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HomeMy WebLinkAboutAgenda Report - June 15, 1988 (46)C 0 6 N C I L C 0 M M U N I C A 1 0 N TO: THE CITY COUNCIL FROM: THE CITY MANAGER'S OFFICE COUNCIL MEEETNG DATE JUNE i5, 1988 SUBJECT: REVIEW OF THE PROPOSED SAN JOAQUIN COUNTY TRAFSPORTATION SALES TAX PREPARED BY: City Manager RECOMMENDED ACTION: That the City Council review the Council of Governments staff issue paper addressing a transportation sales tax in San Joaquin County and transmit to the COG Board of Directors comments as deemed appropriate. BACKGROUND (INFORMATION: A copy of the COG staff issue paper addressing a transportation sales tax in San Joaquin County was distributed to the City Council last week. The COG .Board wouId_1ike the City's comments on this issue prior to the Board's meeting on June 28, 1988, at which time this matter`.w.i11 be:: considered. A copy of .this paper. is attached (Exhibit Aj > : have invited a `representative of: the _'COG `staff :.to . be present at Wednesday.'night's,meeting to present this item and answer .any 4860 EAST HAZELTON AVENUE STOCKTON, CALIFORNIA 95205 TELEPHONE 1209) 468.3943 •_ A1 4rl �, .88 Off; - SAN 1.OAQUIN COUNTY COUNCIL OF GOVERNMENTS e May 9, 1988 Mr. Thomas Peterson City Manager 221 West Pine Street Lodi, CA 95240 Dear Mr. Peterson: Attached is a preliminary draft of a COG staff issue paper regarding a transportation sales tax in San Joaquin County. As staff we are particularly interested in informing decision makers of this financing option that is being utilized by a number of counties and will potentially be enacted by many more in this year; A copy of this preliminary draft is being sent to every City Manager and the County Administrator in the hope of generating comments on what additional material needs to be included in this paper. Please share it with your staffand policy makers as you see fit. I am available to discuss the issue with you and your staffor with your elected officials if you so choose. The COG Board will likely review the draft issue paper on June 28, so I would appreciate your comments by June 10. It is important to note that the COG Board has taken no position and has had no substan- tive discussions on a transportation sales tax. The issue paper is not meant to advocate or oppose any sales tax measure. This gaper is an explanation of the Transportation Sales Tax, its origins, how it has worked elsewhere, options, and prospects for implementation in San Jcaquin County. The paper is for discussion purposes only. THIS IS A PRELIMI- NARY DRAFT. The conclusions are those of staff, and have not been endorsed by the SanJoaquin County Council of Governments' Board of Directors. It is meant to assist policy makers in decidingwhether such a measure is appropriate to San Joaquin County, and educating them as to how such a process works. In 1988 the issue of whether to ask the voters to approve a sales tax for transportation purposes is a complex one. Besides the understandable reticence to ask voters to tax themselves, there are two transportation enhancing measures on the state's June ballot, there could be as many as thirteen transportation safestax measures this year in separate counties, and there is legislation inprogress to allow San Joaquin County to create a Jail Authority to raise a sales tax for adult detention facilities and crive prevention programs. All these, to some extent, have an impact on the decision of whether to try a transportation sales tax vote in San Joaquin County. A transportation sales tax is a possibility though, and depending upon what happens with the issues described above may be essential if San Joaquin County's local governments expects,to participate in setti ng the future transporta- tion agenda for this region. a. j / G Ma�Ofi o�t �YL�dMJr The procedures for taking tKe'-transportation sales tax to the voters is not a complex one. It requires the creation or the,/designation of = authority to epare a plan. The plan would then be approved by Pwe-t fds-of the cities representing population. The Board of Supervisors would then have to place it on the ballot. The sales tax would be either a 1/2 or 1 ereent increase, but could not bring the total. sales tax in a county to over 7%. A number of counties have gone through this process in the past fouryears with mixed results. Fresno, Santa Clara, Alameda, and San Diego Counties have all passed such measures. Tuolumne, San Bernardino and Contra,C osta Counties have all voted down a transporta- tion sales tax. • COUNTY OF SAN JOAQUIN • CITIES OF STOCKTON, LODE, TRACY, MANTECA, ESCALON, RIPON! • `i.�J x+'^'.-- v�xv-atmeerz?wv.�s'e .; s� �:. �..k,....._......-- .sv-. u.+m�.u�.wa+m++:»^++ - i.srm.:, x�ra..woo.-,.... .xst.nwwv-.,- e.n� . ah.r.....t% •.-`.-sen.