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Derailed?: Transportation officials say that, because of budget shortfalls, the Bay Area Rapid Transit (BART) commuter line to downtown San Jose is not likely to be built within the next 12 years as planned. Others say it's not going to happen at all.

Wave Goodbye to the Train

Long-awaited BART may not be coming to downtown San Jose after all

By Loren Stein

TWO YEARS AGO, more than 70 percent of the county's voters approved an ambitious plan to bring the traffic-sparing Bay Area Rapid Transit (BART) commuter rail line into the heart of the Bay Area's largest city. Local voters even agreed to pony up a half-a-cent sales-tax increase to provide the financial muscle needed to get the $4 billion project on track. The promise: a downtown BART station within 12 years.

With the exception of collecting the new tax, it now looks like that promise will go unmet.

Saddled with a staggering $34 billion state budget deficit and the local Valley Transportation Authority's severe financial shortfall, regional officials say they simply have no idea where they will come up with the money needed to secure federal matching funds that would make the project a reality.

Transit advocates are scrambling to save both the existing local transit and the BART project, but there's no escaping the difficulty they are facing. "BART to San Jose is on life-support systems," says a knowledgeable transportation source. "There's absolutely no way it'll be here in 10 years. What's more, the source says, "there's a good chance BART may not even make it to San Jose--especially downtown San Jose."

This is not a scenario that makes anyone happy. The decades-old rail system was finally supposed to have circled the bay, relieving commuters of the maddening traffic jams that have turned what was once called the Valley of Heart's Delight (Silicon Valley's original name) into freeway commuter hell.

But the worsening economy seems to be eliminating those hopes. Back when Measure A (the tax hike designed to fund BART to San Jose and lengthen light rail lines) passed in 2000, the economy was booming, and state and local coffers were overflowing. It's apparent now that no one at the time thought through the possibility of a coming economic crash. Or the domino effect created by California's budget catastrophe and plunging sales-tax revenues, which now threaten to push the VTA into bankruptcy as early as 2005.

Given the state and the VTA's perilous financial condition, "I'm very skeptical [about BART to San Jose's chances]," agrees Santa Clara County Supervisor Don Gage. "If we don't see a great improvement within the next few years, with the state's $34 billion deficit, I think we're going to have a big problem. I don't think anything's sacred anymore."

"At best, there'll be a delay [beyond the 12 years voted on]," adds Gage, noting that in the meantime officials may opt for less expensive alternatives than extending the BART line to San Jose. "I know nobody wants to hear that, but BART is the most expensive piece, and the VTA doesn't have the money. From a logical point of view, is the VTA board going to give up all transit projects in the county for BART? Will the voters want that?"

Some transit backers remain more optimistic, though they concede that delays may be inevitable. "I say with great conviction that BART to San Jose will happen, it's just a matter of when," says Rod Diridon, head of the Mineta Transportation Institute in San Jose. "There's a huge cadre of official support for the project, and it's certainly a priority for the public. The most popular issue in poll after poll on Measure A is the BART-to-San Jose connection. If that project is dropped, people in Santa Clara County will be irate--and justifiably so."

Nonetheless, BART to San Jose appears to be on the chopping block of state and local officials who are unable or unwilling to raise the taxes needed to finance the project.

Behind Schedule

"Before I leave office, BART will be connected to San Jose," Mayor Ron Gonzales promised in his first State of the City address in 1999. Some say that, on closer reading, the statement is more ambiguous. "The mayor knew he could deliver a Caltrain-style connection to BART, and he probably still can," says one source. Insiders say the vagueness of his promise served a beneficial purpose, as most people thought he meant full BART service to San Jose. "It motivated people to do the real deal," the source says.

The BART-to-San Jose extension quickly became the new mayor's top policy priority. The following year, the landmark 30-year half-a-cent sales tax was passed with the goal of netting the VTA $2.2 billion to build the 21-mile line from Fremont to San Jose. (The tax doesn't kick in until 2006.) After the connection is up and running in 2012, it'll cost the agency an additional $48 million a year to operate and maintain the line. (The VTA has a signed agreement with BART to fund the operating costs of the San Jose connection.)

But here's where the trouble begins. Two-thirds of the VTA's operating budget relies on sales-tax revenues. With a plunge of 21 percent in sales-tax receipts, the VTA's current financial emergency is so grave it can't afford to build--let alone operate--the new BART connection.

By this summer, the VTA is expected to go broke. It's already burning through $5 million a month in cash reserves. With an operating budget of $350 million a year, the agency needs an extra $147 million a year right away to stay afloat, or $6 billion over the next 20 years.

"I believe [BART to San Jose] will be delayed until answers are found to the operating-budget problems of the VTA," says Santa Clara County Supervisor Jim Beall, an ex officio VTA board member. He adds that if preliminary engineering design work and environmental review for the BART project keep going forward ($12 million in state funds have been spent so far) and the economy brightens, the extension could conceivably be built. "We have to take it step by step, inch by inch," he says.

