SMART responds to Taxpayers’ Asstn. Suggestion for Second Opinion
Posted by scta | Filed under SMART
April 5, 2010
Jack Atkin
President, Sonoma County Taxpayers Association
Re: Your letter of March 23, 2010
Dear Mr. Atkin,
Thank you for your letter recommending that SMART engage an outside professional consulting firm to evaluate our financial and strategic planning documents. We agree that an extra set of eyes can be helpful in assessing the feasibility of such plans.
That is why, in 2008 with our Funding Plan and again in 2009 with our Strategic Plan, we welcomed the participation of several independent evaluators as part of the process. And, as we continue to re-evaluate our cost and revenue projections, we will invite continued independent review of that process.
As a public agency committed to transparency in all of our activities, SMART’s financial projections are open to review by any interested citizen. It is my understanding that you and your organization have asked for and received access to an array of our financial documents, so you are aware of the amount of outside participation we have encouraged to date. To recap:
n Our 2008 Funding Plan was prepared with the assistance of Parsons Brinkerhoff, an internationally known transportation consulting firm, and KNN Public Finance, a well-respected financial advisory firm with a long list of public agency clients that includes the Sonoma County Transportation Authority.
n The 2008 Funding Plan was thoroughly vetted by a subcommittee appointed by the Transportation Authority of Marin. The subcommittee reported its findings to the Authority’s full Board, which voted to endorse and support Measure Q.
n The 2008 Funding Plan was reviewed by Dr. Robert Eyler, director of the Center for Regional Economic Analysis at Sonoma State University. Dr. Eyler found the plan to be “reasonable and conservative.”
That 2008 Funding Plan was prepared in the spring of 2008 and adopted by the SMART Board in July 2008. At the time it was clear that economic conditions were beginning to change, and the revenue projections contained in the plan were adjusted to reflect those conditions. Sales tax receipts, which had grown at an average annual rate of nearly 5 percent in Marin and Sonoma Counties for the previous 20 years, were projected to grow at 0 percent for 2009, 2010 and 2011, and to remain at 4 percent or below for the life of the 20-year Measure Q sales tax.
In the fall of 2008 and winter of 2009, after the Funding Plan was adopted and Measure Q passed, we entered the most severe recession the United States has experienced since the Great Depression. Not only did sales tax receipts drop precipitously, but credit markets experienced a severe transformation that negatively affected SMART’s bonding capacity. The SMART Board was informed of these changes beginning in February 2009, and the SMART Citizen Oversight Committee – a group of respected community leaders not associated with the development of the Funding Plan – began working on the Strategic Plan in April 2009. With the aid of consultants from Parsons Brinkerhoff and KNN Finance, the COC identified the projected $155 million funding gap that has received so much attention over the past year.
In addition to examining SMART’s revenue and cost projections, the COC in 2009 recommended that SMART obtain a new and independent 20-year sales tax forecast from Beacon Economics, a well-known economics firm that performs such forecasts for the State of California and many local governments. Beacon’s forecast was even more conservative than KNN’s updated forecast, and was used as the basis for revenue projections for the 2009 Strategic Plan.
The Strategic Plan is based upon revenue projections and cost estimates. As such, it is a living document that will change as more information becomes available. We continue to seek additional revenues for the project, and the detailed design and engineering work being performed this year will help us refine cost projections by the fall of 2010.
In summary, I disagree with your conclusion that SMART’s financial planning is flawed because of a need for more review. Our financial situation is caused by the same economic forces that are affecting the finances of every government agency that relies on tax receipts – along with the finances of most businesses and many individual households.
Thankfully, we still have significant revenues available to us from Measure Q. With that support from nearly 70 percent of the voters of Marin and Sonoma Counties, we are hard at work building an alternative transportation system that will benefit the environment, the economy and the quality of life for all who live in the North Bay.
Sincerely,
Debora Fudge
Chairwoman, SMART Board of Directors