Presentation to the Programming and Allocations Committee July 12, 2006 FY Fund Estimate Revision and TDA / STA Allocations

Economic Backdrop – TDA Trend  TDA quarter-cent sales tax revenues are gradually recovering from their plunge in FY

Economic Backdrop – STA Trend  The near 3-fold increase in STA funding for FY is mostly due to a one-time infusion of Proposition 42 payback plus “spillover” funds

Revenue Breakdown – STA  $87.6 million in unanticipated spillover and an additional $37 million in Proposition 42 funding are a welcome bonus for Bay Area transit operators in FY *FY estimate based on February figures adjusted for operators’ revenue basis.

STA Estimated vs. Actual  FY STA revenues far exceed February estimates*  Influx of additional revenue will provide a much needed boost for regional coordination activities – including Free Transit extension *FY estimate based on February figures adjusted for operators’ revenue basis.

Key Issues – Budget vs. Service Growth  Transit operators’ budget increases outpace service growth  Trend is likely attributable to high fuel costs and rising labor costs, among other expense items

 Budget vs. service growth will be one of the considerations affecting each operator’s request for operating assistance Key Issues – Budget vs. Service Growth

 Potential Fare Increases  Use of FTA Funds for Preventive Maintenance Key Issues – Revenues Strategies to Keep Pace with Budget Growth BeniciaGolden Gate Transit County ConnectionVallejo Tri-Delta Transit AC Transit - $17 Million (Capital Swap) VTA - $32 Million (Score Order and 10% Flexible Set-Aside) Various Other Operators - $17 Million (10% Flexible Set-Aside)

Conditional Allocation for Vallejo Transit  Finding in last two performance audit cycles - Vallejo Transit must prepare a federally approved cost allocation plan.  The City of Vallejo has committed to completing the plan submittal by December 2006; therefore, staff recommends that the FY allocation be conditioned upon satisfactory completion of this milestone.  Specifically, staff will recommend disbursement of the second half of the fiscal year funds (January-June 2007) only after the city has completed the cost allocation submittal.

Allocation Summary  With July requests, the allocations to-date are $390 million. Additional requests will come forward in coming months.