred for long. Excess deferral will serve to thedetriment of VTA, our customers and our community. Weve consumed or are in the
process of using up the last of the unique one-time financial transactions. Again, we
can only buy a little time.
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Peter M. Cipolla
General Manager
April 15, 2003
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Resolution No.
RESOLUTION OF THE BOARD OF DIRECTORS
OF THE SANTA CLARA VALLEY TRANSP ORTATION AUTHORITY ( VTA)
ADOPTING A BIENNIAL BUDGET OF VTA
FOR THE PE RIOD J ULY 1, 2003 THROUGH J UNE 30, 2005(FY 2003-04 AND FY 2004-05)
WHEREAS, on or before April 25, 2003, the General Manager presented the Santa
Clara Valley Transportation Authority Fiscal Year 2003-2004 Recommended Budget to
the Board of Directors and mailed a copy to each City Manager and Mayor in the County
of Santa Clara and to the County Executive; and
WHEREAS, additional copies of the Recommended Budget were distributed to
VTAs Advisory Committee membership, libraries in Santa Clara County, Santa Clara
Countys state and federal legislative delegation, senior and disabled groups, professional
community organizations, and the news media, and were available for review on VTAswebsite www.vta.org and at VTAs Downtown Customer Service Center, as well as
libraries and city halls throughout the County; and
WHEREAS, the Recommended Budget includes all administrative, operational
and capital expenses for the Congestion Management Program together with the
apportionment of Congestion Management Program expenses by levy against the
Managing Agency and each Member Agency to the extent necessary to fund the
Congestion Management Program; and
WHEREAS, the Recommended Budget was reviewed by the Administration andFinance Committee on May 15, 2003, and on April 25 and June 5, 2003, by the Board of
Directors a t public meetings conducted throughout the County;
WHEREAS, a list of employee position classifications and pay ranges is included
in the recommended budget as Appendix A, and the amount of funds budgeted for
wages, salaries and benefits for Fiscal Year 2003-2004 is based upon VTAs position
classification and pay plan and is set forth in the Statement of Revenues and Expenses in
the Recommended Budget; and
WHEREAS, the Board of Directors desires to adopt a biennial budget for the
period of Ju ly 1, 2003 through June 30, 2005 (FY 2003-04 and FY 2004-05);
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Santa
Clara Valley Transportation Authority that the attached recommended budget for the
Santa Clara Valley Transportation Authority (marked Exhibit A and incorporated
herein as though set forth at length), is hereby adopted as VTAs budget for the Fiscal
Year 2003-2004.
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BE IT FURTHER RESOLVED that, effective July 1, 2003, positions may be
authorized and filled, as required, by the General Manager and General Counsel, as
appropriate, provided that to tal VTA-wide budgeted wages, salaries and benefits account
is not exceeded.
BE IT FURTHER RESOLVED, that, as necessary for efficient administration,position classifications may be added, modified, or deleted and salary ranges adjusted
with the approval of the Genera l Manager or General Counsel, as appropr iate, provided
that the changes are in accordance with applicable VTA personnel policies and
procedures and are consistent with pay practices in the transportation industry. Such
changes shall include pay and classification adjustments arising from agreements
between VTA and its recognized labor organizations.
BE IT FURTHER RESOLVED, that operating appropriations for major
professional services for one time non-recurring programs or projects, which are not
expended during the fiscal year, shall carryover to the successive fiscal years until the
programs or projects are completed or terminated. Other operating appropriations shalllapse at year-end.
BE IT FURTHER RESOLVED, that capital appropriations, which are not
expended during the fiscal year, shall carry over to successive fiscal years until the
projects are completed or otherwise terminated.
BE IT FURTHER RESOLVED, that the budget shall consist of five Funds: the
Transit Enterprise Fund, the Congestion Management Program Fund, the 1996 Measure
B Transportation Improvement Program Fund, the 2000 Measure A Transit Program
Fund and the Highway Improvement Fund. The General Manager may reallocateappropriations between budget units and cost groups within each Fund up to the limits
of each Funds annual appropriation. Any net increase in authorized appropriations to
any Fund (including an allocation from reserves) shall require an affirmative vote of at
least eight Directors .
BE IT FURTHER RESOLVED, that the Recommended Assessments of member
agencies for the Congestion Management Program are hereby approved.
PASSED AND ADOPTED by the Santa Clara Valley Transportation Authority
Board of Directors on ___________, by the following vote:
AYES: DIRECTORS
NOES: DIRECTORS
ABSENT: DIRECTORS
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___________________________
JANE P. KENNEDY, ChairpersonBoard of Directors
ATTEST:
_________________________________
SANDRA WEYMOUTH, Secretary
Board of Directors
APPROVED AS TO FORM:
__________________________________
SUZANNE GIFFORD, General Counsel
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SANTA CLARA VALLEY TRANSPORTATION AUTHORITY
FISCAL YEAR 2003-04/2004-05 BUDGETS EXECUTIVE SUMMARY
FY 2001-02 FY 2003-04 FY 2004-05
In t housands Actual
Adopted
Budget
Revised
Est imate
Proposed
Budget
Proposed
Budget
Ridership ( In 000's)
Bus 44,900 43,600 40,000 33,000 32,800
Light Rail 7,790 7,900 6,200 5,260 5,760
Tot a l Ride r ship 52,690 51,500 46,200 38,260 38,560
Service Miles ( In 000's)
Bus 22,044 21,174 20,402 15,698 14,633Light Rail 2,033 1,832 1,584 1,415 1,675
Tot al Ser vice Mile s 24,077 23,006 21,986 17,113 16,308
Service Hours (In 000's)
Bus 1,589 1,538 1,493 1,151 1,067
Light Rail 137 122 109 96 101Tot a l Se r vice Hour s 1,726 1,660 1,602 1,247 1,168
Tot a l Revenue 326,230 336,927 360,566 377,757 311,136
Major Revenue Component s:
1/2 Cent Sales Tax 144,218 155,000 133,000 135,000 139,000
TCRP/Measure A Proceeds - - - 81,945 -
TDA 95,401 63,383 63,383 63,450 65,330
Fares 31,282 38,011 32,887 31,495 36,429
Federal Operating Grants 14,023 31,900 40,426 30,284 31,344
Tot a l Ex pen se* 352,405 362,093 357,028 407,460 327,095
* Exclud ing Contingenc y
Wages & Benefits 220,462 227,888 229,007 214,471 207,195ADA 33,122 32,452 30,556 31,797 32,751
Debt Service 23,161 25,268 24,168 105,735 23,579
Caltrain 20,630 16,605 18,146 14,105 14,387
Materials & Supplies 14,715 16,048 14,217 13,200 13,385Security 9,909 9,473 9,383 7,904 8,499
Other Service 8,551 7,883 7,457 6,584 6,380
Fuel 4,809 5,964 6,091 6,161 5,143
Oper at ing Cost Recover y Rat io 13.4% 14.5% 14.0% 13.3% 14.8%Far ebox Recover y Rat io 11.6% 13.3% 11.9% 12.6% 14.6%
Number of Pr ojects:
New Projects 12 14 12
Augmented Projects 4 23 2
Carryover Projects 90 36 71Tot al Number of Pr oject s 106 73 85
Gross Pro ject Expendi tures ( In $000' s) :New Projects 4,668$ 4,259$ 4,008$
Augmented Projects 2,848 64,104 1,000
Carryover Projects 944,904 922,660 991,022Tot al Number of Pr oject s 952,420$ 991,023$ 996,030$
REVENUES ( In $000's)
EXPENSES (In $000's)
CAPITAL PROJ ECTS
FY 2002-03
OPERATIONS
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VISION, MISSION, AND STRATEGIC PLAN
In September 1995, the Board of Directors adopted a vision and mission statement for
the Santa Clara Valley Transportat ion Authority (VTA). This statement provides a
framework for making future policy, planning and budgetary decisions.
