A proposal for a one-eighth cent sales tax levied on transactions within the three counties served by Caltrain — San Francisco, Santa Clara and San Mateo — has transformed into a days-long proxy debate over local control and the prioritization of public transportation.
The rail system, which normally carries around 60,000 passengers up and down the Peninsula daily, is operated and managed by San Mateo County’s transit agency. The two share leadership and staff, media contacts and legal counsel, among other key operational elements.
However, nearly 80% of the proposed sales tax revenue is projected to be generated from San Francisco and Santa Clara counties, which have representatives on a joint powers board. Despite paying to fund the agency, the two exact relatively little control over its functions, say those who have called for reform.
San Francisco Supervisors Shamann Walton, Aaron Peskin and Matt Haney introduced a resolution at the Board of Supervisors meeting Tuesday that they say funds Caltrain while still providing a pathway to resolving governance concerns.
Under this plan, created in collaboration with Santa Clara county leadership, the one-eighth cent sales tax would be put to voters on the ballot in November. If passed, governance reforms would need to be advanced simultaneously “to ensure that we have the ability to directly oversee the use of funds and truly shape and set policy in an equitable manner.”
The first $40 million — out of a projected $100 million — in sales-tax generated revenues would be directed towards funding essential Caltrain operations. The remainder would be kept in an escrow account that could only be spent on Caltrain expenditures when approved by a two-thirds supermajority of the agency’s governing body.
At the same time, the Joint Powers Board would “work toward a consensus on organizational structure and accountability reform,” with the escrow account being closed and its funds transferred once an agreement was achieved.
If no compromise is reached by September 30, 2021, another $40 million in operating funds would be released from the escrow account. If the stalemate continues until December 31, 2022, the counties would turn to the state legislative delegations for help.
After its introduction in San Francisco, the legislation is likely to be voted on next week in front of a “committee of the whole,” a procedural exception whereby the legislation would skip committee and instead be discussed and voted on by the entire board within the same meeting, Haney said.
The urgency is due to an Aug. 7 deadline to get something on the November ballot.
“I believe this is a compromise our entire board can and will support. It’s our best and maybe only way forward […],” Haney said. “It’ll get us a vote, a hearing and, hopefully, if San Mateo can come on board, it’ll go in front of voters.”
At print time, Santa Clara’s Board of Supervisors had yet to discuss the resolution on its agenda, but it was expected to pass Tuesday night.
Both counties called on San Mateo County to join their resolution.
The sales tax appeared dead on arrival after last week’s San Francisco Board of Supervisors meeting, when Peskin and Walton declined to refer the measure to committee. They later blamed unequal regional influence over key Caltrain decisions as the primary reason they couldn’t support a sales tax measure without governance reform.
It was the last opportunity before the ballot deadline under normal procedural rules, and it caused a maelstrom of public debate that embroiled advocates and policymakers alike.
“It’s important to get the measure on the ballot to have an ongoing service that we can decide about the best way to govern,” local transit advocate and co-founder of Friends of Caltrain Adina Levin said of the last-minute attempt to attach governance reform to a funding scheme.
Haney took to Twitter at the time, vowing to revive the measure and introduce it on his own, if necessary. However he says he’s since realized proposing something without the support of his colleagues would only make it “more complicated and less likely to get on the ballot,” which explains his current cooperation with Peskin and Walton.
“Without this compromise, I don’t think I could have even gotten a hearing, and we would have been entirely at the end of the tracks. Now we have hope,” Haney said.
Caltrain’s current funding is fickle, with about 70% of its annual revenue comes from the farebox. The remainder comes from equal contributions from each of the three counties, but how much they provide can change on an annual basis. Ridership has dropped 95% since the start of shelter-in-place, gutting the rail’s budget and jeopardizing its continued service.
Those in favor of the original sales tax measure say it will rescue the rail network from its doomsday financial forecast and give it the long-overdue dedicated funding source it needs to achieve independence and stability. It would also relieve partner transit agencies of their annual contributions, freeing up funds in their strapped budgets.
Though many agree reforming its governance structure is a necessary undertaking, they say it must come second to ensuring Caltrain’s survival.
“Caltrain is absolutely essential to the future of the Bay Area’s future regional rail system. The sales tax is incredibly important to ensure Caltrain’s continued viability. Governance reform is also essential in recognizing Caltrain as a regional world-class rail system,” state Sen. Scott Wiener said. “Governance reform doesn’t need to be part of the measure, but accountability mechanisms are necessary to ensure reform actually happens.”
To get on November’s ballot, the measure must be approved by the boards of supervisors and transit agencies in San Mateo, Santa Clara and San Francisco counties.
The San Francisco Municipal Transportation Authority was scheduled to vote on the resolution Tuesday, but it removed the item from the agenda in deference to the Board of Supervisors. It will hold a special meeting for the vote at a date in the coming weeks.
San Mateo County’s board and transit agency already approved the measure, but that vote did not include any provisions about disentangling itself from Caltrain.
For the version put forth by Santa Clara and San Francisco counties to be approved, San Mateo County’s respective bodies would need to hold special meetings to approve the new language.
It may meet opposition, however. A number of federal, state and local legislators representing the Peninsula issued a joint statement Sunday calling for the sales tax to be placed on November’s ballot free of any governance conditions.
It was first issued in response to reporting from the San Francisco Chronicle, which broke news of a proposal on the table that would have directed all funds collected in a given county back to an account managed by its respective transit agency. Those agencies would then determine how much — if any — money to then give to Caltrain.
The legislators, who included U.S. Reps. Jackie Speier and Anna Eshoo, state Sen. Jerry Hill and Assembly members Kevin Mullin and Marc Berman, suggested that requiring changes to Caltrain’s structure along with the ballot measure violates the state law that allows for the creation of a sales tax to fund the operation of the agency in the first place. Passed in 2017, SB 797 sets parameters around any potential revenue measure, including the stipulation that “net revenues from the tax to be used by the board for operating and capital purposes of the Caltrain rail service.”
“All of us need to keep riders first and foremost in our minds. It’s really quite simple. A clean deal is what the riders and public deserve. Let the voters decide,” the statement read.
San Mateo County Supervisor Dave Pine released a statement lambasting his two partner counties for their “untenable and likely illegal conditions.”
“No lifeline ballot measure will be viable if it is encumbered with conditions such as withholding funds, supermajority requirements to expend such funds or demands for actions related to the governance and structure of Caltrain,” he wrote definitively in his statement.
And even if the measure makes it to the ballot, it will require the support of a two-thirds majority vote in November.
cgraf@sfexaminer.com
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