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Better News on Sales Tax Measure: FUNDING WOULD BE SUFFICIENT, TRANSPORTATION AGENCY SAYS

Posted on: Saturday, 31 December 2005, 15:00 CST

By Gary Richards, San Jose Mercury News, Calif., San Jose Mercury News, Calif.

Dec. 31--The Valley Transportation Authority says that if voters approve a new quarter-cent sales tax measure next year, the agency would have enough money to build all transit projects that voters were promised.

But some observers remain skeptical, cautioning that priorities for any unexpected windfalls should represent the entire county and not just the agency's top priority of extending BART to the South Bay.

The announcement represents a sudden reversal after months of dire projections that numerous new rail lines would be indefinitely delayed because of a lack of cash. The new projection was prompted by a report released this week that says higher revenue from current and proposed sales taxes could generate an extra $2 billion during the next 30 years, making up for the shortfall projected in earlier reports.

Less than a month ago, the agency said the Bay Area Rapid Transit District extension to Silicon Valley would be delayed until 2018 while a rail link from BART to Mineta San Jose airport, Caltrain upgrades and a possible light rail link from East San Jose to downtown faced years of delay.

The new projections are based on the latest forecast by the Center for Continuing Study of the California Economy in Palo Alto.

It predicts a growth rate of 5.8 percent during the next 10 years in Valley Transportation Authority sales tax receipts, up from the 4.8 percent estimate the authority used in a half-dozen previous scenarios studied during the past year.

"This is actually very close to what we've been saying for the last couple of years," said Steve Levy, director of the Palo Alto economic center. "It's our best guess for moderate growth trend, and it's based mainly on gains in wages and income but does not have a lot of job growth in it."

Authority chief construction officer Jack Collins, who prepared the latest funding scenario, said Levy had been pushing the agency to use a higher estimate but "we were not seeing the same exuberant view he had until recently."

For that reason, Collins said, the agency opted to use the more conservative forecast in earlier studies.

But the first sign of an upturn appeared in September when the authority took in about $2 million more in sales tax receipts than it had anticipated. In addition, ridership jumped nearly 6 percent in November, the biggest gain in three years.

The agency has said that, besides what it needs for new rail and bus projects, it also needs more tax dollars to operate an expanded mass transit system. And to acquire more than $1.5 billion in state and federal aid, it must first convince outside agencies it has the money to run a growing fleet of trains and buses.

The report comes weeks ahead of a critical February meeting at which the authority board will consider a plan to place a quarter-cent sales tax on the November ballot to help pay for nearly two dozen projects approved five years ago. They were included in a 30-year, half-cent sales tax plan that kicks in next year. That tax, Measure A, was approved by voters in 2000. The current sales tax rate in Santa Clara County is 8.25 percent.

That decision to approve a spending plan for the new quarter-cent tax on the ballot has been twice delayed. Board members from the Peninsula and South County have battled San Jose officials over how much money BART should receive. They worry that funding for a $4.7 billion BART-to-San Jose extension will get priority over projects dear to them, such as Caltrain improvements and pothole repairs.

Supervisor Don Gage of Gilroy, who has been critical because BART is slated to take up about 85 percent of new funds, says the new projections reflect what county officials have been saying in recent months: The economy is getting better.

"I'm not skeptical; things are getting better," Gage said. "But if San Jose jumps in, gets greedy and says more money needs to go to BART first and the people mover, and the smaller cities don't get their fair share in a timely fashion, we'll have a problem."

Significant hurdles remain. When the Bush administration threatened to declare the BART extension ineligible for federal funding, the authority earlier this month abandoned its quest for federal money until it comes up with a better financial plan for the extension.

Supervisor Liz Kniss of Palo Alto remains dubious about the new projections.

"No matter what, we still need a lot of federal and state money for BART, and I think that is very wishful thinking," she said. "I don't think the north and south county will go for it; they are less than enthusiastic and that can be enough to sink a new tax."

But David Vossbrink, a spokesman for San Jose Mayor Ron Gonzales, who is the major proponent for bringing BART to San Jose, called the new projections "excellent news," adding:

"As the mayor has said, we always have to be careful so that we don't use short-term thinking, whether positive or negative, to make prudent long-term decisions for the good of our residents, commuters or employers. You don't plan your June wedding based on the weather in December."

Sales tax receipts make up 80 percent of the Valley Transportation Authority's operating revenue, yet can be volatile. That fund brought in nearly $200 million a year at the height of the dot-com boom, then plummeted to about $135 million three years later.

Contact Gary Richards at mrroadshow@mercurynews.com or (408) 920-5335.

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Copyright (c) 2005, San Jose Mercury News, Calif.

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Source: San Jose Mercury News

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