In mid-September, SPUR reported on our role on the Regional Transportation Revenue Measure Select Committee, a body tasked with building consensus for funding transit via a future regional ballot measure. We sounded a cautionary note about the many risks and uncertainties ahead for a potential ballot measure and for transit, including uncertainty related to the upcoming national elections. The lack of agreement emerging from the select committee process and the results of the recent election mean that this uncertainty has only deepened, leaving the Bay Area with an increasingly narrow path to find the funding its transit needs.
Pandemic relief funds have saved transit agencies like BART, Caltrain, and Muni from bankruptcy and enabled them to sustain service as riders return. But these funds are going to start running out before income from fares and other revenue sources fully recover, which could force severe service cuts. Now the outcome of the recent federal election has raised the stakes, with the looming prospect of new challenges and uncertainties for transit. It is reasonable to expect that the funding environment for transit under a Trump administration and Republican-controlled congress will worsen in several ways. First, it seems highly unlikely that further relief funding or new operating funds from the federal government will be forthcoming. Second, the region may have to contend with the withdrawal or denial of anticipated federal grants, as well as the potential for reductions to existing streams of federal transit funding. Finally, unrelated funding reductions or policy changes at the federal level may increase the overall financial burden on the state, making it more difficult for California to increase its contributions to transit at a scale that matches its ambitious policy goals. For all of these reasons, the Bay Area will need local and regional solutions to fund transit. Bay Area voters have consistently shown that they value transit and are willing to tax themselves to fund it. This election, San Francisco voters supported Proposition L to tax rideshare companies and support Muni service despite a well-funded opposition campaign. (Unfortunately, it will not go into effect due to a provision included in Proposition M.) The question before Bay Area policymakers now is how to craft a regional ballot measure that will harness this local support.
The Select Committee concluded its process on October 21, and despite hours of discussion and significant work by Metropolitan Transportation Commission (MTC) staff, operators, and advocates, committee members remained largely divided in their perspectives on how the revenue mechanism and expenditure plan for a future regional measure should be structured. There was no single point of disagreement at the committee — rather member opinion fell in many directions along a spectrum of policy provisions, including the measure’s geography (four to nine counties), lifespan (10 years or 30 years), the basis for distributing funding to transit, and the underlying revenue mechanism (sales tax, parcel tax, or payroll tax).
Members did adopt two motions that highlighted several areas of agreement — namely, that a regional measure should include at least four “core” counties (Alameda, Contra Costa, San Francisco, and San Mateo) and that it should also include a substantial amount of funding (at least 10% of revenues) to fund transit transformation programs. Committee members also agreed that any regional measure should include accountability provisions related to greater financial oversight of public transit and that any new funding for transit should be tied to operator compliance with regional network management programs to integrate and improve the rider experience. Finally, committee members agreed that enabling legislation for a funding measure should avoid the topic of transit agency consolidation or “mergers” — an idea that had been included in SB 1031 (the region’s prior attempt to pass enabling legislation) and had proven to be highly politically divisive and controversial.
With the conclusion of the select committee process, discussion of a potential regional measure moved to MTC’s Legislation Committee in November will now go to the full MTC Commission in early December. The upcoming 2025 session of the California Legislature is the final opportunity to advance the enabling legislation needed to place a new regional revenue measure on the ballot in time for the 2026 general election — the last election before a lack of funds triggers deep service cuts by BART, Muni, AC Transit, Caltrain, and other operators.
Principles for Consensus
SPUR believes that leaders in the region and the state should acknowledge and address uncertainty about transit funding head on. One way to do so is by advocating for a set of core funding principles that are the most likely to build consensus among the stakeholders and constituencies instrumental in ensuring that enabling legislation is passed and that a future ballot measure is successful. In a recent letter to the MTC Legislation Committee, we outlined the principles that we think will provide the broadest appeal to legislators and voters.
- Sustain transit: The financial crisis and potential for severe cuts to some of our region’s biggest transit systems — systems carrying more than 80% of Bay Area transit riders — is very real. Any future expenditure plan must provide a level of financial support for transit that will allow our systems to keep operating at a frequency and at a level of service that will avoid a transit death spiral.
- Reform and transform: A significant regional investment in transit must be accompanied by real accountability reforms and commitments to improve customer experience. The region needs independent oversight of transit spending at the operator and regional level and to see sustained progress by transit agencies to control costs and move toward a sustainable business model. The region also needs to see continued work by operators and MTC to ensure that transit is clean, safe, and secure and that the region’s systems are integrated to create a seamless experience for riders.
- Regional outcomes, local support: The Bay Area’s climate targets, affordability goals, and continued economic growth depend on a healthy transit system. However, the regional measure needed to achieve these outcomes will require strong leadership and support at the local level. A successful measure will work within and around existing local funding structures, providing flexibility to counties to define and pursue local priorities. It will include strong return-to-source provisions that ensure fairness in terms of where tax dollars are generated and spent, along with other controls that assure leaders and residents that local priorities are being supported.
- Multimodal expenditure plan: Building broad support among voters in a diverse region will require a multimodal expenditure plan that includes support for transit operations, capital projects to maintain roads, and a range of multi-modal investments that reflect both local and regional priorities. A compelling multimodal expenditure plan— one that is attractive to voters, supports and transforms transit, and advances our region’s climate goals — is achievable.
- Viable revenue mechanism: Sales taxes are a challenging revenue mechanism that can disproportionately burden lower-income households. Nonetheless, such taxes have traditionally been used within the region to fund transit and transportation at the local level, and absent clear polling to the contrary, a sales tax appears to be the most viable mechanism for a future regional measure. While not yet ruling out other revenue options, SPUR believes that a sales tax is the likely revenue mechanism for a future regional measure.
Public transit is essential to the economy, environment, and quality of life in the Bay Area and to the hundreds of thousands of riders who depend on the region’s buses, trains, and ferries every day. The past year has made it abundantly clear that regional transit funding is a complex and difficult problem —one that is only going to get harder. Bay Area voters have consistently shown that they value transit and are willing to tax themselves to fund it. But voters can only support transit if given the opportunity to do so. The region must quickly come up with a pragmatic approach to get transit to the ballot before it's too late.