Sales tax drops 20%, ridership down 10%
The economic storm that's swept the country wiping out both public and private sector budgets, continues to take a terrible toll on businesses and governmental agencies across the Bay Area including BART.
Newly released state figures now show BART has just suffered the worst decline of sales tax revenue in its 37-year history. The facts clearly conflict with what union leaders told reporters this week in which they claimed economic conditions for BART are not dire.
BART has just learned its sales tax revenues for the fourth quarter have dropped 20% when compared with the same period in 2008. That translates into a loss of nearly $10 million. For the fiscal year, sales tax revenues are down $18 million. At the same time, BART saw a 10% decline in the number of riders using the transit system during the first half of June as compared with the same period in June 2008. That translates into a loss of 33,000 riders per day. Fares are the single largest source of operating funds for BART – accounting for approximately 60% of revenues. Sales taxes are the second single largest operating source. They account for approximately 30% of BART's operating budget.
"How bad does it have to get before union leaders realize that BART is facing a fiscal crisis and they need to help find a solution to it?" BART Board President Tom Blalock said. "What these numbers mean is that BART cannot afford to conduct business as usual if we are to weather this economic downturn. We have to improve efficiency and reduce all costs, including the cost of our labor contracts while at the same time keeping BART affordable for our riders."
LATEST ON UNION NEGOTIATIONS
BART faces a $250 million, four-year deficit. The contracts with all five of BART's unions expire on June 30, 2009. The average union worker makes $114,000 a year in wages and benefits. Even without an increase in salary, the cost of maintaining the current benefits for BART employees over the next four years accounts for nearly half of BART's $250 million shortfall.
So far, union leaders have not agreed to a single major cost-saving proposal and seem intent on drawing out negotiations beyond a June 30 contract deadline.
"We need to reach an agreement by July 1," Blalock said. "BART riders and taxpayers simply cannot afford to extend beyond the June 30th deadline because every day of delay means we fail to achieve the savings we need. Every day of delay also means the deficit grows by nearly $70,000.
We can't keep kicking the can down the road. You need to look no further than the State of California's budget to see what a delay can do to a deficit." BART began meeting with union representatives on April 1 and presented a shopping list of options to them with a target of $100 million in cuts as the employees' fair share of the overall problem. The agency is asking for the employees to pick up more of the cost of their benefits and pensions so riders and taxpayers don't have to. In addition, BART proposed to eliminate contract language that limits the agency's right to improve productivity by changing wasteful work rules.
"BART employees do a great job delivering BART service and we compensate them well for that," General Manger Dorothy Dugger said. "However, it would be unfair to burden our riders with additional fare hikes but not ask our unions to cut labor costs, which our riders and taxpayers ultimately pay for."
BEHIND THE SALES TAX & RIDERSHIP NUMBERS
According to figures provided by the State Board of Equalization, BART will receive $38.8 million in sales tax revenue for the fourth quarter of the current fiscal year, down from $48.2 million for the same period last year.
Along with the decline in revenue, the number of daily riders has dropped to an average of 335,500 riders per day, 33,000 less when you compare the first half of June 2009 with the first half of June 2008.
"BART still remains one of the most popular public transit options in the Bay Area," Blalock said. "We expect revenue and ridership to rebound when the economic climate improves. But for BART to be on good financial footing in the years to come, we must address our labor costs and secure a new contract that allows us to run the system within a balanced budget. In these times, fiscal prudence and restraint are what our riders expect."
OTHER BAY AREA AGENCIES FACING SALES TAX SHORTFALLS
Monday, the City of San Jose reported seeing its fourth quarter sales tax revenues drop by 30% - triple what the city expected. Other Bay Area agencies that have seen their fourth quarter sales tax revenues plummet as compared with the same quarter in 2008 include; the Contra Costa Transportation Authority, which saw an 18.1% drop, the Alameda County Transportation Improvement Authority, which saw a 20.4% decline and the San Francisco County Transportation Authority, which saw a 19.8% drop.