A deeply split Valley Transportation Authority Board of
Directors narrowly approved a dangerous plan to borrow against
future, uncollected funds to pay for today’s operating expenses and
to pay for engineering costs related to bringing BART to San
Jose.
They’d do that by issuing $550 million in bonds
– secured by a half-cent sales tax the VTA will begin collecting
in 2006 – if a judge says the plan is legal and can be put before
voters.
A deeply split Valley Transportation Authority Board of Directors narrowly approved a dangerous plan to borrow against future, uncollected funds to pay for today’s operating expenses and to pay for engineering costs related to bringing BART to San Jose.
They’d do that by issuing $550 million in bonds – secured by a half-cent sales tax the VTA will begin collecting in 2006 – if a judge says the plan is legal and can be put before voters.
It gets worse. Those future funds, slated to pay for capital improvement projects, will be spent – at least in part – on today’s operating expenses. That’s akin to taking out a second mortgage to pay the grocer, dry cleaner or utility bill. It’s bad money management.
VTA officials say borrowing from funds the agency won’t begin collecting for three years will allow it to continue to operate at a staggering deficit without cutting service further.
The VTA operates on one of the highest subsidies of any transportation agency. It needs to find ways to eliminate costs, not ways to go further into debt. A huge target for cost-cutting ought to be the underutilized, expensive-to-operate light rail system.
But it gets worse still. The funds the VTA will borrow against are the so-called ‘Measure A Extension’ funds. Approved by Santa Clara County voters in November 2000, the half-cent sales tax was projected to raise $6 billion over 30 years. But those projections were made before the current economic downturn that has seen a startling and dramatic sales tax slump statewide.
But we’re not done listing reasons why the bond-against-volatile-sales-taxes proposal is such a bad idea. The plan to borrow against the uncollected Measure A Extension funds will drop the VTA further into debt and jeopardize many South Valley transportation projects – including planned and desperately needed improvements to the heavily utilized Caltrain lines to South Valley and a project to add carpool lanes from Cochrane Road to Highway 25.
The plan shows poor planning, poor fiscal management, represents an obscenely risky gamble and is unfair to the residents.
We have to believe the judge who will review the perilous proposal this fall will deem it illegal. Otherwise, the plan will go before voters – and we’re confident they’re more fiscally sage than the seven members of the VTA board who voted for this fiasco.
Meanwhile, the VTA keeps running at a huge deficit and the directors who voted for the proposal have, for now, put off cost-cutting measures thereby burdening the taxpayers who have entrusted them with the additional sales tax money.
