Raise High the Sales Tax, Road Builders

The Transportation Agency of Monterey County (TAMC) is nothing if not persistent. Although efforts to raise the sales tax to pay for transportation projects were rejected by County voters in 1992, 1998 and, most recently, in 2006, they are once again preparing a sales tax measure for the ballot. Today we take a look at what it takes to win a transportation sales tax election and at how TAMC’s current effort has headed off the tracks.

 

The Root of the Problem

Once upon a time, road building and maintenance was primarily funded by taxes on gasoline. This “user fee” approach was certainly regressive (meaning everyone paid at the same rate, regardless of income, making the hardship imposed by the tax far greater for lower income people than for those better off), but it did at least ensure that those who made greatest use of the roads were the most heavily taxed.

Unfortunately, the gasoline tax is fixed at a certain amount per gallon, rather than at a percentage of the sales price. This means that even though gas prices have gone way up, revenue from the gas tax has not. To the extent that people may begin driving less or buying more efficient cars, the tax revenues may even go down. Meanwhile, road construction and maintenance, like pretty much everything else, has gotten a lot more expensive – and rapid growth, much of it in the form of sprawl, has created enormous demands for new infrastructure.

Politics being what they are, the state legislature has been unwilling to raise the gasoline tax or income taxes to keep pace with these accelerating needs. Instead, way back in the ‘80s, when this problem first began coming to a head, the legislature (following a trend sweeping state houses across the nation) bravely decided to duck the problem by tossing it back into the laps of the local jurisdictions. They told the counties that if they wanted transportation projects, they would have to help pay for them by getting their voters to approve temporary (usually 20-year) local sales tax increases.

 

Sales Taxes – An Imperfect Solution

From a policy perspective, using sales tax revenue to pay for transportation projects isn’t very sensible or fair. Not only is it a regressive tax, it isn’t even connected to use of the transportation system. A hotel maid who doesn’t own a car can end up paying more for road maintenance than a CEO who commutes 50 miles to work every day in an SUV. Locals also end up charged for fixing regional bottlenecks, simply because the problem happens to be located in their county, and can find themselves paying, not only for projects to meet their own needs, but also for projects necessary to serve new development. The high end, large lot subdivisions popping up like mushrooms in rural parts of the state over the past 20 years, create especially expensive transportation problems since they are often quite remote from adequate roads and services – problems that it is hardly fair to ask existing residents to shoulder the burden of fixing.

As the sales tax measures must list the projects they will fund, another set of problems arises due to the necessity to pick projects on the basis of their popularity rather than on greatest need or good planning principles. The measures also lock in these priorities over long periods of time, making it difficult to adapt to changing transportation needs. Finally, heavy reliance on sales tax revenues, whether for transportation or other purposes, sets the stage for retail wars – where all thoughts of good planning are thrown out the window as cities and counties compete with each other for sales tax income. Yet, regardless of these problems, as the transportation sales tax scheme helps the state legislature avoid making hard, politically difficult decisions, it has remained enduringly popular in Sacramento.

 

Going to the Voters

Having no choice, the counties began bringing sales tax measures to the ballot in the mid ‘80s and, since only a simple majority vote was required, in the areas where traffic congestion was greatest, the measures tended to pass (Southern California, the Bay Area and the fast growing portion of the Central Valley). In the more rural counties, sales tax measures did not succeed. Monterey County’s first measure failed in 1992.

Then, in the ‘90s, the landscape shifted again, as special tax measures of this kind became subject to a two-thirds majority vote requirement. As obtaining a two-thirds majority is extremely difficult in any election, many feared that the “self-help” county club had essentially been closed to new members. The 17 of California’s 58 counties that were already self-help counties would get the transportation projects they needed (at least until their 20-year tax programs expired) and everyone else was out of luck. This has proven largely true, but not entirely.

Over the past 8 years, 16 counties have succeeded in getting the necessary two-thirds vote (some after making several tries). That’s the good news for TAMC. The bad news is that all but 2 of these counties were already members of the self-help club and were simply renewing the temporary transportation sales taxes they had previously passed with a simple majority vote.

Marin and Sonoma, two neighboring and heavily traffic-impacted counties on the northern fringe of the Bay Area, are the only counties to become self-help counties since the two-thirds vote requirement went into effect. It was Sonoma County’s 5th try and Marin County’s 2nd.

Click here to see a map showing the distribution of California’s self-help counties. Not too many outside of the core urban areas, are there? Looks like yet another example of the population centers getting the funding, while the more rural parts of the state go begging, doesn’t it? …. But that’s another story.