The VTA has already started grappling with its budget woes. It slashed $164 million in spending and cut service and 300 jobs, or 11 percent of its workforce. At the Dec. 12 VTA board meeting, Gonzales set up a five-person committee to come up with additional solutions.

"We must have a sound financial strategy by June, or the system will go bankrupt," says Gilroy Mayor Tom Springer, a VTA board member who, along with Supervisor Gage, is a member of the rescue committee. One-time solutions will need to be found even to get to 2004, VTA's chief financial officer, Scott Buhrer, said at the meeting.

Options under consideration include higher fees for licensing cars, steeper bridge tolls or a gas-tax hike, some of which would require state action. A new quarter- or half-cent sales-tax hike is also on the drawing boards for as early as 2004. A half-cent sales-tax increase would need the state Legislature to agree to raise the sales-tax cap. The VTA and other strapped counties in the state may also try to push through a law that lowers the two-thirds majority needed to increase transportation taxes to around 55 percent. This could be a hard sell to voters though, especially if the rules on the vote need to be changed in Sacramento.

The funding options were further reduced last November when local voters approved Measure B, which mandates that future state transportation-improvement program funds, as well as any federal transit-related discretionary funds awarded to the county, be used solely for roadway improvements rather than for public-transit systems over the next 34 years.

At the time the measure was passed, it had the unanimous support of local transit leaders, government officials and the San Jose Mercury News, all of whom maintained that public-transit needs had already been adequately provided for. The measure's only major public opponent was the Sierra Club, which warned at the time of problems that could be caused by locking in funds for road-only projects. (Metro also opposed Measure B on the same grounds.)

"We're not unique in [having a cash-flow problem]," says VTA spokesperson Anne-Catherine Vinickas. "BART is a major project, with many years in development, and has opportunities to recover along the way. Until January, everything is speculation."

Difficult Junction

On Jan. 11, Gov. Gray Davis will present his budget proposal, which is expected to send budgetary shock waves into every county and nearly every program in the state. In his second year of office, when the economy was rosy, Davis pledged $750 million from the state's Transportation Congestion Relief Plan to San Jose for the new BART line. Now, in the current economic crisis, that money will almost certainly be swept back into the state's general fund. At the moment, the state portion of the BART-to-San Jose financing has been suspended.

"The state's clear intention is to take away all transportation dollars to try to solve the budget crisis," says Springer. "The spigot is drying up very quickly as far as getting money from the state. At this point, it's a tossup because of the state's financial quagmire as to whether BART can remain on its original schedule or whether we'll see BART derailed to San Jose."

With the VTA heading into the red and the state's support of the San Jose-BART line up for grabs, local leaders have yet another difficult task ahead of them. Even if they come up with their portion of the funding, they have to convince Washington that despite these immediate hurdles, their financial plan is sound enough to get the $834 million federal investment needed to complete funding and build the connection. Competition for each federal transportation tax dollar is stiff; while the San Jose extension has qualified to be on the list, some 50 new train lines across the country are also jockeying to get federal funding.

"We have to demonstrate that we are building a system we can operate," says Randy Rentschler, manager of legislation and public affairs for the Metropolitan Transportation Commission in Oakland, which distributes state and federal transportation funds to all nine Bay Area counties. "There's absolutely no question that we have to have strong local support; the federal government will insist on that."

The mayor's office is presenting a calm face despite the looming money crunch. "We believe BART is a good project and will continue to move ahead," says Gonzales spokesperson David Vossbrink of the mayor's most often-touted pet project. "We're also aware that there are a lot of factors happening right now that could have a serious impact on any number of projects right now throughout California. There are lots of things in motion."

It's possible, he says, the BART line will be extended only to the planned Berryessa BART station at the flea market in north San Jose, bypassing the construction of the expensive tunnel needed to bring BART downtown to the Diridon station. This will allow the mayor, to some extent, to save the project. It will not deliver, however, on his original pledge of a BART connection that would help revitalize downtown San Jose.

Interestingly, Gonzales, who will soon step down as chair of the VTA board, did not appoint himself to the new committee charged with protecting the VTA from financial ruin. And while VTA officials have known about the leaking ship for some time, they've apparently been pretty quiet about its rocky condition until quite recently.

Some analysts say the mayor is ducking the issue. What's more, the subject has been under study for months, a period when the mayor has shown little if any public leadership on the topic. They conclude that the mayor's real goal is to avoid being publicly linked with the VTA's financial free-fall and BART's increasingly gloomy future.

If the BART-to-San Jose line doesn't materialize this would leave the mayor holding an empty hat, says one source. "This is Gonzales' legacy, the hallmark of his tenure [as mayor]. Without BART, he hasn't done much. Without BART he'll be remembered for a scandal."

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From the December 26, 2002-January 1, 2003 issue of Metro, Silicon Valley's Weekly Newspaper.

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