During this pandemic, the public transportation system is facing tremendous challenges. On top of fare shortfalls caused by an up to 90 percent decline in ridership, public transit agencies are losing revenue on sales tax, the traditional funding source for public transportation which fuels many of these systems for as much as a quarter of the total funding share. As we emerge from the COVID-19 pandemic, it is imperative that we plan to bolster our public transportation system, starting with a foundation of diversified and progressive transportation funding sources.
There are also tensions embedded in these efforts. For instance, among the revenue sources being considered to fund the transportation improvements, the primary focus has been on a sales tax increase, with little attention being given to the regressive consequences for low and moderate income residents. Like other regressive taxes, sales tax inherently captures a higher percentage of income from lower income households than higher income households.Sales taxes use a single rate for all purchases and are imposed primarily on households, not business purchases. In California, households contribute over 60 percent of total sales tax revenues.
In early March, the Voices of Public Transportation* coalition conducted a poll that asked voters for their opinion on potential transportation tax measures. The poll presented voters with alternative funding options based on a recent study commissioned by Silicon Valley Community Foundation, which focused on revenue sources that could mitigate any regressive impacts on low-income households and/or businesses providing middle wage jobs through effective exemptions.
The results of the poll revealed that even in the midst of COVID-19, 87 percent of Bay Area voters supported investments to make the region’s transportation system more affordable, accessible, and connected. Following the failure of three transportation sales tax measures in Contra Costa, Sonoma and Napa at the ballot in March 2020, the poll reiterated voters’ lack of interest in a sales tax, which garnered only 60 percent approval, while voters approved of a surcharge on personal income tax of millionaires by 66 percent. A tax on incomes above $300,000 garnered nearly as much support, with 63 percent of voters saying they would approve such a tax — and that tax would generate a whopping $1.7 billion per year for transit.
Results from this poll and failed sales tax ballot measures make it clear: future efforts such as Senator Jim Beall’s (D-Campbell) Senate Bill 278 regional transportation funding measure should reject any plan or vision that imposes unfair sales taxes and subjects already struggling families to further burdens. Instead, efforts should diversify revenue sources and build a solid fiscal footing that includes progressive tax measures.
For more information: Silicon Valley Community FoundationSilicon valley community foundation
By: Vinita Goyal
June 18, 2020