Bay Area transportation funding bill suspended

Bay Area lawmakers have stalled a state bill that may have asked voters to approve a $750 million annual public transit bailout package for up to 3 many years.

The bill would have authorized regional transportation authorities to place the funding measure to a vote in 2026 to assist stabilize public transit, avoid service cuts, and improve local transit.

Democratic Senators Scott Wiener of San Francisco and Aisha Wahab of Hayward, in addition to the bill's sponsor, the Metropolitan Transportation Commission (MTC) – the agency that makes transportation decisions for the Bay Area – paused their efforts on SB 1031 last week, saying they might introduce a brand new bill next yr.

First, they have to rebuild waning support for the bill and a tax increase that may cost taxpayers $22.5 billion if it remained in effect for 30 years.

“We realized we need more time to reach consensus on how to structure a regional measure that will protect public transit in the Bay Area well into the future,” said an announcement from Weiner, Wahab, MTC Chairman Alfredo Pedroza and Vice Chairman Nick Josefowitz.

In its current form, the bill, once approved by lawmakers, would give transportation authorities the green light to impose a sales tax, payroll tax, property tax or vehicle registration surcharge for as much as 30 years.

The bill also proposes integrating the Bay Area's 27 transportation agencies and allocating money for road and highway improvements. The state Senate approved the bill last month and it was on its solution to the Assembly when it was withdrawn.

The bill proposed a tax increase in just seven of the Bay Area's nine counties – Marin and Sonoma counties were excluded for fear of tax fatigue, as voters there must vote on a separate ballot to fund their local rail network. For the primary five years, 70 percent of revenue would return to the counties they originate from, and 90 percent of revenue thereafter.

But the best way the measure was worded would have left only 4 of the seven counties with a majority of the population answerable for spending, resulting in concerns in some counties, including Santa Clara, that they might have little say left.

This wording didn’t please many transit agencies, including the Santa Clara Valley Transportation Agency (VTA) and SamTrans in San Mateo County, each of which opposed the bill.

The VTA board voted against the measure last month, citing concerns about control of the cash and politics. Santa Clara County would have provided about 32% of the seven counties' revenue, by far the most important share, but would have had little control over how the cash was spent.

Before the Senate vote, Senator Dave Cortese, a Democrat from San Jose, said he opposed the bill because it will unfairly distribute the cash amongst tax-paying districts.

“That’s why I called it an existential threat,” he told the Senate in May.

More than two dozen organizations, including the California Taxpayers Association, the California Association of Realtors and the California Chamber of Commerce, also opposed the bill. In one letter, they said SB 1031 creates a competitive drawback for Bay Area businesses and imposes excessive sales taxes on working families and businesses.

California has the very best state sales and use tax rate within the country, and combined state and native sales tax rates in parts of the Bay Area are amongst the very best within the country, reaching nearly 11%, the group said in a letter.

“The sales and use tax is a regressive tax that has the greatest impact on low-income residents because it makes it more expensive for these taxpayers to purchase everyday items. Raising the cost of living even higher through a sales tax increase would harm Californians and disproportionately impact the state's most vulnerable residents,” the letter said.

Cindy Chavez, Santa Clara County Councilwoman and chair of the VTA board, spoke out against the measure during a board meeting in May, saying there could be concerns in each county in regards to the impact of the measure on their community.

“We all have very specific funding sources, plans and needs in our region. In order to work more cross-regionally, these concerns must be taken into account,” said Chavez.

Despite all of the objections and discussions, the bill passed the Senate on May 24 with 26 votes and the support of eight of the nine Bay Area senators.

But just per week later, Wiener and Wahab withdrew the bill, saying more time was needed to construct regional consensus. Lawmakers said the goal was to find out what sort of bill would secure sufficiently broad regional support to pass parliament next yr and pave the best way for a successful vote in 2026.

“We all have to come together as a region,” Wiener said on Tuesday.

Since the pandemic, transit ridership within the Bay Area has steadily increased but still not reached pre-pandemic levels. As state and federal aid dries up, transit agencies within the region are expected to see budget deficits totaling at the least $600 million a yr – enough to trigger massive service cuts that may significantly impact the economy, convenience and climate goals.

BART ridership in April was 42% of pre-COVID estimates. Muni's overall ridership is about 67% of pre-pandemic levels, though some lines are seeing much higher ridership, a spokesperson said.

“We have a real problem in the Bay Area that we want to address that affects Muni, BART, Caltrain and other systems that are going to have big problems in the next few years,” Wiener said Tuesday. “We wanted to pass this bill this year so that transit systems can have confidence that it will be on the ballot in 2026. We really all need to come together and recognize that we are all connected and that we give and take when it comes to transportation.”

BART, which is able to run out of cash by 2025 unless it receives latest funding, called the legislative pause “disappointing but not discouraging” given the continuing opposition and wrote in an announcement that the pause was comprehensible.

Even before the Senate passed the bill, a majority of MTC commissioners said they might withdraw their support for the measure.

“We still have to get involved and just try to find a way forward,” said Pedroza, the chairman of the MTC. “How that will work has yet to be decided.”

The MTC will hold a special meeting on June 12 to debate next steps, with additional meetings planned for this summer and fall.

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