- •„- ...... _ , _ ,e N1r. Thomas Peterson Page Two May 9, 1988 Is the need great enough in SanJoaquin County, and are there other options? From an objective standpoint it appears that the answer to both questions Is yes. For local public works departments it is safe to say that annually they are forced to defer 50% or more of their local road and street needs to future years. The County of San Joaquin very conserva- tively estimates that $6 -million in deferrals occur annually. Future highway improvements in San Joaquin County over the next 20 years will require over S 100 million more than the revenue available. Unfortunately that is a conservative estimate based upon project cost estimates that are outdated or nonexistent. Routes 205,120, 99, 5, 12, 4, 26, and 88 all have present and projected needs that dwarf the resources available. And finally transit is going to be asked to meet intra- and inter -count demand which will outstrip the Stockton Metropolitan Transit District's ability to finance. There are options to a transportation sales tax. Orange County is working hard at exploring public/private partnership arrangements. This is another way of describing means of having developers pay for transportation improvements. Also Orange County sponsored controv- ersial legislation that allows for several toll roads in Orange County. What appears to be happening though is rather than these being alternatives they work as a package. Orange County is exploring once again the sales tax option. (In 1982 a 1/2010 increase failed passage getting only 30% of the vote.) This paper concludes several things. First of all, a transportation sales tax is probably not a likely event in SanJoaquin County in 1988. Propositions 72 and 74 are going to effect transportation funding if they pass, or fail. Policy makers will need to h o w what those effects are, Right now they can only be guessed at. A transportation sales tax requires agreement between the local jurisdictions. While it does not require unanimity, every opportunity should be available for achieving that goal. In other counties the effort has always taken longer than 6 months. The experience of counties going after a transportation sales tax this year should provide a better perspective on what San Joaquin County's opportunities are. Also of importance is working in coordination with the County ofSan Joaquin which has a sales tax interest beyond transportation. What is the likelihood of ajail and a transportation sales tax passing on the same ballot? Should they go on separate ballots, and if so which goes first? Is there a compromise situation Iike that worked out in Stanislaus County? A Mr. Thomas Peterson Page Three May 9,1988 had sales tax measures passing in Los Angeles and Santa Clara counties, but failing miserably in Orange County. More recent efforts have seen success in Alameda, Fresno, and San Diego Counties, but failures in Contra Costa, Tuolumne, and San Bernardino. As nwW as 13 counties may have transportation sales tax measures on the 1988ballot. This - should provide abetter perspective as to the long term viability of using the sales tax as a transportation financing tool, Very truly yours, ******* PRELIMINARY DRAFT ******* �Y�2 ,88 C`ty 4anazers Of . lice THE TRANSPORTATION SALES TAX AND SAN JOAQUIN COUNTY A. INTRODUCTION This paper is an explanation of the transportation sales tax, its origins, how it has worked elsewhere, complimentary measures, and its prospects for implementation in San Joaquin County. The paper is for discussion purposes only. The conclusions are those of staff, and have not been endorsed by the San Joaquin County Council of Governments' Board. of Directors. This is an attempt to explain a growing phenomena in public financing and to provide policy makers with guidance in approaching the subject. In 1988 the issue of whether to ask the voters to approve a sales tax for transportation purposes is a complex one. Besides the understandable reticence to ask voters to tax themselves, there are two transportation enhancing measures on the state's June ballot, there could be as many as thirteen transportation sales tax measures this year in separate counties, and there is legis- lation in progress to allow San Joaquin county to create a Jail Authority to raise a sales tax for adult detention facilities and crime prevention programs. The procedures for taking the transportation sales tax to the voters is not a complex one. It requires the creation or the designation of an authority to prepare a plan. The plan would then be approved by a majority of the cities representing 50% of the population. The Board of Supervisors would then have to place it on the ballot. The sales tax would be either a 1/2 or 1 percent increase, but could not bring the total sales tax in a county to over 70. A number of counties have gone through this process in the past four years with mixed results. Fresno, Santa Clara, Alaneda, and San Diego Counties have all passed such measures. Tuolumne, San Bernardino and Contra Costa Counties have all voted down a transportation sales tax. There are options to a transportation sales