VTA 2003-2005 Recommended Budget

8/6/2019 VTA 2003-2005 Recommended Budget

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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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VTA F Y 2003-0 4 & F Y 2004-05 RE COMMENDED BUDGETS

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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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VTA F Y 2003-0 4 & F Y 2004-05 RECO MMENDED BUDGETS

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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

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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

Documents

VTA 2003-2005 Recommended Budget