VISION STATEMENT
The v is ion of the Santa Clara Val ley Transportat ion Authori ty (VTA) is to
provide a transportat ion sys tem that a l lows anyone to go anywhere in the
region easily an d eff iciently .
This statement contains the long-range vision for VTA and portrays the desired future
VTA seeks to achieve. The vision is regional, including both the immediate areas of
Santa Clara County and the bordering Bay Area to which the County is linked
economically, socially, and culturally.
MISSION STATEMENT
The miss ion of the Santa Clara Val ley Transportat ion Authori ty (VTA) is to
provide the publ ic wi th a safe a nd e f f ic ient county wide trans portat ion s ys tem.
The sys tem increases access and mobi l i ty , reduces congest ion, improves the
environment, and supports economic development, thereby enhancing quali ty
of life.
The mission or core purpose of VTA is to provide a safe and efficient countywide
transportation system. The emphasis is on an integrated transportation system thatcomprises the full range of mobility options, from cars, buses, and rail systems to
walking and bicycle trips. The system will allow members of the public to travel eas ily
and comfortably to their destination by the most appropriate means.
POLICY DIRECTIONS
In adopting the vision and mission in 1995, the Board of Directors specified four key
policy directions for VTA. In March 1999, the Board adopted a fifth policy direc tion
related to the 1996 Measure A transportation program of projects.
Integrate transportation and land use Use all transpor tation options Create a safe, convenient, reliable and high-quality bus /rail ope ration
Build a regional perspective
In partnership with the County of Santa Clara, implement the 1996 Measure A
transporta tion program of projects
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STRATEGIC PLAN
The Strategic Plan serves as the umbrella policy document for VTA and drives the
Recommended Budget and other documents for which VTA has responsibility, such as
the Short Range Transit Plan (SRTP), the Congestion Management Program (CMP), and
the Countywide Transportation Plan. The goals set forth in the Strategic Plan areambitious but attainable, and include mechanisms for measuring performance .
The Strategic Plan conta ins VTAs st rategies for implementing the mission and achieving
the vision. Five broad goal areas form the basis of the plan:
Enhance our customer focus
Improve mobility and access
Integrate transportation and land use
Maintain financial stability Increase employee ownership
The divisional goals contained in this budget are consistent with the broad goals
established in the Strategic Plan.
The Strategic Plan also includes a 10-year Business Plan for VTA. The Business Plan
consists of a 10-year forecast of transit service levels, expenses, revenues, and specific
performance measures with annual benchmarks for monitoring progress towards
attaining our goals. VTAs actual performance is analyzed each year against the
performance measures, and the Business Plan is modified accordingly. VTAs cur rent
Business Plan was released in 1998.
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CURRENT OPE RATIONS
The Santa Clara Valley Transportation Authority (VTA) is an independent public agency
responsible for bus and light rail operation, ADA paratransit service, congestion
management, specific highway improvement projects, and countywide transportation
planning. As such, VTA is both an access ible transit provider and a multi-modaltransportation planning and implementation organization involved with transit,
roadways, bikeways, and pedestrian facilities.
VTA provides transit services to the 326 square mile urbanized portion of Santa Clara
County that is comprised of 15 cities and the County of Santa Clara with a total
population of more than 1.7 million residents. A historical summary of the county
population by city is presented in Appendix C. VTA opera tes 69 bus routes and two light
rail transit (LRT) lines (Guadalupe and Tasman) within this service area. In addition,
VTA funds paratransit and privately operated shuttle services in the County and
par ticipates in providing inter-regional commuter rail and express bus services. All of
the bus and rail vehicles are accessible for individuals with disabilities.
In January 1995, VTA was designated as the Congestion Management Agency and
changed from being exclusively a transit provider to an organization responsible for
countywide transportation planning, funding, and congestion management within the
County.
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VTA, in partnership with the County of Santa Clara, assumed the responsibility for
implementing the 1996 Measure B Transportation Improvement Program of transit and
highway improvement projects. In addition, VTA is responsible for implementing the
2000 Measure A Transporta tion Improvement Measure an essent ial element of VTP
2020.
The following sect ion provides a summary of VTAs services:
BUS OPE RATIONS
By the beginning of FY 2003-04, VTA will have an active bus fleet of 433 diesel-powered
buses, which includes 235 low-floor buses. The average age of the active fleet is about
3.8years and the buses range from new to over 11 years old. There are approx imately
4,700 bus s tops and 700 shelters along the bus routes. VTA also maintains 15 park & ride
lots -- five owned by VTA and ten provided under a lease, permit, or joint use agreement
with other agencies. Buses are operated and maintained from three operating divisions
and an Overhaul and Repair (O&R) facility: Cerone Operating Division, Don Pedro
Chaboya Opera ting Division, North Operating Division and Cerone O&R Division.
LIGHT RAIL TRANSIT ( LRT)
VTA operates a 29.5-mile LRT system connecting the Silicon Valley employment areas of
Mountain View, Sunnyvale, Santa Clara,North San Jose and Milpitas to residential areas
in South San Jose. The LRT system hasa total of 50 stations and 16 park & ride lots. It
operates on three routes: service between Santa Teresa and the Baypointe Station in
North San Jose, service be tween Mountain View and the I-880/Milpitas Station in Milpitas
and shuttle service be tween Almaden and Ohlone-Chynoweth Stations in South San Jose.
A fleet of new Kinkisharyo low floor light rail vehicles operates exclusively on the
Tasman light rail line. VTA will dep loy a mixed fleet o f Kinkisharyo low floor and UTDChigh floor light rail vehicles on the Guadalupe line for part of 2003 until adequate
numbers of the Kinkisharyo vehicles a re commissioned and the interim platform retrofit
pro ject is complete. All 79 (32 Kinkisharyo and 47 UTDC) light rail vehicles are stored
and maintained a t the Guadalupe Operating Division near downtown San Jose .
PARATRANSIT SERVICES
In 1992, VTA implemented a paratransit system, which operates throughout the County.
VTA contracts with Outreach and Escort, Inc., to serve as a broker and provide
paratransit service through contracts with vendors. Eligible riders call Outreach to
schedule their trips. Outreach then assigns the trips based on the most appropriate
mode that can meet the riders needs: taxi, sedan, accessible van, or transfer to or fromfixed-route. VTA is in full compliance with the Americans with Disabilities Act (ADA).
In 2002, VTA began the development of the Paratransit Business Practices Improvement
Plan. This four-phased plan is designed to control increasing costs through a variety of
methodologies, which will improve productivity, decrease vendor and broker costs and
increase revenue. Phases I and II have been implemented. Phase III is scheduled for
implementation in October 2003, and Phase IV may be implemented later in the year.
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CONTRACTED AND INTE RAGENCY TRANSIT S ERVICE S
VTA is also a partner in various ventures that expand the transportation options for our
customers. These relationships include commuter rail, inter-county express bus lines,
and rail feeder services. They are operated either by cont ract or through cooperative
agreements.