tax, and they are discussed later on in the paper. However, it appears that in operation these are not so much alternatives as complementary measures that may or may not be implemented at the same time. This paper concludes several things. A transportation sales tax is probably not a likely event in San Joaquin County in 1988. Propositions 72 and 74 are going to effect transportation funding if they pass, or fail. Policy makers will need to know what those effects are. Right now they can only be guessed at. A transportation sales tax requires agreement between the local jurisdictions. While it does not require unanimity, every oppor- tunity should be available for achieving that goal. In other counties the effort has always taken longer than 6 months. The experience of counties going after a transportation sales tax this year should provide a better perspective on what San Joaquin County's opportunities are. Also of importance is working in coordination with the County of San Joaquin which has a sales tax interest beyond transportation. What is the likelihood of a jail and a transportation sales tax passing on the same ballot? Should they go on separate ballots, and if so which goes first? Is there a compromise situation like that worked out in Stanislaus County? As to whether voters will approve such a measure in San Joaquin County is not the purpose of this paper. As many as 13 counties may have transportation sales tax measures on the 1988 ballot. This should provide a better perspective as to the long term viability of using the sales tax as a transportation financing tool. B. WHAT ARE THE ORIGINS OF THE TRANSPORTATION SALES TAX? Historically, the gasoline tax has been the major source of revenue for road and street and highway improvements. California has had a gasoline tax (cents per gallon purchased) since 1923. It began at 2 cents per gallon and in 1988 is at 9 cents per gallon. Over time though, the buying power of the gasoline tax .has greatly diminished. Table 1 shows the California.. gasoline tax adjusted to the CPI. (The CPI is for the San Francisco Bay Area.) TABLE 1 History of the California Gasoline Tax and CPI Adjustment Source: Robert Allen, BART Director, The state of California has raised the gasoline tax only twice in the past 30 years. It went from 6 to 7 cents in 1964, and from .7. to 9 cents in 1983. It is unlikely that a gas tax will be imPle- nented in the near future. In 1981, the Legislature balked at a 5 cent gas tax increase, instead voting for a two cent increase and giving counties the option to vote for their'' own. gas. tax increase. This local option gas tax required counties to submit the, proposition to; the voters for a two thirds, approval Six =_ "counties tried it with none getting greater than 45% approval Interestingly enough, at the same time Reno,,Nevada passeda 1/2% ation gettin sales tax increase for transport g 70%`approval ; Tax/ CPI Cents/Gal. Year Gallon 1986 Adjusted to 1986 1923 2 .131 15.3 1930 3 - .130 23.1 1940 3 .113 26.5 1950 4.5 .197 22.8 - 1960 6 .256 23.4 1970 7 .337 20.8 1980 7 .721 9.7 1986 9 1.000 9.0 Source: Robert Allen, BART Director, The state of California has raised the gasoline tax only twice in the past 30 years. It went from 6 to 7 cents in 1964, and from .7. to 9 cents in 1983. It is unlikely that a gas tax will be imPle- nented in the near future. In 1981, the Legislature balked at a 5 cent gas tax increase, instead voting for a two cent increase and giving counties the option to vote for their'' own. gas. tax increase. This local option gas tax required counties to submit the, proposition to; the voters for a two thirds, approval Six =_ "counties tried it with none getting greater than 45% approval Interestingly enough, at the same time Reno,,Nevada passeda 1/2% ation gettin sales tax increase for transport g 70%`approval ; Clara County in 1984, the Governor, the Legislature and the California Transportation Commission have all taken strong posi- tions urging counties to utilize this revenue source. SB 142 was passed in 1987 and is a measure establishing set procedures for counties to implement a transportation sales tax. C. IMPLEMENTING A TRAaxISPORTATIOtT SALES TAX VOTE There are two ways to present to the electorate a transportation sales tax vote. The first is the more utilized method, the SB 142 approach. As many as 12 counties nay try it this year. Eight counties have already attempted this approach with half of them succeeding. The second approach utilizes AB 999. It is restricted to counties of under 350,000, and therefore does not apply to San Joaquin County, but is the method being used by Stanislaus county. I. SB 142: Local Transportation Authority A-nd Improvement Act In 1987 the State Legislature passed and the Governdr.signed=into law, SB 142 by Senator Stirling. SB 142 is a generic enabling legislation that allows counties to levy their own sales tax for transportation purposes. Previous to this bill, several