Friday, April 09, 2010

Does VTA know the way to financial recovery?

Without much fanfare, VTA's ad-hoc financial recovery committee (comprised of some boardmembers and "stakeholders" like former vice-mayor Cindy Chavez) is reviewing various strategies to keep cost under control. Some of these ideas have been discussed in the previous financial stability committee back in 2003. VTA is currently looking for ways to increase ongoing revenues or decrease ongoing costs, rather than one-time revenues like the ARRA grants.


Ideas:

- Eliminate Eco Pass - Rather than allowing employers to buy annual transit stickers for all of their employees, VTA is considering eliminate that program and require all riders pay the regular fares. VTA believes the Eco Pass program is underpriced. According to VTA, if 50% of riders using Eco Pass pay the regular fares, VTA would break even on fare revenue. If less than 50% of those riders continue to pay the fare and ride VTA, VTA would be better off keeping Eco Pass.

- Extend 2000 Measure A indefinitely - While portions of the 2000 Measure A funds support the existing operation, it is a silly idea because it has no implication in the near term. Measure A isn't ready to expire until 2036.

- Service cuts - Not a new idea. Although VTA has a policy in place to evaluate low ridership services, VTA can't continually just cut services alone.

- Privatize transit service through competitive contracting - Privatizing service is popular among the business interests, but is heavily opposed by the labor groups. VTA says other agencies who have pursued contracting saved 32%-38% in operating costs. VTA used to outsource services like the DASH and the light rail shuttles. Today VTA only contracts out the ACE shuttles, which are funded by grants. As a variation, VTA could potentially use contracting for "new" services like BRT.

One of the biggest cost drivers is the health insurance cost for employees. In less than ten years, health/dental insurance premiums have more than doubled, from less than $15 million in 2000/2001 to over $30 million in 2008/2009. The employee contribution only covers a small fraction of the rising cost. VTA is considering plans to reduce employee benefits or require additional contributions from employees to cover more of the cost.

Unlike the previous 2003 committee, this committee has not (yet) proposed large fare increases (which didn't work), new taxes (since they would most likely fail), and tougher eligibility requirements for paratransit services. Back then, the proposal on paratransit received strong opposition from the disabled community. Although VTA approved most of the ideas, the board later reversed many of those policies.

6 comments:

amandainsjc said...

I hope the SJSU student passes arent included under the definition of Eco Pass.

accountablevta said...

Unfortunately the SJSU pass is an Eco Pass.

Anonymous said...

Getting rid of the Ecopass would be a bad idea.


Do we expect a $200,000 salary engineer would ride the slow train with ineffective routing alignment, excessive parking spaces around the office, and the line isn't door-to-door service with discount bus pass like Ecopass to entice people riding public transit....... slow train???


Do we expect ridership that will rise because of high density building???


Nada.

Regards,
CK

Anonymous said...

I meant "without discounted bus pass".


Regards,
CK

Anonymous said...

Do you really think an engineer making $200,000 a year would care about the cost of a transit pass? He's getting paid $1.67 per MINUTE. At that point, the cost of a $42 monthly pass just doesn't matter, what matters is speed and quality of service. Light rail can save time even if it's not actually faster than driving, since you can use your time productively, but the service needs to still be reasonably fast and, most importantly, reliable. Missing an evening train and having to wait 29 minutes wastes $48 worth of time for this hypothetical engineer.

Jeremy Hubble said...

For the Ecopass, VTA makes companies buy one for everybody, whether or not they ride VTA. If they discontinue it, all that money will suddenly disappear. Some of the riders that do use VTA may continue to pay full fare, but many will likely drop it altogether. "Cash" payments for fares seem quite expensive compared to available "free parking" - especially when the cash fare entitles you to a longer commute and a nice wait outside.

I can see VTA implementing this and being shocked that farebox revenue and ridership fall.