Caltrain/Peninsula Corridor Jo int Powers Board ( PCJ PB)
Caltrain is the commuter rail service provided by the PCJPB, which is governed by
representatives from San Francisco, San Mateo, and Santa Clara count ies. It operates
between Gilroy and San Francisco. Seventy-six trains operate between San Jose Diridon
Station and San Francisco each weekday, with 67 of these trains extended to the Tamien
Station in San Jose where a connection can be made to the VTA LRT system. Connection
to the LRT system can also be made at the Mountain View Caltrain Station. Eight peak-
hour weekday trains (four northbound in the morning and four southbound in the
evening) extend Caltrain from Tamien stat ion to Gilroy. There are 34 stat ions along the
line; 16 are located in Santa Clara County. The system uses diesel-powered locomotives.
The share of the operating costs apportioned to each member agency is based uponmorning peak period boardings in each county.
Complete service planning information, budget and financial statements for PCJPB can
be obtained from SamTrans at 1250 San Carlos Avenue, San Carlos, California 94070.
Altamont Commuter Expr ess Rail Service
The Altamont Commuter Express (ACE) rail service provides peak hour, weekday
commuter rail service from the Central Valley to Santa Clara County (three morning and
three afternoon commuter trains). VTA, the San Joaquin Regional Rail Commission, and
the Alameda County Congestion Management Agency administer the service under aJoint Exercise of Powers Agreement. The 85-mile rail line includes ten stations located
in Stockton, Lathrop, Tracy, Livermore (2), Pleasanton, Fremont, Great America, Santa
Clara and San Jose Diridon Station. VTA provides free shuttles to transport ACE riders
between the Great America and San Jose Diridon stations and nearby employment sites.
The share of the operating costs apportioned to each participating county is based upon
the proportional share of total daily boardings and a lightings that occur in each county.
Complete service planning information, budget and financial statements for ACE can be
obtained from the San Joaquin Regional Rail Commission at 5000 South Airport Way,
Room 201, Stockton, California 95213.
Capitol Corr idor Int erci ty Rail Service
The Capitol Corridor Intercity Rail service began in December 1991 and is a 170-mile
train corridor from Auburn and Sacramento to San Jose, through Placer, Sacramento,
Yolo, Solano, Contra Costa, Alameda and Santa Clara Counties. Operating on the Union
Pacific railroad tracks, Capitol Corridor service consists of four daily round trips from
Sacramento to San Jose and seven daily round trips from Sacramento to Oakland with
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connecting bus service to and from San Jose. One round trip per day extends beyond
Sacramento to Auburn.
The train service parallels the Interstate 80 corridor between Sacramento and Oakland,
and Intersta te 880 between Oakland and San Jose. Service includes stops in Roseville,
Sacramento, Davis, Suisun/Fairfield, Martinez, Richmond, Berkeley, Emeryville, Oakland,Hayward, Fremont , Santa Clara a t Great America, and San Jose Diridon Station. On July
1, 1998, the Capitol Corridor Joint Powers Authority (CCJPA), which is comprised of
representatives from the eight counties served by the corridor, assumed responsibility
for the service. Under contract with the CCJPA, the Bay Area Rapid Transit District
(BART) manages the service and Amtrak operates the service on tracks owned by Union
Pacific Railroad. The funding is provided by the State of California.
Complete service planning information, budget and financial statements for the Capitol
Corridor Joint Powers Authority can be obtained from 1000 Broadway, Suite 604,
Oakland, Californ ia 94607.
Int er-count y Bus Ser vices
VTA co-sponsors two inter-county bus services through cooperative arrangements with
other transit systems.
The Dumbarton Express is a transbay express route operating between the Union City
BART Station and the Stanford Research Park in Palo Alto. It provides the only regularly
scheduled public transit service over the Dumbarton Bridge. A consor tium comprised of
representatives from the Alameda-Contra Costa Transit District (AC Transit), the San
Francisco Bay Area Rapid Trans it District (BART), the City of Union City, the San Mateo
County Transit District (SamTrans), and VTA underwrite the net operating costs of theservice. This service is contracted out to a private trans it provider. SamTrans and VTA
are responsible for 50% of the net operating costs and the other East Bay transit
opera tors a re responsible for the rest. The remaining 50% of the operating costs is
apportioned based upon total daily boardings in Santa Clara and San Mateo Counties.
Express service over Highway 17 between Santa Cruz and downtown San Jose is funded
and operated through an agreement between the Santa Cruz Metropolitan Transit
District and VTA. Santa Cruz Metro operates this service. The two agencies share the
net operating costs equally.
Rail Shutt le ProgramUnder this program, VTA offers financial assistance to employers that wish to operate
shuttle bus service between LRT stations and nearby employment centers. The service is
operated through private contractors provided by VTA or the employers. Shuttles
opera te trips ca rrying employees from light rail in the morning to work and back again in
the afternoon. Funding to operate this program is provided by the employers (minimum
of 25%),VTA, and grantsfrom the Transpor tation Fund for Clean Air Act (AB434).
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DASH and HP Pavilion Shut t le Pro grams
VTA operates a free shuttle (DASH) on weekdays between the downtown San Jose
Trans it Mall, San Jose State University, and the San Jose Diridon Tra in Stat ion. VTA, the
Transporta tion Fund for Clean Air Act, the City of San Jose, and the San Jose Downtown
Association fund this service.
In addition, VTA operates a free shuttle service from the downtown San Jose Trans it Mall
to public events held in the HP Pavilion. Recently, VTA staff met with the City of San
Jose, San Jose Arena Authority, San Jose Arena Management and San Jose Downtown
Association to develop a new funding scheme for this shuttle. All parties agree that the
Sharks game service is worth continuing and funding is being pursued. VTA has
requested that the other parties fund 50% of the costs. If funding partner s at this 50%
level cannot be secured, this service will be discontinued. Service for other events will be
discontinued due to low ridership and existing parallel bus service, effective May 9.
San J ose Airpor t Flyer Service
VTA, in partnership with the City of San Jose, provides free Airport Flyer bus serviceconnecting San Jose International Airport terminals and airport employee parking lots
with VTAs Metro/Airport Light Rail Station and the San ta Clara Caltrain Station. The
City of San Jose and VTA equally share the operating cos ts for this service.
CONGESTION MANAGEMENT
VTA, as the Congestion Management Agency for Santa Clara County, is responsible for
coordinating and prioritizing projects for state and federal transportation funds,
administering the Transporta tion Fund for Clean Air Program, and coordinating land use
and other transportation planning.
1996 MEASURE B TRANSPORTATION I MPROVEMENT PROGRAM ( MBTIP )
In November 1996, the voters in Santa Clara County overwhelmingly approved Measure
A, an advisory measure listing an ambitious program o f transpor tation improvements for
Santa Clara County. Also approved on the same ballot, Measure B authorized the County
Board of Supervisors to collect a nine-year half-cent sales tax for general county
purposes. Subsequently, the County Board of Supervisors adopted a resolution
dedicating the tax for Measure A projects. Collection of the tax began in April 1997;
however, use of the revenue was delayed pending the outcome of litigation challenging
the legality of the sales tax. In August 1998, the California courts upheld the tax allowing
the implementation of the Measure A transporta tion projects to move forward.
In February 2000, the VTA Board of Directors approved a Master Agreement formalizing
the partnership with the County of Santa Clara to implement the 1996 Measure B
Transportation Improvement Program. With this partnersh ip in place, the County and
VTA are in a position to complete a transportation program valued at over $1.4 billion.
