This story has been updated.

San Antonio’s transit agency will not have a significant budget shortfall over the next few years and should be able to weather the coronavirus pandemic without cutting bus service, according to top City officials.

Last week, VIA Metropolitan Transit released budget projections showing $126.2 million in shortfalls over the next five years, a deficit that even factored in $93 million that VIA anticipates in federal coronavirus relief funding.

VIA’s budget estimates came as its officials signaled their plans to go ahead with a proposition to shift a one-eighth-cent sales tax away from aquifer and trail funding and toward transit. VIA President and CEO Jeff Arndt said last week that without the additional sales tax revenue, the agency might have to cut a third of its routes, affecting 150,000 riders of its fixed-route buses and 1,400 disabled users of its VIAtrans services.

But in a memo to City Council members Monday, City Manager Erik Walsh offered different conclusions, citing an analysis of VIA’s budget numbers by City Chief Financial Officer Ben Gorzell.

Instead of the $126.2 million deficit over five years, the transit authority would only have a “modest” deficit of $10.9 million by 2023, increasing to $59.4 million by 2025, Walsh wrote. He called these reduced shortfalls “manageable.”

“My assumption is that VIA would manage their budget and services much like other public entities are having to do in these times, closely monitor economic and financial conditions as they evolve, and adjust accordingly,” Walsh’s memo states.

In a statement later Monday, VIA officials cited $111.3 million as their current estimate for the transit agency’s budget shortfall.  The City’s estimate is $52 million lower than VIA’s because the City is factoring in roughly $10 million in annual funding to VIA that VIA officials say would require City Council approval each year. VIA’s estimate excludes that funding.

“The forecast will change as new numbers become available,” the VIA statement reads. “This does not negate the validity of our current or previous projections that are based on the information available at the time.”  

The competing budget numbers are the latest sign of a break between City leaders and their counterparts at VIA, the independent regional transit agency operating 90 bus lines in Bexar County.

San Antonio Mayor Ron Nirenberg was once the biggest champion of shifting more sales tax funding to VIA. Expanding transit is a cornerstone of Nirenberg’s policies to fight climate change and reduce suburban sprawl, among other goals. However, the mayor has recently said the sales tax vote should be postponed for now in the wake of the coronavirus pandemic.

“The City’s analysis has shown there is not a cash-flow problem at VIA,” Nirenberg told the Rivard Report on Monday. “And there is no reason to suggest that the most disadvantaged members of our community and transit-dependent residents will be without service through this pandemic and recovery effort.” 

At its meeting Tuesday, the VIA board could vote to provide formal notice about putting the sales tax shift on the November ballot, even without the support of Nirenberg and Bexar County Judge Nelson Wolff. (Technically, the vote would come from the Advanced Transportation District, which uses a quarter-cent of sales tax revenue to fund transportation projects from VIA, the City of San Antonio, and the Texas Department of Transportation. VIA’s board also functions as the ATD board.)

In his memo, Walsh said the $126.2 million deficit was partly the result of VIA’s assumptions that it wouldn’t get $10 million per year in City funding in exchange for more frequent buses on 18 routes. The City’s five-year financial forecasts include plans to continue giving VIA that money, Walsh wrote.

VIA officials said in their statement that they are “encouraged by the new commitment from City staff and the mayor to provide $50 million over five years” and that they “appreciate this step toward narrowing the funding gap and [helping] us avoid severe service or labor cuts.” The agency’s staff and leadership held a conference call with counterparts from Wolff’s and Nirenberg’s offices and City staff on Monday to discuss the issues.

“We are on a path to find a workable solution that we believe will keep VIA from having to make additional service cuts that would negatively impact our riders as the community works together to recover from this pandemic,” the VIA statement read.

VIA also based its original deficit number on sales tax forecasts from earlier in the year that have since been updated, Walsh said. VIA’s economic consultant has upped its sales tax revenue estimate, saying that VIA will likely get $190 million this fiscal year instead of $152.6 million as originally projected.

With higher-than-expected revenue expected to roll in from the City and the sales tax, the $93 million in emergency funding should then help VIA plug its budget holes in future years, Walsh’s memo states.

Brendan Gibbons

Brendan Gibbons

Brendan Gibbons is the Rivard Report's environment and energy reporter.