Crises Precipitate Change

The defeat of Measure B1 has officials and activists talking about reforming the way the state raises and spends money on transportation.

On November 6, Alameda County voters came out in overwhelming support for Measure B1, the local sales tax to fund $7.8 billion in transportation investments over the next thirty years. But in California, overwhelming isn’t enough. The state’s two-thirds approval threshold for new taxes allowed a minority of voters to block Measure B1. Now transportation officials, community advocates, and city leaders from Berkeley to Fremont are wondering where the needed funds will come from to pay for bus services, new roads, bike lanes, smart growth projects, and more. Beyond new investments, many wonder how the county will restore service cuts and keep up with increasingly deferred maintenance of existing infrastructure. It’s simultaneously a crisis, and a moment of new opportunities.

“We’re in a little bit of a crisis,” said Arthur Dao, executive director of the Alameda County Transportation Commission (ACTC). “Without passage of B1 we’re back to our current revenue sources of federal and state money, which are volatile and decreasing over time.”

Dao said there’s still enough money in the current half-cent sales tax approved by voters in 2000 to fund very basic levels of service and some long-planned investments. Local and state politicians of both major parties agree, however, that the state’s infrastructure, much of which was planned and built between 1950 and 1970, is crumbling under larger traffic and passenger loads and dwindling revenues.

The vote on B1 was so close that the ACTC is pursuing a recount. Of the 527,403 votes cast, more than 350,000 gave B1 the green light. That comes out to 66.53 percent voter approval. B1 lost by an amazingly small margin of 721 votes. “We lost by 14/100s of a percent,” Dao said, clearly disappointed.

While the state’s economy has changed and the population has grown, California now confronts serious environmental and social problems that have to be addressed through smarter transportation policies. Everything from climate change to economic inequality can be taken on with better transit services, bicycle infrastructure, and improved urban planning. But these things have to be paid for. B1 was not just another tax measure for local transportation funds, it was an effort to shift the system of transportation funding into the hands of the local community, and to secure long-term revenues necessary for reducing reliance on environmentally destructive forms of transportation and urban sprawl.

B1 wasn’t perfect, though. In fact, there were serious problems with the measure, said Lindsay Imai, associate director of the Transportation Justice Program at Urban Habitat. Imai coordinated with other community advocates to increase spending on bus services and bike, pedestrian, and transit-oriented-development projects within ACTC’s expenditure plan that would have allocated B1 dollars. Even with a very balanced spending plan, Urban Habitat ultimately took a neutral position on B1 because of its inequities. The sales tax increase would have disproportionately impacted low-income communities, failed to include protections against gentrification and displacement near transit hubs, and would have been permanent. “Don’t get me wrong, we’re not happy about the way things have turned out,” said Imai. “It is bleak,” she said about the current state of transportation funding.

Like a lot of transit advocates, Imai is hoping for broader reforms to change everything from how money is raised to whom spending benefits. “We really need to be reforming how we fund transportation, and what we fund at every level of government. At the federal level, 80 percent of gas tax goes into highways, rather than transit and pedestrian improvements,” noted Imai. “We need to flip that.”

But solving these problems is a tall order. “It’s a question of putting forward new ideas and proposals, and building public support for them,” said Imai. “The fact that Proposition 30 [the governor’s statewide tax measure] passed is a really good sign that the public is done with fees on the average person, and are asking those who can afford to pay more to pay their fair share.” For transportation, this would mean finding ways to shift away from sales taxes and rely on more progressive and environmentally beneficial revenue sources like corporate income taxes, carbon reduction credits, or transit impact fees on real estate developers.

ACTC’s Dao is also looking for ways to reform the system. “[The] talk among transportation circles right now is how to lower the vote threshold below two-thirds, like school bonds,” he said. “We think 55 percent might be the right bar to set for future sales tax initiatives for transportation.” Dao said this will be one of ACTC’s top legislative priorities in 2013. The Democratic Party’s new super majority in the state legislature gives Dao hope that such a reform effort can succeed. “Nothing is ever a slam dunk, though,” he cautioned.

Indeed, changing the two-thirds vote requirement for tax measures would itself require a constitutional amendment. The legislature would first have to approve such a change with a two-thirds vote, putting it on a statewide ballot that would then require a simple majority of voters to pass. A reform is already being proposed for parcel taxes used to fund education. Senator Mark Leno (D-San Francisco) plans to introduce a constitutional amendment that would lower the vote threshold from two-thirds to 55 percent, showing that progressive Democrats intend to make good on their new legislative power.

In the meantime, the state’s budget crisis is leading some conservatives to call for the opposite kinds of reforms — shifting public commitments even further away from things like transportation. For-profit companies, lobbyists, and a handful of government officials are promoting the privatization of highways under so-called “public-private partnerships,” or P3s. In 2009, the legislature passed SB4, authorizing Caltrans and local transportation agencies to hand over the financing, construction, operation, and maintenance of highways to private companies. Proponents of P3s say that private capital is the solution to state budget shortfalls. Ex-Oakland Mayor and current Governor Jerry Brown has let these privatization plans move forward.

“What’s different at this point is that, in years prior, the economy quickly came back around, and dollars came in from Congress, so people’s attention got redirected,” said Dale Bonner, ex-Governor Schwarzenegger’s secretary of the Business, Transportation, and Housing Agency. “The recovery is taking so long, even when it’s complete, I don’t think anyone thinks Congress is going to start sending money to take care of the state’s needs,” added Bonner, who is now a senior advisor at the Milken Institute, and a principal of Cal-Infra Advisors. “You can’t use private capital for everything, but there’s consensus that we have infrastructure needs, and this is a way to take care of them.”

California’s first privatized roadway is already under construction across the bay in San Francisco. Called Presidio Parkway, the elevated and tunnel-tucked approach to the Golden Gate Bridge has been handed over to a French investment bank and a German construction company through a lucrative thirty-year concession worth at least $1.4 billion. A recent Legislative Analyst’s Office report stated, however, that the Presidio Parkway’s privatization has cost California taxpayers $140 million more than if the project had been procured in the traditional manner.

Alameda County transportation officials say they don’t have plans to privatize roadways. The only attempt to authorize a P3 transportation project in the region was the Mid-State Tollway, a proposed forty-mile, $600-million toll road that would have run from Antioch through Livermore to Sunol. But strong local opposition to the project’s negative environmental impacts killed the tollway in 2001.


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