VTA is responsible for project implementation and management of the transit and
highway projects and assists in the administration of the pavement management and
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bicycle elements of the program. A more detailed description of the program elements
can be found in Section IV of this document.
To monitor the progress of the program, VTA and County staff update the Measure B
Program Revenue and Expenditure P lan for each upcoming fiscal year in June . Any
scope, schedule or budget changes are formally requested through this document, uponwhich the VTA Board of Directors and the County Board of Supervisors take action
dur ing a joint workshop. In December, VTA and County staff prepare the Measure B
Program Status Report, which describes the status of each project within the program.
The report is also presented to the VTA Board of Directors and the County Board of
Supervisors for review and acceptance.
2000 MEASURE A TRANSIT IMPROVEMENT PROGRAM
In August 2000, the VTA Board of Directors approved placing a measure on the
November 7, 2000, General Election ballot allowing Santa Clara County voters the
opportunity to vote on transportation improvements funded by a 30 year half-cent sales
tax to take effect after the 1996 Measure B sales tax expires (March 31, 2006) in thecounty. More than 70% of the voters approved the 2000 Measure A.
It was estimated that$6.8 billion(FY 2000-01 constant dollars) would be collected. This
amount will be revised to reflect the pro tracted decline in sales taxes. The revenue from
this Measure may be used to finance the tr ansit projects and operations spec ified in 2000
Measure A and listed in VTAs VTP 2020 Transportation Plan and Expenditure Program.
VTP 2020 provides for a balanced transportation system consisting of transit, roadway,
bicycle and pedestrian improvements. A more detailed description of the program
elements can be found in Section IV.
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Board of Directors
General Manager
Peter M. Cipolla
General Counsel
Suzanne Gifford
Operat ions
Frank T. MartinChief Operating
Officer
Fiscal Resources
Scott BuhrerChief Financial
Officer
AdministrativeServices
Kaye L. Evleth
Chief AdministrativeOfficer
Construct ion
Jack CollinsChief Construction
Officer
Development/
Congestion
ManagementMike Evanhoe
Chief Developmen t
Officer
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FY 2001-02 FY 2003-04 FY 2004-05
In t housands Act u a l
Adopted
Budget
Revised
Est ima te
Proposed
Budget
Proposed
Budget
Fares 31,282$ 38,011$ 32,194$ 31,495$ 36,429$
1/2 Cent Sales Tax 144,218 155,000 133,000 135,000 139,000
TDA 95,401 63,383 63,383 63,450 65,330
STA 7,003 7,322 6,778 4,274 5,000State Operating Grants 1,066 1,766 1,159 1,177 1,177
Investment Earnings 24,381 12,000 14,420 2,000 1,500
Advertising Income 4,425 4,589 3,402 1,818 1,818
Measure A Refinancing Proceeds 0 0 29,263 14,595 14,566
Other Income 4,319 1,636 1,632 1,375 1,375Ongoing Revenues 312,095 283,707 285,231 255,184 266,195
Local Operating Assistance 112 0 4,042 0 0
Federal Operating Grants 14,023 31,900 40,426 30,284 31,344
Financing Transactions 0 16,320 16,320 8,300 8,400
Sale of Property 0 5,000 14,547 0 0
Measure B Fund Swap 0 0 0 2,044 5,197
TCRP/Measure A Debt Proceeds 0 0 0 81,945 0
One-Time Revenues 14,135 53,220 75,335 122,573 44,941
Tot a l Revenue 326,230 336,927 360,566 377,757 311,136
Wages & Salaries 136,729 144,768 136,343 125,628 118,081Benefits 83,733 83,120 92,664 88,843 89,114
Materials & Supplies 14,715 16,048 14,217 13,200 13,385
Security 9,909 9,473 9,383 7,904 8,499
Professional & Special Services 8,326 7,808 7,766 4,645 5,475
Other Services 8,551 7,883 7,457 6,584 6,380Fuel 4,809 5,964 6,091 6,161 5,143
Traction Power 3,612 4,000 3,589 2,500 3,100
Tires 1,034 1,049 977 916 938
Utilities 2,161 2,353 2,279 2,470 2,518
Insurance 3,199 4,262 4,111 3,461 4,438Data Processing 3,691 3,124 3,125 2,675 2,726
Office Expense 745 787 703 662 671
Communications 1,439 1,750 1,644 1,625 1,642
Employee Related Expense 1,505 1,671 1,523 1,099 1,115
Leases & Rents 674 739 651 630 639Miscellaneous 944 1,916 1,930 1,692 1,474
Reimbursements (17,219) (16,750) (17,400) (21,140) (15,631)
Oper at ing Expense 268,557 279,965 277,053 249,555 249,707
ADA 33,122 32,452 30,556 31,797 32,751
Caltrain 14,897 14,105 14,105 14,105 14,387
Caltrain Capital Contribution 5,733 2,500 4,041 0 0Light Rail Shuttles 1,237 1,340 1,223 1,000 1,000
Altamont Commuter Express * 3,160 5,100 3,960 3,960 4,034
Highway 17 Express 520 587 425 440 440
Dumbarton Express 246 250 329 355 355
Contribution to Other Agencies 436 440 435 466 470Debt Service 23,161 25,268 24,168 105,735 23,579
Other Expense 1,336 86 733 47 372
Ot her Expense 83,848 82,128 79,975 157,905 77,388
Tot a l Expense 352,405 362,093 357,028 407,460 327,095
Contingency 0 5,000 1,927 2,000 2,000Sur plus/( Deficit ) to Reserves ( 26,175)$ (30,166)$ 1,611$ (31,703)$ (17,959)$
FY 2002-03
SANTA CLARA VALLEY TRANSPORTATION AUTHORITY
FISCAL YEAR 2003-04 AND 2004-05 PROPOSED BUDGETSSTATEMENT OF REVENUES AND EXPENSES
* ACE Expen ses inc lude $703,000 for sh uttles opera ted b y VTA. VTA is reimbu rsed and t he amo unt is included in
fare revenue.
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OPE RATING BUDGET
The core of VTAs financial crisis is the fact that VTA has experienced significant
reductions in local sales tax revenue for seven consecutive quarters. Instead of growing
at a rate that maintains pace with the growth of operating expenses, the local sales tax
receipts are tr ending below the levels VTA received in 1997/98. The magnitude anddurat ion of the decline in sales tax is the most ext reme ever experienced by VTA. The
chart below shows sales tax results for the last decade.
The anticipated slow recovery of the economy has not materialized. Actually, the anemic
recovery has stalled and the economy continues to deteriorate. Santa Clara County
experienced its lowest unemployment rate ever , 1.3%, in December 2000. It was 7.7% in
January 2002 when our last budget was prepared. It climbed to 8.9% by October 2002 and
remains a t 8.6% in February 2003. In excess of 190,000 jobs have been lost in ou r
community. Organizations in the public sector at all levels, including the Federal, State
and local, are now awakening to the financial crisis facing them. Announcements of hugedeficits and implementation of painful cost saving and service reduction plans, including
layoffs of personnel, by governmental agencies are ever increasingly common events.
