Bay Area transportation funding bill paused

Bay Area lawmakers have hit the brakes on state legislation that would have asked voters to approve a $750 million yearly public transit bailout for up to three decades.

The bill would have authorized regional transportation regulators to put the funding measure on the 2026 ballot in an effort to help stabilize public transportation, avoid operational cuts and improve transit service.

Democratic Sens. Scott Wiener of San Francisco and Aisha Wahab of Hayward, along with the bill’s sponsor, the Metropolitan Transportation Commission (MTC) — the agency that makes transportation decisions for the Bay Area — paused efforts on SB 1031 last week, saying they will introduce new legislation next year.

First, they need to shore up sagging support for the bill and a surcharge that would cost taxpayers 22.5 billion if it ran for a full 30 years.

“It has become clear to us that we need more time to build a consensus on how to structure a regional measure that protects Bay Area transit service into the future,’’ according to a statement from Weiner, Wahab, MTC Chairperson Alfredo Pedroza and Vice Chairperson Nick Josefowitz.

In its current version, the bill, once approved by the legislature, would give the transportation agency a green light to seek a sales tax, payroll tax, property tax or vehicle registration surcharge lasting up to 30 years.

The bill also proposes integrating the Bay Area’s 27 transportation agencies and earmarking money for street and highway improvements. It was approved by the state Senate last month and was headed to the Assembly when it was withdrawn.

The bill sought the tax increase in only seven of the nine Bay Area counties — Marin and Sonoma counties were not included out of a fear of tax fatigue as voters there face a separate ballot measure to fund their local rail system. Seventy percent of revenue would have been slated for return to the counties it came from for the first five years, and 90% of revenue after that.

But with the way the measure was worded, just four of seven counties with a majority of the population would have controlled the spending, leaving some counties, including Santa Clara, worried they could be left with little say.

That wording did not sit well with many transit agencies, including the Santa Clara Valley Transportation Agency (VTA) and SamTrans in San Mateo County, which both opposed to bill.

The VTA board of directors voted last month to oppose the measure amid concerns about control of money and policy making decisions. Santa Clara County would have provided roughly 32% of the revenue for the seven counties, by far the largest share, but would have had little control over how money would be spent.

Before the Senate vote, Sen. Dave Cortese, a Democrat from Campbell, said he opposed the bill because money would have been distributed unfairly among counties being taxed.

“That’s why I called it an existential threat,’’ he said from the Senate floor 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, saying in a letter that SB 1031 creates a competitive disadvantage for Bay Area businesses and excessive sales taxes for working families and businesses.

California has the highest state-level sales and use tax rate in the country, and combined state and local sales tax rates in parts of the Bay Area are among the highest in the nation, reaching nearly 11%, according to a letter from the group.

“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 necessities. Adding even more to the cost of living with a sales tax increase would harm Californians and will disproportionately impact the state’s most vulnerable residents,’’ the letter said.

Santa Clara County Supervisor Cindy Chavez, the chairperson of the VTA board, spoke against the measure during a board meeting in May, saying every jurisdiction will have concerns about the way the measure would impact their communities.

“All of us have very prescribed funding sources and plans and needs in our region, and so in order to be able to work in a more cross-regional way, those concerns would need to be considered,” Chavez said.

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

But just a week later, Wiener and Wahab withdrew the bill, saying more time was needed to build a regional consensus. The lawmakers said the goal is to determine what kind of legislation will lock down broad enough regional support to pass the legislature next year and pave the way for a successful ballot measure in 2026.

“We all need to come together as a region,’’ Wiener said Tuesday.

Since the pandemic, public transportation ridership levels in the Bay Area have grown steadily but still fail to reach pre-pandemic levels. With state and federal aid drying up, transportation agencies in the region are expected to see budget shortfalls totaling at least $600 million each year, enough to trigger massive service cuts that would significantly disrupt the economy, convenience and climate goals.

BART ridership in April was 42% of pre-COVID estimates. Overall Muni ridership is at roughly 67% of pre-pandemic levels, although some lines are much higher, a spokesperson said.

“We have a real problem that we are trying to address in the Bay Area that affects Muni, BART, Caltrain and other systems that are going to have a big problem in the next couple of years,” Wiener said Tuesday. “We wanted this legislation this year so that transportation systems had confidence that it would go to the ballot in 2026. We really need to all come together and acknowledge that we are all interconnected and we give and get when it comes to transportation.”

BART, which will run out of money by 2025 unless it secures new funding, called the legislative pause amid continued opposition “disappointing but not discouraging,’’ saying in a statement that the pause is understandable.