counties had written their own enabling legislation. These had passed the Legislature, but applied only to their own individual counties. In 1987, the Legislature passed a number of individual county sales tax bills, but were vetoed by the Governor. The Governor preferred the use of the guidelines developed in SB 142. The provisions of SB 142 are not complex. The bill allows the following: Step 3 The bill encourages a pay as you go approach, but does not prohibit the use of bonds. The LTA is authorized to issue bonds for financing transportation purposes with the expenses paid for from the proceeds of the tax. This is how the steps are actually implemented. sten 1 The initial choice to be made in the SB 142 process is whether to create a neer Local Transportation Authority or to designate an existing Regional Transportation Planning Authority. In the three counties that adopted sales tax increases prior to 1987, each created a new agency to handle the money. For the two sales tax measures in 1987, San Bernardino and San Diego Counties, the existing RTPAs have been designated as the Local Transportation Authority (LTA), The San Diego Association of Governments (SanDAG) will now be responsible for implementing the expenditure plan. The San Bernardino Association of Governments will have to try to put another sales tax measure on the ballot to have any function as an LTA. But both agencies will continue to exercise their regional transportation planning responsibilities, and will maintain their RTPA designation. The choice appears to be based upon whether the RTPA is a multi -county agency, and/or what the existing political situation is in each county. r. Fresno County, there was widespread support for the expendi- ture plan, but no political body took a formal portion sup- porting the ballot measure. Stew It is up to the Authority to issue bonds and take responsi- bility for the payment. If a pay as you go approacn is taken, the LTA is responsible for disbursing the proceeds to the appropriate agencies. AB 999 This approach is available only to counties of less than 350,000 population (January 1 1987). It was meant as a way to help small financially stricken counties to impose a tax increase with the approval of majority of the voters. The key here is that only the County Board of Supervisors is allowed to levy the sales tax increase, There are no provisions for allowing the approval of incorporated communities. There is no expenditure plan. Based on provisions in the State Constitution, (Proposition 62) the purposes for which the revenue is being raised maV, meci- fied in the measure, If a purpose is specified, then z be omes a special purpose tax and would require a two thirds voter approval, As it is, Stanislaus County will collect the sales tax increase and per agreement will send 40% to the cities for trans- portation. None of tU, included in the ballot language. 3. Potential San J n Co. Sales Tax Revenue In San Joaquin County, an additional 1/2% sales tax would raise an estimated $8.4 million in fiscal year 1988-89. Over 10 years it would raise $110 million, The life of a sales tax increase is optional as is the distribution of the funds. TABLE'S TABLE 3 Effect of Half Percent Tax Increase On Taxpayers Income Family Size Sales Tax Increase $42,000 2 $ 47 $27,000 4 $ 40 $55,000 5 $ 65 $18,000 1 $ 24 Derived from 1986 Federal Income Tax Optional State Sales Tax Tables adjusting for CPI. TABLE 5 Local Sales Tax Purposes Where Purpose Los Angeles Transit Orange Highways and Roads Santa Clara Highways and Transit Contra Costa Highways, Roads, Transit Fresnc Highways, Local Transportation Alameda Highways, Roads, Transit Tuolumne Highways, Local Transportation San Diego Highways, Roads, Transit San Bernardino Highways, Local Transportation The ballot measures differed in each case. Fur instance, the life of the sales tax is 10 years in Santa Clara County, 15 years in Alameda County, and 20 years in Fresno County. Some are very general in their description of what they are funding such as the Fresno measure, but others are very specific like the Alameda measure. Not all have met with great political support, though generally local governments have been positive. An interesting example of this was Alameda County where a brochure was distrib- uted istrib- uted showing all the seals of the cities supporting the measure on one side of the page and the lone city opposing it on the other. That city was Berkeley. The brochure was not distributed in Berkeley. It is not true .either that the. most expensive campaigns are the most successful Contra, Costa spent far more than.did Alameda (which refused any development money). Fresno's campaign was minuscule. In Fresno they took the approach that the less publicity the better- The result is the highest support TABLE 6 f988 Potential Transportation Sales Tax Counties Jure 198 El Dorado Sacramento November 1988 Contra Costa Marin San Bernardino Tulare