Last year we proposed a budget that included a 5% service reduction, incorporated a
number of one time revenue enhancement strategies and projected that VTA would
virtually exhaust the budget reserves by June 30, 2003. Since that time we have taken
Quarter ly Sales Tax Actual % Chan e from same quar ter of previous year
VTA Half-Cent Sales Tax Quarterly Performance
Data Through 2Q03
2.1%
-2.2%-2.0%
5.5%
-3.0%
5.3%
2.2%
-1.1%
10.4%
1.6%
6.4%
2.0%
-1.0%
5.7%2.8%
15.6%
20.0%21.4%
28.5%
16.8%
9.1%7.4%
1.0%
4.5%
9.9%11.2%
6.4%
1.8%
7.8%
-8.1%
7.1%
10.0%
2.9%
18.8%18.7%
23.9%
27.1%
23.2%
1.9%
-8.4%
-21.5%
-24.5%-21.9%
-17.2%
-8.6%-10.2%
-30.0%
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%15.0%
20.0%
25.0%
30.0%
35.0%
F
Y
9
2
Q
1
F
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4
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F
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8
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F
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8
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1
Q
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1
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-
$ 10,000
$20,000
$30,000
$40,000
$50,000
$60,000
Quarterly Sales Tax Actual % Chan e from same quar ter of previous year
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several steps leading up to this budget. We have implemented another 9% reduction in
VTA bus and light rail service hours. We have continued to r eview the capital budget and
have over the last one and one-half years reduced or deferred over $120 million of capital
projects. We have continued to aggressively seek out financial strategies that have
enabled us to defer the depletion of our reserves for another two years. Further, our
proposed budget includes an additional 21% reduction in VTA bus and light rail servicesand another fare increase. Yet still, as shown below, our on-going annual structural
deficit is pro jected to be $62.9 million for FY 2004-05.
The Recommended Budget for the next two years merely buys us t ime. The two
years will get us to the November 2004 election. The November 2004 election is the last
opportunity to gain voter approval for new revenues tha t could stave off further drastic
reductions in VTA services.
The two years will be necessary for all the stakeholders to decide what kind of
organization they want VTA to be, what kind of system they want, the kind of services
the public wants VTA to provide, directly and indirectly, and what they are willing to pay
for. It is clear that VTA cannot do everything that everyone wants. The VTA Board of
Directors will need to take an ever-increasing role in influencing the goals, objectives
and mission(s) of the various other organizations that VTA provides funding for,
including Caltrain, ACE and our ADA service.
Similarly, as we reflected on the recommendations of the Business Review Team (which
was convened by 2002 VTA Chair Gonzales, see page 36) and the consultants to the 2003
Ad Hoc Financial Stability Committee of the VTA Board, it is evident that fares areexpected to cover a larger percentage of VTAs operat ing expenses. Over the course of
the summer we will be drafting a Fare Policy that will make recommendations as to the
overall farebox recovery goals recognizing that a comprehensive farebox recovery
strategy encompasses fare revenue, expenditure efficiencies and ridership.
This is our first biennial (two -year) budget, which is authorized by subsection (d) of
Section 11-2 of the Administrative Code. The Administrative Code permits adoption of
FY 2002-03
Adopted
FY 2002-03
Revised
Estimate
FY 2003-04
Proposed
FY 2004-05
Proposed
On-Going Revenues 283,707$ 285,231$ 255,184$ 266,195$
On-Goin Expenses 367,093 358,955 327,315 329,095
On-Goin St ruct ur al Deficit ( 83,386 (73,724 (72,131 (62,900
Tot al Net One-Time Revenues 53,220 75,335 40,428 44,941
Supr lus/( Deficit ) from Oper at ions ( 30,166) 1,611 (31,703) (17,959)
Reserves Committ ed for Local Share of Capital Projects* (4,759 31,654 (4,717 (5,000
Reserves Beginning of F iscal Year 42,121 42,465 75,730 39,310
Reserves Endin of Fiscal Year 7,196$ 75,730$ 39,310$ 16,351$
* FY 2002-03 Revised Est imate cons ists of $4,759 in new projects and $36,413 in capital project s cope reduct ions and deferrals.
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the biennial budget at this time, and provides for one general mid-term review by the
Board and amendment at that time upon the affirmative vote of at least eight directors.
We will also submit periodic budget reviews and updates over the next two years. These
reviews provide the Board and the public with an opportunity to evaluate VTAs actual
performance after several months of operations. In addition, it presents a forum for VTAmanagement to report to the Board any major differences between budgetary
assumptions and actua l results that have been occurred since the budget adoption and to
request resource reallocations that are warranted due to changes caused by both internal
and external factors.
MAJ OR BUDGET ASSUMPTI ONS AND EXPLANATIONS
ONGOING RE VENUES
Ridership and Far es
There is a clear and direct correlation
between ridership and employment ridership drops when employment
declines . If Santa Clara County
continues to lose jobs, our ridership
will likely continue to decline.
Conversely, a rebound in ridership
should occur when the Countys
economy rebounds. In order to
compensate for the falling sales tax
receipts and alleviate our operating
deficits, the Administration and FinanceCommittee at the November 2002
meeting recommended that staff provide a proposal for a fare increase as soon as
feasible. The Business Review Team (BRT) also recommended that VTA reduce fare
discounts and increase multiples on monthly passes to levels more in line with peer
transit agencies in the United States. As a result, we have proposed fare increases for
implementation in August 2003 with the goal of increasing the percentage of operating
costs paid by patrons and the average fare revenue per boarding. The proposed fare
increase is estimated to cause an initial ridership decline of 5.8% with a gradual return
over the next year. We anticipate the need of another fare increase in July 2004, which is
estimated to r esult in an initial ridersh ip loss of 4.8% with a gradual return over the
following year . Although every situat ion is unique, it is generally observed tha t lostpatronage after a fare increase typically returns over a year to fifteen months with many
riders returning in the first six months after the increase.
In addition to the fare increase, the budget proposes a 21% reduction in overall service
levels in October 2003. The reduction in service reduces projected reduced ridership to
40,000,000 for FY 2003-04 and FY 2004-05 before considering the impact of a concomitant
Monthly Ridership & Employment (July 2000 thru January 20
Jul
2000
Jul200
1
Jul2002
Jan2003
0%
5%
10%
15%
-5%
-10%
-15%
YeartoYear
%
Change
Ridership Employment
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fare increase. Ridership for light rail is estimated to increase in FY 2004-05 when the
Tasman East/Capitol light ra il extension to Alum Rock becomes operational in July 2004.
The combination of the fare increase and the service reduction reduces our total
ridership projection to 38,260,000 in FY 2003-04 and 38,560,000 in FY 2004-05. This will
generate fares of $29.2 million in FY 2004 and $34.1 million in FY 2004-05 assuming an
additional fare increase in July 2004. Without the currently proposed fare increase,FY 2003-04 revenue would drop to an estimated $25.2 million due to reductions in
ridership associated with the reduction in service.
We need to increase fares and reduce service levels at the same time because doing only
one of them will impose greater and disproportionate hardship for those riders who
depend on having VTA services available. We believe that our current proposal
represents a balanced compromise.
Eco Pass, Residential Eco Pass and San Jose State Universitys Transit Access Program
continue to be popular with employers, residential communities and student s. Currently
the VTA Eco pass program includes almost 150,000 employees, residents and students inthe area. The projected revenues for FY 2003-04 are estimated at $2.5 million. These
revenues are included in the ca lculation of the revenues per boarding.
