Measure of Success: Renewing Transportation Sales Taxes

Over the next 18 months, voters in at least three Bay Area counties will be asked to consider renewing their transportation sales taxes, although current measures will not expire until 2008 or 2009. If approved, the reauthorization measures will bring the stability of long term funding for major transportation projects and programs in San Francisco, San Mateo and Contra Costa Counties. With many projects still only partially complete, and a dismal state funding picture, county transportation authorities are hoping to convince voters that transportation sales taxes are more important than ever.

Transportation sales taxes have become a financing option used by most of the urban counties in the state. Recent updates of countywide transportation plans have shown that without local funding there will continue to be many projects needed but not built. Although these taxes are vulnerable to economic downturns, they provide a funding source that seems more predictable and secure than state funding, and offer a reliable source of local matching funds to help secure grants from other agencies. For example, in San Mateo County, Measure A funds will total approximately $1 billion over 20 years; they have already helped bring another $1 billion in matching state and federal grants. In Santa Clara County, where the drop in sales tax revenue has severely impacted plans for both current and reauthorized sales tax measure income, officials are polling residents on a potential new measure to raise extra funds needed to complete the plans.

The long lead time for these new measures reflects changes in transportation funding since the original measures were passed in the late 1980s. "Self-help" counties, those with transportation sales taxes, initially decided to use local funds to offset cutbacks and limitations in state transportation funds in order to complete projects which would otherwise have remained on wish lists. The first "focused" self-help tax measures were required to sunset—10 years for Santa Clara County, 20 years in Contra Costa and San Mateo Counties—and needed only a majority vote. However, due to subsequent initiatives and court cases, these taxes will now require a 2/3 vote for reauthorization. Even with attractive expenditure plans, ballot measures may need good timing, a strong union of diverse interests and/or more than one try to pass.

San Francisco's Measure B, approved in 1989 and due to expire in 2009, would be replaced by a measure which is scheduled for the November 2003 ballot. It would extend the sales tax for 30 years and is likely to raise $2.6 billion over its lifetime. According to the expenditure plan, the majority of the funds would be used to extend Muni Metro from the South of Market to Chinatown, provide the San Francisco share of funding for Caltrain electrification and extension to the Transbay Terminal, and rebuild Doyle Drive, the dangerous link between San Francisco and the Golden Gate Bridge. The plan also includes infrastructure for a bus rapid transit network and for ferries. Programs which would be funded include paratransit, pedestrian and bicycle safety, and transportation system planning. Some of the projects, such as the Muni Third Street Rail, would be funded only for a first phase; the measure includes preliminary planning to enable extensions beyond 30 years.

Sales tax renewal measures in both San Mateo and Contra Costa Counties are aimed at the November 2004 ballot, although changes in the political and economic climate could mean a delay. If the Santa Clara Valley Transportation Authority (VTA) decides to move forward with another sales tax measure, it would probably also be on the November 2004 ballot. In San Mateo, a 20-year renewal of Measure A, which expires at the end of 2008, could bring in an estimated $1.5 billion, and in Contra Costa, renewal of Measure C for 20 years beginning in 2009 could raise an estimated $1.6 billion. Polling in both counties shows that voters are pleased with the results of the current sales taxes and are likely to support a renewal.

However, the next step is to develop expenditure plans tailored to fit within the anticipated income while accommodating as many interests as possible. San Mateo cities are now generating their initial proposals for an expenditure plan, which will be incorporated into a prioritized list by the end of the year. Many projects funded by Measure A, such as Caltrain service across the Dumbarton railroad bridge, are not complete and will need additional sales tax funds, while proposals for new projects are also surfacing.