Stanislaus San Mateo San Benito Xern Riverside Santa Barbara Ventura ExnlorinQ A Transportation Sales Tax Yolo Imperial Monterey Orange Huaboldt Nevada Placer Tuolumne An "Example of development fees is the direct assessment of fees based upon a per unit, or trips enerated standard. This is used by �;he City of Manteca in It� interchange fee, and by the City of Stockton in its traffic signal assessment. Benefit assessment districts are another method, but create some diffi— difficulties when dealingwith trans ortation. The City of Tracy has created a Mello --Roos Community Facilities District to deaf with the financing of improvements in various newly devel— opeZ :areas of the City. In transportation this creates some difli:7ulties though in assessing who actually benefits and to what extent from a new road ox an interchange. There are of course alternatives to a transportation sales tax. One alternative is the local option of a gas tax. However, the failure of this measure to pass in six previous attempts, and the requirement for two thirds voter approval make this an unlikely source of success. Another possibility would be a state gas tax increase. once again though the existence of the Gann ceiling, the Governor's continued opposition, and the legis.lature's need to secure a 2/3 majority vote mean this is unlikely to occur in the near future. up to 5 cents, and since 1984, the Legislature has passed legis- lation authorizing nine counties to vote on a local sales tax increase of up to 1 percent. SB 140 was just signed into law. Besides the $1 billion bond, the legislation encourages the adoption of local financing methods, and establishes a $300 million local/state partnership program to offer an incentive. Existing sales tax counties are already making their presence felt on the state highway program. In the 1988-89 budget there are Caltrans engineering positions allocated to each potential sales tax county. Should the tax measure pass, Caltrans will fill the positions allocated to that individual county. if it fails, Caltrans will not fill those engineering positions. At the California Transportation Commission (CTC) there is a wit- ness to reward self help counties by allowing them to leverage state highway dollars. The Commission has been hindered in doing so though because of the $1.6 billion shortfall in the existing State Transportation Improvement Program. They are unable to reward self help counties without taking away from the other 54 counties, With additional counties falling into the self help category, there may very well be more pressure on the CTC to leverage state highway dollars with local transportation sales tax dollars. The trend in state policy is clear. Certainly the decision makers at the state level have made it clear that local govern- ment agencies are going to have to find their own source of revenue for their re ion's high priority transportation projects. 2. Propositio.-c nd 74 on the June Ballot Proposition 7; is the Gann sponsored initiative on t h" hA 11 M* f-,, 4-1, method for determining the state's Gann ceiling on expenditures. The measure would also transfer a portion of the state general fund sales tax revenue to transpor- tation purposes, In order to avoid cutting other state programs, the spending ceiling would be raised by a margin greater than the transfer of sales tax revenue. This however, only works ifthere is a state surplus greater than the sales tax revenue transferre,z= to transportation. If there is no surplus, as appears 1}k@Jy 2987-88,, alien the Legislature w i 1 1 have to make cuts in existing programs. The' sales: tax revenue dedicated to focal g is protected by the Proposition, but -there is concern that state: funding of local programs will be the first cut. Proposition :'74 .e Governor's $1 billion bond proposal It w^*i1Ae4AA4.-at-o':� 700 million to highways, and probably: an- adds-,;; tional $300 million to a new local/state partnership program;_ The bonds would be paid back from the state's general fund, Should both these measures pass there would be added'fu;lding to transportation. -.Proposition 74 would provide $70.0 million- to the state's highway fund. While,a large amount of money, .it doesn't .even, cul theexistingstate. shortfall in half... The:five -21- F n,: -^1 year highway progr;.,1,1, the State Transportation Improvement Pro- gram (STIP), is $1. billion overprogrammed, and may be overpro- granmed by as much is $2.9 billion based upon new programming guidelines created i., SB 140. It w i 11 take more than the bond measure to make a dif arerce in the state's highway program. Proposition 72 would transfer money annually to transportation. It is likely to be a better source of revenue to transportation than a bond measure. Estimates vary, but it would raise $150 million in the first year, $400 million th-e second, $600 million the third, $710 million the fourth, and in the raid $700 million the fifth. It would annually escalate