FY 2000-01 FY 2001-02 FY 2003-04 FY 2004-05
In t housan ds Act ua l Act u a l
Adopted
Budget
Revised
Budget
Proposed
Budget
Proposed
Budget
Ridership:
Bus 47,238 44,900 43,600 40,000 33,000 32,800
% Change -4.9% -2.9% -8.3% -17.5% -0.6%
Light Ra il 9,237 7,790 7,900 6,200 5,260 5,760
% Change -15.7% 1.4% -21.5% -15.2% 9.5%
Tot a l Ride r ship 56,475 52,690 51,500 46,200 38,260 38,560
% Change -6.7% -2.3% -10.3% -17.2% 0.8%
Tot a l Revenue 31,724$ 28,826$ 34,500$ 29,470$ 29,231$ 34,164$
% Change -9.1% 19.7% -14.6% -0.8% 16.9%
Aver age Far e Per Boar ding 0.56$ 0.55$ 0.67$ 0.64$ 0.76$ 0.89$
% Change -2.6% 22.4% -4.8% 19.8% 16.0%
FY 2002-03
CENT SALES TAX
Regiona l Economic Growt h Half-Cent Sales Ta x a nd TDA
The half-cent local sales tax and a quarter-cent state sales tax (also known as the
Transportat ion Development Act or TDA) are the two most important income sources to
VTA. About 68% (more than 80% in FY 2000-01) of VTAs proposed operating revenues
are generated from them. They are driven by the local economy. The quarter-cent sales
tax is derived from the same tax base as the half-cent sales tax but it is collected by the
State. The proceeds are administered and allocated by the Metropolitan Transportation
Commission (MTC). The cash flow fluctuates differently from the half-cent tax because
the annual receipts are based on forecasts, which are adjusted in subsequent years for
over-funding or under-funding in pr ior years.
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Our latest quarterly receipts in March
2003 experienced the seventh
consecutive quarterly decline and were
10.2% less than the same quar ter last
year and 32.2% less than the quarterly
amounts received for the quarter endedDecember 31, 2001. The total of the
latest four quar ters is 14.7% less than
that of previous four quarters. We are no
longer optimistic that the economy will
turn around soon. As a result, we
reduced our FY 2002-03 estimate down
to $133 million and are hoping for a
slight 1.5% increase to $135 million in half-cent sales tax receipts in FY 2003-04 from the
revised FY 2002-03 estimate and 3.0% in FY 2004-05 to $139 million.
TDA
Transportation Development Act funds (TDA) are derived from a quarter cent sales tax
levied by the State on taxable transactions occurring in Santa Clara County. A portion of
these funds is retained by the Metropolitan Transportation Commission and
approximately 94% is returned to source (i.e., Santa Clara County).
We have estimated the TDA funding on the same basis as our half-cent sales tax. For
FY 2003-04, we estimated $63.4 million ($135 million times 0.5 times 0.94) and for
FY 2004-05, we have estimated $65.3 million. According to the most recent MTC fund
est imate , VTAs TDA funds are est imated to increase to $67.4 million in FY 2003-04. We
expect the MTC estimate of TDA funding available to be revised downward.
REVENUE SOURCES
Half-Cent Sales Tax45.0%
TD A22.5%
ST A1.4%
Fed Pr eventa t ive Maint10.1%
Mea-A/Refi Proceeds4.9%
Financial Transactions2.8%
Other2.2%
Fa re s11.2%
(Dollars in thousands) Q1 Q2 Q3 Q4 Tot a l
Revenue 48,170$ 51,132$ 41,913$ 42,326$ 183,540$
Change from Previous Year 27.1% 23.2% 1.9% -8.4% 10.1%
Revenue 37,818$ 38,597$ 32,752$ 35,051$ 144,218$
Change from Previous Year -21.5% -24.5% -21.9% -17.2% -21.4%
Est imated Est imated Est imated
Revenue 34,552$ 34,656$ 31,487$ 32,306$ 133,000$
Change from Previous Year -8.6% -10.2% -3.9% -7.8% -7.8%
Est imated Est imated Est imated Est imated Est imated
Revenue 33,203$ 35,445$ 31,960$ 34,392$ 135,000$Change from Previous Year -3.9% 2.3% 1.5% 6.5% 1.5%
Est imated Est imated Est imated Est imated Est imated
Revenue 34,187$ 36,495$ 32,907$ 35,411$ 139,000$
Change from Previous Year 3.0% 3.0% 3.0% 3.0% 3.0%FY 2005
Actual & Estimat ed Sales Tax Revenue Performance
FY 2001
FY 2002
FY 2003
FY 2004
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STA
State Transit Assistance (STA) apportionments to regional planning agencies (MTC in
the Bay Area Region) are determined by two formulas:
1) 50% of funds are distributed according to population and,
2) 50% are distributed on a basis propor tional to operator revenues in the region for theprior year.
The Bay Area Region usually receives about 38% of State STA funds.
According to MTCs most recent fund estimate, STA is estimated at $4.3 million in
FY 2003-04, a decrease o f $2.5 million or 36.9% from the current year.
STATE OPE RATING GRANTS
The sta te opera ting grants we have budgeted for FY 2003-04 and FY 2004-05 are from the
AB 434 Program (Transportation Fund for Clean Air Program), which increased vehicle
registration fees in the Bay Area by $4 to fund projects and programs that help reducevehicle emissions. We request the grants to fund our LR shuttle operation. We only
expect a small increase to $1.2 million in FY 2003-04 and 2004-05 from FY 2002-03
Revised Estimate.
INVES TMENT EARNINGS
The investment earnings are derived from three primary sources. First, are the funds
which have been earmarked to underwrite operating deficits. These funds are invested
by a money manager whose performance is evaluated by comparing actual results
against the Institutional Money Market benchmark. The estimated earnings rate for
FY 2003-04 is 1.5% and for FY 2004-05 is 2.5%.
The second source of earnings for the Enterprise Fund are from funds which relate to
long-term liabilities for which VTA has set aside and restricted assets, (e.g., accrued
vacation and sick leaves.) These funds are invested by a money manager whose
performance is evaluated by comparing actual results against the Lehman Brothers U.S.
Government Intermediate Bond Benchmark. The estimated earnings rate for FY 2003-04
is 3.5% and for FY 2004-05 is 4.0%.
The third source of earnings for the Enterprise Fund are from the funds which have been
set aside to pay for the 70 new low floor light rail vehicles. The money manager has
structured a series of investments that are scheduled to matu re at intervals that coincidewith the dates payments are due to the LRV manufacturer. Average rates of return for
FY 2003-04 are est imated a t 1.5% and 2.5% for FY 2004-05.
The composite average investable funds and rates of return are estimate at $108.9 million
and 1.84% for FY 2003-04 and $54.6 million and 2.75% for FY 2004-05 resulting in
est imated earnings of $2 million for FY 2003-04 and $1.5 million for FY 2004-05.
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ADVERTI SING INCOME
Advertising income is comprised of two components: advertising on buses and light rail
vehicles, and bus shelter advertising. Advertising revenue for bus and light ra il vehicles is
projected at the minimum guaranteed amount of $1.5 million. We budget $318,000 for
bus shelter advertising income.
MEASURE A REFINANCING PROCEEDS
We propose issuing debt to re imburse VTA operating funds for interest and principal that
has been disbursed for the 2001 Series A Senior Lien Sales Tax Revenue Bonds. The
source of funds to repay this new debt is proposed to be the 2000 Measure A one half
cent sales tax approved in November 2000. The tax will start being collected on April 1,
2006.
