Approximately 10,000 tech-related and manufacturer jobs have returned to California’s Silicon Valley in the past year. The economy is slowly moving in the right direction, the unemployment figures dropping from double to single digits.

These days, things are also looking up for Santa Clara Valley Transportation Authority (VTA). In addition to steady ridership increases in the first quarter of this year, VTA is attracting new riders with its Commuter Express light rail service and plans to revamp its express bus service. Moreover, the VTA budget is balanced for the next two years—with a 15 percent funding reserve.

Two years ago, it would have been difficult to imagine the agency with a budget in the black. Like many other public transportation agencies, VTA was in financial trouble in 2009—when the U.S. economy bottomed out due to the housing financial meltdown—and its budget was in the red.

VTA depended on multiple funding sources, including local sales tax revenues and California State Transportation Assistance (STA) funds, to operate its bus and light rail lines. As the economy declined, so did local sales taxes revenues, and the state eliminated STA funding.

In response to bleak revenue projections, VTA General Manager Michael T. Burns acted quickly. He alerted the board of directors of the impending financial crisis, and the board immediately issued three guiding principles to help the agency navigate through the budget crisis: align cost-saving strategies with minimized service reductions, maintain investment in critical infrastructure, and preserve jobs to the extent possible.

At the time, Burns said: “To meet fluid economic realities, we must make fundamental business changes.”

Under his leadership, the VTA executive team immediately explored cost savings and implemented internal belt-tightening strategies through a soft hiring freeze, restricted travel, and improved applications of technology. The agency used its 15 percent operating reserves and deferred the purchase of Bus Rapid Transit vehicles.

Everyone pitched in: VTA staff stepped up and took unpaid furloughs and wage freezes while board members reduced meeting stipends. Fare increases were the last resort.

VTA executives implemented all these cost-saving strategies after introducing the “New Bus Service,” which realigned bus lines to core transit corridors and high service demand.

The agency realized that its old business model was not a good fit in the new volatile economic environment. Burns encouraged the board and staff members to be innovative—and they stepped up to meet the coming challenges.

They secured American Recovery and Reinvestment Act funds to help offset operating expenses and purchase new hybrid buses. VTA staff also found new revenue sources by wrapping advertisements on light rail vehicles, selling web ad space, and replacing a sales firm to generate more ad revenue on bus and light rail.

On the legislative front, VTA received a one-time STA allocation to help close the budget gap. Then gas tax swap legislation was signed into law, establishing a legislative framework for stable STA funding for the next few years.

The VTA board also took on the fiscal challenge, forming the Ad Hoc Financial Recovery Committee to explore long-term solutions to address the system’s structural deficit. Three board members lead the committee, which has accepted financial principles such as limiting the use of capital funds for operating-related purposes, controlling cost growth, and negotiating sustainable bargaining agreements. These and other principles are now incorporated into the current biennial budget.

“We were committed as an organization to deal with our problems,” said Burns. “We were very conservative and frugal in our assumptions and are now poised in a good place.”