BayRail general meeting

Santa Clara County transportation revenue sources

Local sources of funding for transportation in Santa Clara County include

  • Permanent 1/2-cent sales tax for transit passed in 1976. This tax has no expiration date, and provided more than enough money to cover pure operating costs for service at peak year 2000 levels (before VTA cut a bunch of service) even if no fares were collected
  • "Temporary" 1/2-cent for transit passed in November 2000. This tax was specified to begin collecting revenue six years later at the expiration of the 1996 Measure B half-cent sales tax, in April of 2006. This 2000 Measure A tax is set to expire after 30 years of revenue collection, i.e. in 2036.


History


1978:  Prop 13, a measure to amend California's state Constitution placed on the ballot by voter initiative, passes. Article XIIIA of Proposition 13 included a section stating that "Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district, may impose special taxes on such district..." Special taxes were not defined in the proposition, and that ambiguity led to litigation.

1984:  Santa Clara County approves the first local sales tax for transportation in California, soon after the California legislature began authorizing such taxes to be placed on the ballot. It is for a 1/2-cent (one-half percent) sales tax for a 10-year duration. Due to what anti-tax advocates perceive as court-ordered loopholes, these taxes require 50% of the vote to pass, rather than 66%.

1986:  Due to the efforts of anti-tax advocates, the state legislature places Prop. 62 on the ballot.  Prop 62 requires city and county general taxes to be approved by a majority (50%) vote of the electorate. It also included a requirement that local special tax measures (such as those for education or transportation) be approved by a supermajority of two-thirds of the vote (i.e. at least 66% of the vote).

California voters pass Proposition 62 with 58% of the vote. A number of lawsuits and appeals are filed to overturn Prop. 62, but the issue remains unsettled for years.

1992:  Santa Clara County attempts to pass a new sales tax to commence when the 1984 tax expires. Bonds issued against the revenues of this tax were to benefit specified projects of the Santa Clara County Local Transportation Authority. It receives 54.1 % of the vote -- less than the supermajority threshold required by Prop. 62. This forms the basis of a new lawsuit to overturn Prop. 62. The appellate court’s ‘‘Guardino decision’’ on September 28, 1995 definitively established that two-thirds majorities are required, and so the 1992 Santa Clara County measure fails.

1996: Santa Clara County, seeking to circumvent the 2/3rds requirement of Prop 62, devises a 2-measure strategy. The first measure on the ballot, Measure A, was an advisory measure that asked voters whether any funds raised from a half-cent sales tax increase should be spent on transportation projects.  The second, Measure B, was the actual 1/2-cent sales tax measure. Measure B did not specify what the money would be used for, so it required only a 50% approval to pass. On November 5, Measure A the advisory proposition, is approved by 78 percent of the vote. The 1996 Measure B half-cent sales tax on the same ballot wins 52 percent of the vote.

Proposition 218, which requires voter approval of local government taxes, passes statewide on the same day that the 1996 Santa Clara County Measures A + B pass, with 56.6% of the vote.  It extends the Prop 62 requirement to charter cities as well as "general law" cities. Prop 218 also specifies that any tax imposed for a specific purpose is a "special tax,"even if its funds are placed into the community's general fund, and makes many other changes to local government finance.  Prop 218 specified that it applied to measures on the ballot the day after the passage, so the Santa Clara County Measures A + B remained intact. Many believe Prop 218 would provide serious legal challenge to future similar A + B attempts, and so such a workaround has not been attempted since.

The 2000 Measure A tax was placed on the ballot by VTA after the county board of supervisors, leery of an VTA's speculative financial plan for the measure, declined to place a transportation measure on the November ballot. The VTA board, under the leadership of then- mayor of San Jose, Ron Gonzales, rushed to place a measure on the ballot before the county registrar's deadline. Because by statute VTA could only place a county-wide tax on the ballot to fund public transit, it became a transit-only measure instead of one that included non-transit transportation projects such as highway expansion or bicycle projects. In 2002, VTA placed a subsequent measure on the ballot to dedicate the majority of its discretionary funds (which could otherwise go to transit) to non-transit projects. That measure passed with almost 75% of the vote.

BayRail Alliance opposed the 2000 Measure A tax in Santa Clara County along with the Sierra Club and several other environmental and transit groups, even though it was an all-transit measure, because we saw that its revenue projections were overly optimistic and because we determined that it would endanger existing transit services and projects that we felt were a greater priority than extending BART to Santa Clara County. Our concerns were vindicated in 2004 by the Santa Clara County Grand Jury, and by a scathing 2007 outside audit of VTA.


References:
Crabbe, Hiatt, Poliwka, and Wachs. "Local Transportation Sales Taxes: California’s
Experiment in Transportation Finance," Public Budgeting and Finance, Fall 2005.


Mersereau, Richard. 1995-1996 Assembly Bill 3222 Analysis.

California Taxpayers' Association April 1996 Policy Brief.

California State Legislative Analyst's Office report, December 1996.

Matsubara, Kerne. Pillsbury Winthrop Shaw Pittman LLP paper on Prop 218.

Secretary of State's office web page on Prop 218 campaign contributions.