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Dr. Martin Wachs on Transportation Finance and Direct Democracy in California

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VTA recently hosted a lecture with Dr. Martin Wachs, renowned expert researcher on transportation funding policy.

The talk, part of the MTI Visiting Scholar series, was held in partnership with San José State University (SJSU), the Mineta Transportation Institute (MTI) and the California State University Transportation Consortium (CSUTC).

The one-hour presentation delved into the increasing number of transportation finance measures on ballots across the country and over time. This November alone, 25 states will decide on more than 250 transportation ballot measures. Dr. Wachs’s talk questioned why voters are playing a larger role? Why legislators are not able to get more funding for transportation by other means? Do most voters understand the measures and the outcomes of their votes?

Transportation funding in California includes myriad methods such as gas taxes and sales taxes. Revenue from the gas tax has been in decline due to decreased fuel consumption, and some property taxes that fund transportation such as Prop 13 (1978) have limited revenues. This trend of more ballot measures and sales taxes needed to fund transportation is a response to decreased funds from the usual sources such as gas and property taxes and Federal funds that come to California. Therefore, the State and local governments are responding to transportation needs with diminishing resources. California pioneered the Local Option Sales Tax (LOST) because the other funding options are shrinking.

When We Put It Before the Voters
When financial decisions are put to the voters, the ballot measures need to be worded with a winning strategy in mind, as opposed to the best congestion policy or most effective funding strategy. For example, funding measures in Sonoma County were proposed five times with different combinations of projects it would fund. The measure with the most elements: highway, roads, transit, bike and pedestrian projects passed.  Funding such a wide variety of projects may not be the most effective way to alleviate congestion, but it was what would pass on the ballot with the super majority.

The 1995 Guardino decision requires sales tax measures that fund transportation to pass by a two-thirds majority. Some ballot measures for transportation funding are state-wide. Another downside to relying on sales taxes to fund transportation is that these taxes are regressive, meaning the burden the tax places on families as a percent of income is higher for low-income families. Gas taxes are also regressive, but Wachs reminds us that those who buy gas use the roads and benefit from the gas tax expenditures. There is a more direct connection between gas taxes being collected and how it is used than there is a connection between sales taxes and how governments spend those revenues.

The other downside to putting financial decisions to the voters is that the measures are often quite complicated, and many casting their ballots “…vote very enthusiastically misunderstanding what they’re voting for or against.” Voters are also more likely to blindly choose a “no” vote by a significant margin, also without understanding the actual outcome of what the “no” means.  The electorate may also feel remorse after the decision is final and the outcomes are made clear.

When asked what kinds of action would help fund transportation to reduce congestion, boost other modes, and fund more transit, bicycle, and pedestrian projects, Wachs’s two recommendations included:

  1. Congestion Pricing. This would go beyond toll lanes on highways to generate revenue and influence behavior.  Drivers would pay to get out of a traffic delay which can fund the investment of the lane and other projects such as mass transit. Congestion pricing entices people to double up, take a different route, choose alternate transportation like transit or change the time of day when they travel which helps manage traffic flow. Wachs also includes city streets in the topic of congestion pricing. The city center of London, for example, charges vehicles for driving on regular surface streets.
  2. Value Capture. Land values around transportation investments such as BART stations are higher than surrounding areas not served by transit. The increases in value of that land can be captured to fund the transit agency that borrowed to build the train connection, and continues to pay to operate it. Dr. Wachs suggests that the State would need to step in to make implementing value capture possible.
For more, watch the replay of the presentation.

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