In Contra Costa, initial "wish lists" from the transportation authority's city/county subcommittees totalled approximately $4.5 billion, far more than could be included in any final expenditure plan. Polling shows that popular choices in Contra Costa include a fourth bore for the Caldecott Tunnel, extending Bay Area Rapid Transit District (BART) service, support for transit for the elderly and disabled, and maintaining local streets and roads. Suggestions from city/county subcommittees, interest groups, and a citizens advisory committee ranged from a transit-heavy proposal with no money specified for the Caldecott bore, to a plan which focused over 50% of the funds on highways and local streets and roads. A draft environmental document to be released in December 2003 will include three alternatives; a final plan will be picked in spring 2004.

The BART District and the San Francisco Bay Area Water Transit Authority (WTA), two multi-county transportation agencies, have been involved in the expenditure plan process in all three counties. San Francisco's expenditure plan includes $10.5 million for BART station access, system and capacity projects. Sales tax funds from Contra Costa helped fund the BART extension from Concord to Pittsburg/Bay Point, but the new expenditure plan is unlikely to support a full BART extension farther east, favoring less costly diesel units on existing rail lines instead. San Mateo County, which has just welcomed new BART service, could fund studying a BART extension south from Millbrae. In Santa Clara County, stations that will probably be whittled from plans for the BART extension to San Jose could be restored with a new sales tax measure.

The WTA, which is planning more extensive ferry service in the region, has been actively educating sales tax expenditure plan participants about its financial needs. WTA is working to secure federal funding, as well as an earmarked portion of any increased bridge tolls (see October/November 2002 issue), but local sales tax measures will be essential for capital expenditures such as building terminals and may also be needed for additional operating costs. WTA would receive $5 million from San Francisco's renewal measure to improve downtown ferry terminals to accommodate increased ridership. WTA plans for Contra Costa County show potential ferry terminals at Richmond, Hercules/Rodeo, Martinez, Pittsburg and Antioch, but the county's expenditure plan analysis includes service from only the first two, estimated to cost $31 million. In San Mateo County, WTA is proposing service from South San Francisco and Redwood City to San Francisco, and possibly the East Bay. A South San Francisco terminal would cost approximately $10 million.

By early 2004 both Contra Costa and San Mateo Counties will be well on their way to putting renewal measures on the ballot and VTA will be close to a decision point on its options. The success of San Francisco's November tax measure, as well as other political and economic factors such as any potential increase in the state sales tax, will affect the timetable for bringing the next renewal measures to the voters. Meanwhile, state legislators may offer voters a measure to pass transportation sales taxes with a 55% vote rather than 2/3 approval. Legislators have also looked at a proposal that would require only a majority vote for taxes accompanied by specific spending plans and oversight bodies, such as transportation sales taxes, while requiring the 2/3 vote for general taxes. Either of these changes would make it easier to pass transportation sales tax measures, although opponents to lowering the vote requirement note that it would make it less important to secure broad-based community support prior to approving an expenditure plan for the ballot.

Political factors affecting sales tax renewals may include the controversy over a recent VTA decision to use some of the proceeds of its latest sales tax measure, set to begin in 2006, to repay bonds that will partially fund current VTA operations, although this use was not anticipated when Santa Clara voters approved renewing the sales tax in 2000. Expenditure plans submitted to voters in the future may need to include either more flexibility or greater restrictions on how tax money could be used.

Local transportation sales taxes are becoming a required part of the funding mix in the Bay Area, relied upon for local matching funds and to complete particularly desirable local projects. As such, they will soon lose their status as "new money" in the transportation funding pot. However, they are not a guaranteed source of money, both because they suffer in economic downturns, and because the voters can deny a renewal. Like Santa Clara, other self-help counties may find that in spite of careful long-range planning, projects will have to go on the shelf until voters are once again inclined to add to their tax burden. Therefore, polls, advisory groups, and plenty of lead time are seen as essentials in successfully bringing the upcoming measures to the voters.

Contra Costa Transportation Authority, 925-407-0121; http://www.ccta.net

San Francisco County Transportation Authority, 415-522-4800; http://www.sfcta.org

City/County Association of Governments of San Mateo County (CCAG), 650-599-1406

Santa Clara Valley Transportation Authority, 408-321-5725; http://www.vta.org