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July 8, 2009 > AC Transit declares fiscal emergency

AC Transit declares fiscal emergency

By Simon Wong

The AC Transit Board voted unanimously (7-0) to declare a fiscal emergency on June 24 for FY 2009-10.

Transit agencies' actions arising from "the failure of agency revenues to adequately fund agency programs and facilities" are exempt from CEQA, as per the California Public Resources Code and CEQA guidelines. This means that agencies, except the Los Angeles County Metropolitan Transportation Authority, can bypass environmental review to implement service cuts even if there might be environmental consequences.

To invoke the exemption, the Board must specifically find that there is a fiscal emergency or negative working capital within one year of a declaration of a fiscal emergency.

A public hearing was held on May 27 to receive testimony on how a fiscal crisis might be avoided. The Board had 30 days in which to respond to the three speakers and 19 written comments before finding a fiscal emergency.

Mary Oram queried AC Transit's lack of profitability given that Measure VV, which voters approved in Nov 2008, doubled the parcel tax within the District.

"Measure VV revenues will help limit service reductions the District would otherwise have to make. Measure VV will generate approximately $28M annually. The State's fiscal crisis has prompted appropriation of State Transportation Assistance (STA) funding from the District for the next five years. In FY 2009-10, this amounts to a $26M loss of revenue for the District... Additionally, sales tax revenues, which fund Measure B in Alameda County and Measures C and J in Contra Costa County, have been significantly reduced by the ongoing recession. Beside the loss of revenue, The District has seen increased cost for goods, supplies and services," responded the Board.

Sales and property taxes account for a large part of the District's revenues. As the economy fluctuates, the District's revenues also rise or fall. At the moment, the economic downturn means that revenues have declined.

Most of the District's departments have cut their FY 2009-10 budgets by 15% through outsourcing, layoffs and a moratorium on recruitment for vacant positions. Savings will amount to $8M.

Ms. S.O. Fowles criticized the District's decision to raise fares from July 1, implement potential service reductions and the adverse effect on riders who depend on these services. She, and other members of the public, allege the District has wasted money sourcing its buses from Van Hool in Belgium and suggested that the vehicles be returned or the contracts cancelled.

"The District has ongoing contracts with Van Hool for certain buses which cannot be cancelled or for which Van Hool was the successful bidder. The buses are necessary to replace an aging fleet and would not avert the present fiscal crisis because the funds are designated for capital purchases and not for general expenses. Staff travel to Belgium, with limited exceptions, has been curtailed for the past four years," responded the Board.

The June 24 meeting was poorly attended with only one speaker on the matter.

"I've some acquaintance with CEQA and often commented for draft environmental impact reports. I've never before seen two-page comments reduced to a single paragraph, edited and censored. Normally, comments for a DEIR appear in their entirety no matter how tedious or lengthy they might be and a response is made," complained Joyce Roy.

"The full text of all the public comments was circulated to the Board and are on file in a Board document," replied AC Transit VP Christian Peeples.

AC Transit's Finance Department projects a $9.74 million shortfall of working capital by the end of FY 2009-10. This is expected to reach $57 million by the end of FY 2010-11. These figures could change depending on how state legislators decide to balance the state budget.

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