The proceeds of the 2001 Series A Bonds were used to finance portions of Tasman East,
Vasona, and Capitol 1996 Measure B Light Rail Projects. Financing these project s for
Measure B enabled the Measure B program to provide VTA with Measure B funds for the
purch ase o f 70 low-floor light rail vehicles. The acquisition of the low floor light railvehicles was included in the 2000 Measure A Transit Improvement Program and
approved by the Board of Directors in 2001.
The new debt will provide proceeds to reimburse VTA approximately $29.3 million in
FY 2002-03, and fund the payment of $14.6 million in FY 2003-04 and $14.6 million in
FY 2004-05. In the absence of the new debt, the VTA operating budget would have been
repaid in FY 2005-06 and FY 2006-07 when Measure A sales tax receipts become
available.
OTHER INCOMEOther income includes fines and forfeiture, use permit fees, property rentals, proceeds
from the disposition of equipment (e.g., buses) and, from time to time, small grants for
special operating projects (e.g., Job Access/Reverse Commute Program). We expect a
decrease of $257,000 to $1.4 million in both FY 2003-04 and FY 2004-05, mainly due to a
lower expected receipts from the Job Access Program and o ther miscellaneous incomes.
ONE-TIME REVENUES
LOCAL OPE RATING ASSISTANCE
In consideration of the financial constraints VTA is facing, the County Board of
Supervisors and the VTA Board of Directors approved the use of approximately $10.8
million of the 1996 MBTIP Caltrain Plan by VTA to fund VTA's share of local contributionto the Caltrain Capital Program for three years beginning in FY 2002-03, at the June 7,
2002 Joint Board Meeting. As a result, VTA received $4 million of 1996 MBTIP funds in
FY 2002-03. In the December Semi-Annual Update to Revenue and Expenditure Plan, the
County and VTA deferred the remaining 1996 MBTIP funds earmarked for Caltrain
matching purpose.
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FE DERAL OPE RATING GRANTS
The federal operating grants we have budgeted for FY 2003-04 and FY 2004-05 are from
the Preventat ive Maintenance Program, which is an eligible activity for FTA Section 5307
formula grant assistance. Although the Section 5307 grant p rogram is designed primarily
to fund capital acquisitions, funds awarded for preventive maintenance essentially
function to support the maintenance portion of the operating budget. In order words,grants which should be used to replace and refurbish our assets (e.g., buses) are
converted into operating assistance. Currently, we treat all maintenance costs for
revenue and non-revenue vehicles as eligible expenditure.
It is important to note that we are now maximizing the use of preventive maintenance to
reduce our operating deficits, with virtually no funds available for capital. This is a
necessary strategy at this time, but one that cannot be sustained for a long period of
tim e. Ultim ately , we wi ll need to replace and fu rbish our assets.
$9.8 million of Federal Preventative Maintenance (i.e., federal operating assistance) was
recognized in VTAs audited financial statements in FY 2001-02. These funds were notincluded in VTAs budget process until FY 2002-03. This is because we used FY 2001-02
maintenance costs to justify the grant reimbursement, but did not expect to receive the
reimbursement unt il FY 2003-04. We actually received the funds in FY 2002-03.
FY 2002-03 Preventative Maintenance Program
For FY 2002-03, VTA will receive a total of $40.4 million for preventive maintenance.
This cons ists of two grants. The first one is a grant for $9.8 million of FY 2001-02 formula
funds that had been programmed for replacement buses. The replacement bus project
was cancelled and during FY 2002-03, FTA approved the application of these funds
against FY 2001-02 maintenance operating expenses. The second grant for $30.7 million
is the amount of 5307 formula grants available to be applied against the FY 2002-03
maintenance operating expenses.
FY 2003-04 & FY 2004-05 Preventative Maintenance Program
VTA is continuing to use the available Sect ion 5307 to support the maintenance opera ting
budget. We anticipate receiving $30.2 million in FY 2003-04 and $31.3 in FY 2004-05.
FI NANCING TRANSACTIONS
The financing transaction is associated with the new low-floor light rail vehicles. The
Board of Directors approved the transaction, (contingent upon a successful validation
act ion) on April 13, 2003. The transaction cons ists of a Head Lease where VTA leases thevehicles to a trust and a Sublease where the trust leases the vehicles back to VTA. The
net benefit is highly dependent on equipment valuations (determined by appraisal) and
remaining useful life of the assets, as well as prevailing interest rates at the time the
transaction closes. We anticipate that the first tranche1 of the transaction will close
before the end of FY 2002-03 with a net benefit to VTA of approximately $11-$13 million.
1A tranche is a specified part of a larger transaction.
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VTA anticipates two additional tranches closing in FY 2003-04 to generate a net benefit
of approximate ly $22-$25 million.
SALE OF P ROPERTY
The FY 2002-03 Adopted Budget included the assumption that the Transit Program would
sell a portion of the North Operating Division real estate to the Highway Program for $5million. The Highway Program acquired the property for the 1996 MBTIP Route 85/101
(North) Interchange Project. The actual price paid, (based upon appraisal), was $4.9
million.
We also sold the Winfield parcel for $1.1 million and the Evans Lane property for $8.6
million. These are no additional property sales assumed in the Recommended Budget for
FY 2003-04 and FY 2004-05.
MEASURE B FUND SWAP
Due to VTAs existing financial condition, Staff completed a very detailed review of
existing capital projects. One of the projects that have been de ferred is the downtownsegment of the Guadalupe Corridor Platform Retrofit project. This project was financed
in par t by a $7.2 million FTA 5309 Rail Modernization grant. VTA was able to reprogram
this revenue to the Vasona 1996 Measure B Light Rail Project. In exchange for bringing
the grant funding into the projects, the County agreed to provide an equivalent amoun t of
1996 Measure B sales tax funds to VTA. The 1996 MBTIP funds will be release to VTA as
the grant funds are received. The swap proceeds are prepared to be used for operations.
It is anticipated that $2 million of the revenue will be received in FY 2003-04 and $5.2
million in FY 2004-05.
TCRP/MEASURE A DEBT PROCEEDSOn October 10, 2002, the Board of Directors approved the issuance of Bond and Grant
Application Notes (Notes) to fund the acquisition of a rail corridor from Union Pacific
Railroad. The Notes were issued for the principal amount of $81.5 million at a stated
interest rate of 3%, and mature in December 2003. Although we used our 1976 cent
sales tax to enhance the credit ratings of the Notes (thus reducing borrowing costs), it
was, and is not, the intention to repay those notes with any funds other than the State
Transportation Congestion Relief Program (TCRP) funds and 2000 Measure A Sales Tax.
After the 2002 Notes were issued, the TCRP Program was suspended due to the current
State budget crisis. We do not anticipate that TCRP funds will be made available until
and if the State Legislature and the Governor agree to continue the TCRP Program.
Additionally, VTA covenanted that prior to issuing any future debt, the repayment forthese Notes would be provided for, or the Notes would be retired. Therefore, VTA must
include in any transaction that advances 2000 Measure A Sales Tax, the refunding of
these Notes. We anticipate receiving $81.9 million for repayment in FY 2003-04.
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EXPENSES
Ser vice Levels
The budget anticipates additional service reductions in October 2003. Details for the
October reduction have not been finalized at this time, thus all FY 2004-05 data should be
viewed as approximate and preliminary.
The service miles and hours in the table on the nex t page reflect only the pa rtial impacts
of the 9% reduction in April 2003 (FY 2002-03) the estimated 21% reduction in October
2003 (FY 2003-04). FY 2004-05 reflect s the annualized miles and hours of bus service
after the two reductions. The Tasman East and Capitol light rail extensions (to Alum
Rock) will become operational in July 2004 (an additional 6.3 miles and 8 new stations).