 

Marin & Sonoma – The Winning Formula

So what was the secret of Marin and Sonoma’s success? Well, it just so happens that researchers at UC Berkeley performed a detailed analysis of the various votes in Sonoma County and what they learned boils down to this. The 5th try, in 2004, appears to have succeeded because it was the most “multi-modal.” In other words it went the furthest toward balancing the spending between road, rail, transit, bicycle and pedestrian projects.

Especially interesting was the unsuccessful 2000 election in Sonoma County, when the business community qualified a measure for the ballot focused only on roads – apparently believing this would have the best chance of success. A member of the Board of Supervisors, who saw the need for alternative transportation options, then placed a second measure on the ballot to fund transit, bike and rail projects. The business community’s measure, which understandably failed to gain the support of environmentalists, became the most expensive initiative campaign in Sonoma County history. The second initiative, meanwhile, languished with no organized support or opposition. Yet, when the vote was taken, although both measures failed to gain the needed two-thirds majority, the road-focused measure, in spite of the immense campaign effort, received fewer votes than the alternative transportation measure.

Sonoma’s successful 2004 measure called for a 20-year  .25% sales tax allocated as follows:

60%            Regional and state roadways

20%            Local streets and roads

10%            Transit

5%            Commuter Rail Project

4%            Bicycle and Pedestrian Facilities

1%            Administrative Costs

Although still heavily focused on roads, this plan did enough for alternative transportation projects to gain the support or neutrality of environmentalists (defined here as anyone smart enough to realize that transportation problems can’t be solved by road building alone). It passed by the slimmest of margins, with 67% of the vote.

Marin County’s successful measure (also passed in 2004) called for a 20-year .5% sales tax allocated as follows:

55%            Bus system

25.5%            Roads/Bikeways/Paths/Sidewalks

11%            Reduction of congestion around schools

7.5%            Carpool lanes

This plan, showing a far more serious commitment to alternative transportation, captured the enthusiastic support of environmentalists and cycling advocates and won easily, capturing an amazing 71% of the vote.

In addition to these two success stories, 7 existing self-help counties managed to extend their transportation taxes in 2004, and 3 counties attempting to become self-help counties failed. Once again, the plans that failed were generally much less balanced and much more focused on road building than the plans that passed.

 

Back to Monterey County

Given these results, it’s not too surprising that Monterey County’s 2006 measure, which allocated only 13% to transit and rail, fell far short of passage, with just 57% of the vote.

So what is TAMC’s plan for doing better this time? Well, in addition to counting on the higher turnout of a presidential election year to give the measure a boost, they’ve also increased bus and bus-related transit funding to 20%, with another 3% for bicycle and pedestrian facilities. Will that be enough to gain the support of those who’ve come to grips with the fact that a transportation system almost totally reliant on cars is doomed?

 

TAMC’s New Measure Derailed

Well, the chances of success would certainly be better if they hadn’t removed the funding for extending Caltrain service to Salinas. A relatively small item in terms of the dollars involved (of the $980 million expected to be raised by the tax, $1.5 million per year would have gone to the train), this rail link is huge in terms of symbolizing a move toward a genuinely sustainable and functioning transportation infrastructure. Given the obvious necessity of avoiding environmental opposition, dropping this item seems close to political insanity.

So whose bright idea was this? The Farm Bureau. They demanded that the rail funding be removed and threatened to withhold support for the measure if it was not. Undoubtedly against their better judgment, TAMC accepted the Bureau’s ultimatum.

If the Farm Bureau secretly opposed the transportation tax, their “poison pill” demand would make sense, but this does not appear to be the case. Instead, they seem to genuinely want the roads they haul their produce over fixed and they seem to oppose rail based on a complicated mix of believing that any money not spent on roads is wasted, that a train will not provide any direct financial benefit to their industry, and that a train will bring outsiders into the area who are less sympathetic to agriculture than locals.

That’s fine, but we’re sure more astute supporters of the transportation tax are wishing the Bureau wasn’t quite so tone deaf to political reality. By displaying their open distain for alternative modes of transportation, they might as well have sent an engraved invitation to the environmental community requesting organized opposition – and if the opposition they’ve requested arises, the measure is obviously doomed.

Getting a two-thirds majority vote is never easy. It takes a very high degree of community consensus – something currently in short supply in Monterey County when it comes to envisioning the county’s future. Whatever their intentions, by demanding removal of the Caltrain funding, the Farm Bureau has very likely derailed TAMC’s latest transportation measure in more ways than one.

 

 

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