from there depending upon the amount of sales tax revenue raised from gasoline sales. There is no direction in the Proposition as to whether the reve- _.:fie_ should go to state highways or to local governments SB 140. though states that the legislative intent is for any new revenue to go to state highways, and AB 3745 (Chandler) which would have split Proposition 72 revenue 50/50 between the state and locals was defeated in Committee. Assemblyman Frizzle has stated his intention to amend AB 2589 to have Prop. 72 money go entirely to locals. At this writing it has not been amended. Whatever happens, the Legislature must act to allocate the monies. The outcome of these two propositions could have an impact on sales tax measures throughout the state. If approved, will voters believe they have solved the transportation problem? If neither is approved, is that an indication of voter apposition to transportation financing measures? Will the results of these two propositions teamed with the Californians for Quality Gov- ernment initiative (Proposition 71) make a gasoline tax increase a more attractive option for the state legislature? The answer. to these questions is not likely to be fully known until Novem ber when the last of the 1988 county sales tax initiatives and voted on. TABLE 7 Proposition 74 Revenue This distribution is based on the present gasoline tax distribu- tion. It is possible that the monies could be distributed by other methods. 3. San Joaquin County Jail Facilities Sales Tax Possibilities Under the sponsorship of the San Joaquin County Board of Supervi- sors, Senator Garamendi has introduced SB 2745, the San Joaquin County Regional Justice Facility Financing Act. The bill would create the San Joaquin County Regional Justice Facility Financing Agency. This Agency would have the authority to levy a 1/2% sales tax increase with the approval of a majority of the elec- torate. The proceeds would go to the Authority and can be used'. for the construction of adult detention facilities, the retire ment of existing bonds on adult detention facilities, and the operations of facilities constructed under the Authority. Also, under certain provisions the Authority could allocate monies to the county for "prevention programs". Proposition 72 Revenue Scenarios Based on $700 Million A Year (in thousands of dollars) 50% State Jurisdiction 100% Local 50% Local County of San Joaquin $ 6,328.5 $ 3,164.2 city of Stockton $ 3,100.4 $ 1,550.2 city of Lodi $ 753.4 $ 376.7 City of Manteca $ 620.0 $ 310.0 City of Tracy $ 443.8 $ 222.9 City of Ripon $ 111.4 $ 55.7 City of Escalon $ 69.0 $ 34.5 This distribution is based on the present gasoline tax distribu- tion. It is possible that the monies could be distributed by other methods. 3. San Joaquin County Jail Facilities Sales Tax Possibilities Under the sponsorship of the San Joaquin County Board of Supervi- sors, Senator Garamendi has introduced SB 2745, the San Joaquin County Regional Justice Facility Financing Act. The bill would create the San Joaquin County Regional Justice Facility Financing Agency. This Agency would have the authority to levy a 1/2% sales tax increase with the approval of a majority of the elec- torate. The proceeds would go to the Authority and can be used'. for the construction of adult detention facilities, the retire ment of existing bonds on adult detention facilities, and the operations of facilities constructed under the Authority. Also, under certain provisions the Authority could allocate monies to the county for "prevention programs". both tax measures were to appear on the same ballot both would lose 5 to 10% of their support. Without the transportation sales tax, the jail sales tax received 51%approval, but required a 2/3 majority at that time and failed. The transportation sales tax went in November of 1987 and received 54% approval. Needing only a majority the measure passed. 01 the June 7, 1988 ballot, the jail sales tax will be going again. Under provisions similar to SB 2745, this measure will only require a simple majority vote. This w i 1 1 demonstrate whether voters are willing .to approve two 1/2% sales tax increases within seven months of one another. In Stanislaus County, a 1/2% sales tax increase will be on the November ballot. Ostensibly, 60% of the measure will go to the County for funding jail facilities, and the remaining 40% w i l l go to cities for transportation purposes. This is a compromise worked out between the cities and the county after both surfaced their own sales tax proposals. This sales tax measure is being done under the provisions of AB 999 described earlier in this paper. This means that the ballot' measure can not specify the purposes of new tax revenue. If it did it would require a 2/3 vote, rather than a simple majority. Intuitively, it would seem that the sales tax measure (jail or transportation) that reaches the ballot first has the best chance of passing. The San Diego experience