Light rail service is ant icipated to increase in July 2004 (adding 300,000 servicemiles and
8,000 service hours). However , overall miles and hours in FY 2004-05 will still be
reduced as a resu lt of the full year e ffect of the October 2003 service reduction.
The annualized savings resulting from the 9% service reductions implemented April 2003
are:
(In thousands) FY 2003-04 FY 2004-05
Support Services $5,624 $5,914
Transporta tion & Maintenance 16,794 18,048
Tot al $22,418 $23,962
FY 2000-01 FY 2001-02 F Y 2003-04 F Y 2004-05
In t housands Act ual Act ual
Adopted
Budget
Revised
Est imate
Proposed
Budget
Proposed
Budget
Service Miles:
Bus 22,640 22,044 21,174 20,402 15,698 14,633
% Change -2.6% -3.9% -3.6% -23.1% -6.8%
Light Rail Tra in 1,927 2,033 1,832 1,584 1,415 1,675
% Change 5.5% -9.9% -13.5% -10.7% 18.4%
Tot a l Ser vice Miles 24,567 24,077 23,006 21,986 17,113 16,308
% Change -2.0% -4.4% -4.4% -22.2% -4.7%
Light Rail Car Miles 2,885 2,555 2,655 2,187 1,931 2,473
% Change -11.4% 3.9% -17.6% -11.7% 28.1%
Service Hours:
Bus 1,617 1,589 1,538 1,493 1,151 1,067
% Change -1.7% -3.2% -2.9% -22.9% -7.3%
Light Rail Tra in 137 13 7 12 2 109 96 101
% Change 0.0% -10.9% -10.7% -11.9% 5.2%
Tot al Service Hours 1,754 1,726 1,660 1,602 1,247 1,168
% Change -1.6% -3.8% -3.5% -22.2% -6.3%
Light Ra il Car Hour s 198 17 2 17 7 147 127 152
% Change -13.1% 2.9% -16.9% -13.6% 19.7%
FY 2002-03
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The 21% service reduc tion proposed to be implemented in October 2003 will result in
estimated savings for nine months of FY 2003-04 and the annualized savings for
FY 2004-05 of:
(In thousands) FY 2003-04 FY 2004-05
Support Services $8,308 $8,837Transporta tion & Maintenance 32,200 46,147
Tot al $40,508 $54,984
We are continuing to work on developing the best service plan possible, given the
resources available. We are also developing plans for reduction in support services. The
total number of positions that will be eliminated will likely be between 300-400. Our
ability to provide service of all types (e.g., bus, light rail, public information, and
responsiveness to requests from the Board and the public) will be significantly and
adversely affected.
Wages & Ben efits
The Recommended Budget assumes that the ATU top of scale wage rates will increase
5% on February 2, 2004. There is no provision in the budget for wage rate adjustments for
SEIU, CEMA, TAEA and non-represented employees. The Recommended Budget does
include provisions for step increases for all employees who are in pay progression. The
benefit cost increases are driven by: health care cost; pension costs due to non-
performance of plan asse ts; and, workers compensation costs.
Inflat ion Rat e
The Consumer Price Index (CPI) is the gauge of inflation at the retail or consumer level.
CPI reached an annual rate of 1.63% for the San Francisco-Oakland -San Jose region in
2002. It was the year that the rate for the Bay Area p lunged from the height in 2001 --
5.38%. This low rate is expected to continue as the Bay Area remains in a recessionary
environment.
Budget s for Salaries & Benefi ts an d Benefit Rate s
In $000s
FY 2002-03
Adopted
FY 2002-03
Revised
FY 2003-04
Proposed
FY 2004-05
Proposed
Salar ies & Wages $144,768 $136,343 $125,628 $118,081
Benefits 83,120 92,664 88,843 89,114
Benefit Rates:
ATU 49.0% 58.3% 63.4% 66.8%
Non-ATU 39.0% 50.1% 53.5% 59.4%
Budget ed Pos ition Cha nges By Classification
Classification
FY 2002-03
Adopted
FY 2002-03
Revised
FY 2003-04
Proposed
FY 2004-05
Proposed
Details will be provided at a later time.
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We used 1.5% as the inflation factor to
develop our FY 2003-04 budget and 2.0%
for FY 2004-05. Generally, we escalate
the budget for non-labor cost items by
the appropriate inflation factor to
derive the budget number for the nextyear. However, most divisions chose
not to do so.
Cont ingency
In order to maintain a more efficient
budgeting process, an individual
division does not budget for
contingency within its own budget. An
organization-wide contingency fund is established within the Office of the General
Manager to fund urgent and unexpected programs or projects. During development of
the FY 1997-98 Budget, the Administration and Finance Committee recommended thatVTAs budget policy should include the establishment of a contingency fund (i.e., the
General Managers unallocated fund) a t 3.0% of the operating budget. Most of the fund
has been used to fund new capital projects. However, due to the current financial
situation, we do not be lieve that we will launch any non-critical new capital projects and
new programs in FY 2003-04. Consequently, we should need only $2.0 million for
contingency purposes. We will re -institute the 3% policy once our financial conditions
improve.
Reimbursements
This item is used primarily for two completely different purposes. The MaintenanceDivision mostly uses it to record internal repair cost transfers; the
Development/Congestion Management, Construction and other support Divisions and
Operations departments use it to accumulate capitalized labor costs for project cost
monitoring and grant billing purposes. Total reimbursements budget in FY 2003-04 is
$20.3 million, an increase of $2.9 million from the FY 2002-03 Revised Budget.
The Maintenance reimbursement budget was based upon an estimate of the amount of
labor that is going to be capitalized into rebuilt parts in FY 2003-04. It is estimated that
the net reimbursement for maintenance labor will be $4 million. This is about 30% below
the current year trend and is line with the pro jected service reduction.
For the Development/Congestion Management, Construction and other support Divisions
and Operations departments, their reimbursement budgets were developed based upon
estimated capital project activities and reimbursements history. We expect
reimbursements for the Development/Congestion Management and Construction
divisions to increase by $1.6 million. The Operations Transportation Department will
charge about $887,000 for rail activation work. Other divisions also increased their
reimbursements estimate by $402,000.
Monthly Consumer Price Index (Jan 1990 thru Feb 2002)
'
'
''''''''''''''''''''''''''''''''''''''''''
'''''''''''''''''
'''''''''
'''''''''''''''''
''''''''''''''''''
''''''''''''''''''''''''''''''''''''''''''
'''''''''''
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
100
110
120
130
140
150
160
170
180
190
Base
Year:1982-84=100
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Yea
r-To-Year%Change
SF-Oakland-San Jose
U.S.-All Items
SF-Oakland-San Jose Year-Over-Year % Change
U.S.-All Items Year-Over-Year % Change
January
'
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For labor cos ts incu rred for the 1996 MBTIP, we will not recover 100% of our fully
allocated expenditures. As stated in the Master Agreement with the County of Santa
Clara, we agreed to seek only reimbursement for the direct costs but not indirect costs.
As a result, we kept $3.7 million in the Non-Departmental cost center to reflect the
indirect costs VTA will absorb.
We are in the process of developing a new overhead a llocation plan and indirect cost rate
proposal, which we will be submitting to the Federal Transit Administration for approval
by June 30, 2003.
The new allocation will more appropriately distribute support costs be tween capital and
operating programs. The operating programs have been receiving a dispropor