Thursday, August 07, 2008

VTA approves placing 1/8 cent sales tax increase on the ballot

With David Casas,Yoriko Kishimoto and Don Gage dissenting, the rest of the VTA board approved the proposal to place the 1/8 sales tax increase on the ballot to pay for the BART extension.

This is a great sample of how dysfunctional the VTA Board is and how most of the board members, already deeply delusional, forget their fiduciary responsibility.

On Monday, VTA General Manager Michael Burns sent a last-minute memo to the boardmembers stating that the proposed 1/8 cent sales tax not only would completely cover the cost of running the BART extension but would produce a surplus. This was a 100% flip-flop over his earlier statement to the press that the 1/8 cent tax would not cover the entire cost.

The memo appeared convincing at the first glance, but BayRail Alliance issued a counter-memo at the meeting showing that Burn's memo left out key details and that the 1/8 tax will only cover about 80% of the cost running the extension.

The key details left out of the Burn's memo are:

  • VTA is obligated to pay BART in advance at $48 million per year (in 2001 dollars) and adjusted quarterly thereafter to the growth rate of the sales tax revenue. In other words, BART gets a percentage cut of the sales tax revenue from VTA. That percentage cut happens to be larger than the 1/8 cent sales tax. As a result, the 1/8 cent tax will never completely cover VTA's financial obligation to BART.

  • According to the agreement between BART and VTA, VTA's maximum payment on the capital reserve is 30% of the operating and maintenance cost along with the allocated overhead cost. Burn's memo claimed that VTA is obligated to the maximum of the 20% of the operating cost, which, according to the agreement, is actually the minimum payment after 15 years of operation. Unless the advance payment from VTA and fare revenue can completely cover the operating cost plus a 30% capital reserve, BART will not return any funds back to VTA. Calculations by BayRail show that the maximum BART subsidy, which includes a 30% capital reserve, will exceed the $48 million annual advance payment from VTA. Therefore, surplus is not possible.

When Kishimoto pressed Burns about the advance payment, Burns said that VTA is not committed to the $48 million but rather the operating cost, a concept that violates the agreement between BART and VTA.

In response to the BayRail's numbers, Burns pointed out that the tax would be collected years before opening, which would produce a surplus in the early years. Even so, a simple calculation shows that VTA would still leave a deficit of about $200 million under the BayRail scenario, assuming that VTA would not use any of the funds in other ways, which is very unlikely.

Instead of asking hard questions, reviewing VTA's financial obligation to BART, and figuring how this tax relates to other VTA projects like Downtown East Valley, most of the boardmembers were instead telling stories about their delusions. Carl Guardino deliberately rushed this tax at the last minute directly to the board to avoid serious discussions and analysis, especially at the committee level.

Unfortunately, the same carelessness displayed by most boardmembers tonight have led to budget crises at the agency in the past eight years. Does VTA deserve more of your tax dollars? The choice is clear in November.

1 comment:

Eco Creative said...

Staff omitted key information on an agreement that VTA is a party of. It's highly disturbing that staff is not providing trustworthy information to the board and the public on which to make decisions. Hell, they are flat out LYING. You can see that for yourself if you read the relevant pages from the Comprehensive Agreement that are posted on the BayRail Alliance website.

Burns said last night that his guess was that the tax would begin to be collected four years before the BART line would open. He sounded very reluctant and hesitant to disclose this. Why four years? Hmm, opening in year 2017, full funding grant agreement in 2013. Why not a FFGA earlier than that, say this January if the BART tax passes? It's because, the 1/8-cent isn't enough, and the feds still won't give their approval. The apparent plan is for VTA to get a third tax passed by voters in say, 2012, but they are not telling you that up front now.

Before more money is assigned to the BART project, shouldn't everyone agree on what it will cost and on what funds are available to pay for it?