should give us some idea as to whether this is terminal for the second measure. It is worth- while to note the advise given to the SanDAG Board of Directors by D. J. Smith and Associates in the Memorandum of July 17, 1986, "In all counties which have successfully pursued a sales tax for transportation, there has been to one degree or another a well organized public/private sector support group." "We are optimis- tic that there exists the seeds of such an effort, but that it needs t o be nurtured and mature before a measure is put on the ballot." "If work can commence immediately on development of a strong, committed public/private sector support group and the refinements to the expenditure are completed as suggested, we believe that San Diego County voters would vote to increase their sales tax by one half percent for specific transportation improvements in November of 1987." What this indicates to COG staff is that far more important than getting on the ballot first is the development of a private/public coalition that would.. educate the citizenry on present transportation finance, and. build the arguments that would successfully carry a ransporta tion sales tax measure. It is also the opinion of COG staff that Placing two sales tax measures on the same ballot w i 11 result in Besides the loss of the 5 to 10%cited by D. J. Smith Associate$ such a situation is likely to make those supporters choose one qq the other. This would dramatically cut into the support of bofh proposals. It is obvious that cooperation between supporters F t G. CONCLUSIONS The following are the conclusions of COG staff. 1. 1988 is not the opportune time for a transportation sales tax measure for the following reasons. a. Propositions 72 and 74 are on the June Ballot. b. Lack of a major educational campaign on transportation needs in San Joaquin County. c. Lack of a Public/Private Partnership to advocate such a measure. d. Not enough time to gather needed political concensus. 2. Successful passage of transportation sales taxes in other counties can make it more difficult for San Joaquin County to compete for discretionary state funds. 3. If a transportation sales tax is to go on the ballot at some time, it must be part of a package of measures that include development fees, and alternative transporation measures. A sales tax increase will have difficulty being approved if it is viewed as a substitute for these actions. -15- TO: 91ROM: DATE : MEMORANDUM Honorable Mayor and Members of the City Council City Manager June 6, 1988 San Joaquin County Transportation Sales Tax ALICE REWNEr TAP: br 1E60 EAST HAZELTON AVENUE STOCKTON. CAIRURN U 95205 TELFF ONE (209) 468-3913 Vie ,88 Cary M e`�Ser SAN JOAQUIN COUNTY COUNCIL OF GOVERNMENTS May 9,1988 Mr. Thomas Peterson City Manager 221 West Pine Street Lodi, CA 95240 Lear Mr. Peterson: office Attached is a preliminary draft of a COG staff issue paper regarding a transportation sales tax in San Joaquin County. As staff we are particularly interested in informing decision makers of this financing option that is being utilized by a number of counties and will potentially be enacted by many more in this year. A copy of this preliminary draft is being sent to every City Manager and the County Administrator in the hope of generating comments on what additional material needs to be included in this paper. Please share it with your staff and policy makers as you see fit. I am available to discuss the issue with you and your staff or with your elected officials if you so choose. The COG Board will likely review the draft issue paper on June 28, so I would appreciate your comments by June 10. It is important to note that the COG Board has taken no position and has had no substan- tive discussions on a transportation sales tax. The issue paper is not meant to advocate or oppose any sales tax measure. This paper is an explanation of the Transportation Sales Tax, its orrgms, how it has worked elsewhere, options, and prospects for implementation in San Joaquin County. The paper is for discussion purposes only. THIS IS A PRELIMI- NARY DRAFT. The conclusions are those of staff, and have not been endorsed by the SanJoaquin County Council of Governments' Board of Directors. It is meant to assist policy makers in deciding whether such a measure is appropriate to San Joaquin County' and educating them as to how such a process works. In 1988 the issue of whether to ask the voters to approve a sales tax for transportation purposes is a complex one. Besides the understandable reticence to ask voters to tax themselves, there are two transportation enhancing measures on the state's June ballot, there could be as many as thirteen transportation sales tax measures this year in separate counties, and there is legislation in progress to allow San Joaquin County to create a Jail Authonty to raise a sales tax for adult detention facilities and crive prevention programs. All these, to some extent, have an impact