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Rural Counties Task Force Meeting: Local Option Sales Taxes and Transportation Funding Trends

The October 2005 Rural Counties Task Force Meeting, led by Martin Wachs from UC Berkeley, examined the growing trend of Local Option Sales Taxes (LOSTs) across the U.S. as a funding solution for rural transportation projects. State legislatures have shown reluctance to increase user fees, prompting a shift towards ballot measures for local funding. The meeting discussed voter behavior patterns and the efficacy of LOSTs in 23 California counties, revealing significant trends in support for transit measures over highway improvement measures. The findings underscore the importance of local authority and citizen engagement in addressing transportation needs.

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Rural Counties Task Force Meeting: Local Option Sales Taxes and Transportation Funding Trends

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  1. Rural Counties Task Force Meeting – October 2005 Martin Wachs University of California, Berkeley

  2. Quiet Revolution Under WayNationally • State legislatures reluctant to raise user fees • Increasingly reluctant to directly raise fees or taxes at all • Putting measures on ballot for voters to enact instead of taking action in legislatures

  3. Number of states granting authority to local governments…..All since 1970 • 15 States: Local motor fuel taxes • 33 States: Local vehicle license/registration fees • 33 States: Local option sales taxes • 15 States: Local income/payroll taxes • A few others….severance taxes; impact fees; real estate transfer taxes, mortgage recording taxes

  4. Local Option Sales Taxes • Most popular and fastest growing • National survey and detailed study of California (23 Counties; 85% of Population) • Read ballot measures • Interviewed proponents/opponents/administrators • Examined projects built and not built, studied budgets and costs

  5. Major Features of LOSTS • Majority or Supermajority (in CA) Vote Required • Sunset Date/ Reauthorization Required • Lists of Projects or Categories of Spending • Implementation by Local Governments

  6. Change is happening quickly • 44 Transportation Finance Ballot Measures in US in 2002 • 32 Local/Regional in Nature • 9 Statewide • 20 Dealt with sales taxes • 5 Property taxes • 1 Gasoline tax 9 Bond issues • Another 43 in 2003

  7. Voting Patterns • People vote their interests (e.g. bicyclists vote for bike paths) • People vote geographically • Democrats more supportive than Republicans

  8. Recent CA LTST Vote Results • 2000 Alameda 81.5% Passed • Santa Clara 70% Passed • Sonoma(Hwy) 58.5% Failed • Sonoma (Transit) 60.3% Failed • 2002 Fresno 54% Failed • Madera 51% Failed • Riverside 69% Passed • Merced 61% Failed • Solano 60% Failed

  9. Recent CA LTST Vote Results • 2003 San Francisco 75% Passed • 2004 Contra Costa 71% Passed • Marin 71% Passed • Sacramento 75% Passed • San Bernardino 80% Passed • San Diego 67% Passed • San Mateo 76% Passed • Sonoma 67% Passed • Santa Cruz 43% Failed • Solano 64% Failed

  10. Sonoma County Instructive • Part rural but part suburban • History of several attempts to pass measures • If you try and don’t succeed, try again and learn from your mistakes……

  11. Source: Sonoma County Registrar of voters: http://www.sonoma-county.org/regvoter/ Table XX: History of local transportation sales taxes in Sonoma County since 1990.

  12. Sonoma 2000 Measure B • In order to (1) widen and improve Highway 101 from Windsor to the Sonoma-Marin border; (2) improve or construct major Highway 101 interchanges; and (3) improve sections of Highway 116, shall a 1/2 cent sales tax be levied for a period not to exceed eight (8) years?

  13. Sonoma 2000 Measure C • In order to (1) repair and improve local streets and roads; (2) implement passenger rail service through Sonoma and Marin counties; (3) expand transit service by increasing bus frequencies and establishing broader service; (4) enhance transit service for seniors and the disabled; and (5) build and improve bicycle and pedestrian paths, shall a 1/4 cent sales tax be levied for a period not to exceed sixteen (16) years?

  14. Comparing 2000 Measures B & C • Highways Measure Resulted from Organized Campaign…..58.5% Voted in Favor and it Failed • Transit Measure Resulted from Hasty Last Minute Effort…..60.3% Voted in Favor & it Failed… • Suggests New Interpretation….Transit Measures May Be Inherently More Popular

  15. Sonoma 2004 Measure M • To maintain local streets, fix potholes, accelerate widening Highway 101, improve interchanges, restore and enhance transit, support development of passenger rail, and build safe bike/pedestrian routes, shall the Sonoma County Transportation Authority be authorized to levy a 1/4 cent retail transactions and use tax for a period not to exceed 20 years, spend money raised by the tax on the projects proposed, and issue bonds to finance the projects?

  16. Interpretations from Regression • Greater correlation between failed transit and passed combined measure than between failed highway and passed combined measure • Environmentally oriented citizens more likely to vote yes • Democrats vote yes; Republicans less so • Higher income/education communities vote yes, holding constant political affiliation • Proximity to projects a good predictor

  17. Which way do we go?

  18. Issues Raised by LOSTs • Move away from user fee philosophy • Sales Tax is broad based tax • Regressive • Consistency with Regional Transportation Plans • Project delivery • Local authority and responsibility • Flexibility versus specificity • Salience of issue of “trust”

  19. More Issues Raised by LOSTS • Christmas tree measures • Pay to play measures may be even worse (California Proposition 51) • Dissociation between projects and efficiency of management of system • Increased congestion in many areas is due to longer-intercity trips; why pay for improvements through local taxes?

  20. Broader Questions Worth Asking Is user fee concept still valid and appropriate? • User fees provide incentives to efficiency • Motor fuel taxes were second best, and may be declining • Technology to the rescue/ A new era of tolls • Attitudes changing toward tolls, if you get what you pay for

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