on the decision of whether to try a transportation sales tax vote in San Joaquin County. A transportation sales tax is a possibility though, and depending upon what happens with the issues described above may be essential if San Joaquin County's local governments expects to participate in setting the future transporta- tion agenda for this region. c aro vi^liPr G M4;Ori o� t►tC tri ot(� The procedures for takingt e transportation sales tax to the voters is not a complex one. It requires the creation or th designation of an authority to g epare a plan. The plan would " then be approved by f the cities representing population. The Board of Supervisors would then have to place it on the ballot. The sales tax would be either a 1/2 or 1 percent increase, but could not bring the total sales tax in a county to over 7%. A number of counties have gone through this process in the past four years with mixed results. Fresno, Santa Clara, Alameda, and San Diego Counties have all passed such measures. Tuolumne, San Bernardino and Contra Costa Counties have all voted down a transporta- tion sales tax. •-COUNTY OF SAN JOAQUIN • CITIES OF, STOCKTON, LODI, TRACY, MANTECA, ESCALON, RIPON..• " Mr. Thomas Peterson Page Two Niay 9, 1988 Is the need great enough in San Joaquin County, and are there other options? From an objective standpoint it appears that the answer to both questionsis yes. For local public works departments it is safe to say that annually they are forced to defer 50% or more of their local road and street needs io future years. The County of San Joaquin very conserva- tively estimates that $6 million in deferrals occur annually. Future highway improvements in San Joaquin County over the next 20 years will require over $ 100 million more than the revenue available. Unfortunately that is a conservative estimate based upon project cost estimates that are outdated or nonexistent. Routes 205, 120, 99, 5, 12, 4, 26, and 88 all have present and projected needs that dwarf the resources available. And finally transit is going to be asked to meet intra- and inter -county demand which will outstrip the Stockton Metropolitan Transit District's ability to finance. There are options to a transportation sales tax. Orange County is working hard at exploring public/private partnership arrangements. This is another way of describing means of having developers pay for transportation improvements. Also Orange County sponsored controv- ersial legislation that allows for several toll roads in Orange County. What appears to be happening though is rather than these being alternatives they work as a package. Orange County is exploring once again the sales tax option. (In 1982 a 1/2% increase failed passage getting only 30% of the vote.) This paper concludes several things. First of all, a transportation sales tax is probably not a likeiy event in San Joaquin County in 1988. Propositions 72 and 74 are going to effect transportation funding if they pass, or fail. Policy makers will need to know what those effects are. Right now they can only be guessed at: A transportation sales tax requires agreement between the localjurisdictions. While it does not require unanimity, every opportunity should be available for achieving that goal. In other counties the effort has always taken longer than 6 months. The experience of counties going after a transportation sales tax this year should provide a better perspective on what San Joaquin County's opportunities are. Also of importance is worlung in coordination with the County of San Joaquin which has a sales tax interest beyond transportation. What is the likelihood of a jail and a transportation sales tax passing on the same ballot? Should they go on separate ballots, and if so which goes first? Is there a compromise situation Iike that worked out in Stanislaus County? The funding of transportation purposes with sales tax revenue is not a brand new idea. The BART counties added 1/2% to the sales tax in the late 1960sto create and operate the rail system. Also, California passed the Transportation Development Act in the early 1970s which took 1/4 of 1% of the 6% sales tax and allocated it for local public transit and roads and streets. The Transportation Sales Michas been urged on county governments by the Legislature and the Governor as a means of solving transportation financing problems. More recent efforts have met with mixed success in the state. Efforts in the early eighties Mr. Thomas Peterson Page Three May 9,1988 had sales tax measures passing in Los Angeles and Santa Clara counties, but failing miserably in Orange County. More recent efforts have seen success in Alameda, Fresno, and San Diego Counties, but failures in Contra Costa, Tuolumne, and San Bernardino. As many as 13 counties may have transportation sales tax measures on the 1988 ballot. This should provide a better perspective as to the long term Viability of using the sales tax as a transportation financing tool.