MTA Board May Finally Get Creative on Funding, But Obstacles Remain

IMG_5750_1.jpgMTA Executive Director Nat Ford and Board members Jerry Lee, James McCray, and Chairman Tom Nolan.

Could the bleakest budget in the San Francisco Municipal Transportation Agency's history force its directors to finally get creative in funding Muni?

The answer, judging from Tuesday's MTA Board meeting, is yes. Fresh off approving a 10 percent cut to Muni service to balance this year's budget, MTA directors appeared eager to close the agency's massive budget gap in the upcoming two years without cutting more service or raising fares.

MTA staff presented $75 million in solutions that the agency could enact without going to the ballot box, but more than a third of that would come from charging for transfers and cutting even more service -- ideas quickly shot down by the board.

The remaining solutions, including a plan to extend parking meter enforcement hours, add up to about $40 million annually. That's far less than the $56.4 million shortfall the agency is projected to face next year, or the $45 million shortfall projected for the year after that.

But for the first time in the MTA's ten-year history, the board seems serious about going to the ballot box to stave off further service cuts. Transit supporters say it's a noteworthy shift.

"It is a really good sign to see the MTA trying to get ahead of things now and come up with a long-term revenue strategy so they're not facing a crisis every single year," said Gabriel Metcalf, Executive Director of the San Francisco Planning and Urban Research Association (SPUR), an urban planning think tank.

Tom Radulovich, Executive Director of Livable City and a member of the BART Board, also called it a welcome development. "This would be the MTA Board for the first time not being totally passive about creating new revenue and actually being proactive," he said. "It's late, but it's progress."

The directors will have to maintain their resolve during what is certain to be an uphill battle. MTA staff presented five potential ballot measures to the board on Tuesday, and the directors themselves suggested two more. Each of the seven faces formidable hurdles.

Any measure would need two-thirds approval from voters to be dedicated to the MTA, instead of going to the city's general fund. That's a tall order in any year, but especially in a recession.

Two of the proposals -- a parcel tax and an increase in the hotel occupancy tax -- are heavily opposed by the city's business interests while promising relatively small financial returns (the taxes are projected to bring in $15 million and $20 million, respectively). That could quickly scuttle both ideas.

Another measure -- a one-half percent increase in the city's sales tax -- could bring in more than $70 million annually, but is likewise bound to meet strong opposition (60 percent of respondents opposed the idea in a poll released yesterday [PDF]). It may be a large enough sum to justify the struggle, and the Bay Area has a history of supporting sales tax measures for transit funding. But it's a very tough sell in the midst of a recession that has already decimated retail sales.

A Tie to Transportation

Some transit supporters say the focus should be on measures that have an obvious tie to transportation.

"The CAC (MTA Citizens' Advisory Council) has given me pretty clear direction that they prefer taxes that have some direct linkage to transportation," said Daniel Murphy, chair of the CAC. "Vehicle license fees, parking fees, extending parking meter hours, things like that are things the CAC has generally been supportive of."

The advantage of measures that generate revenue from parking, said SPUR's Metcalf, is that they increase the price of driving while funneling money to transit, which is in line with the city's Transit First policy.

MTA staff presented two measures that meet that criteria: an increase in the vehicle license fee (VLF) from the current 1.15 percent to 2 percent of the vehicle purchase price, and raising the commercial off-street parking tax from 25 percent to 35 percent. The VLF could generate $33 million annually, while the parking tax could bring in $20 million, according to the MTA.

"I would observe that there is a really clear nexus between the vehicle license fee and the commercial off-street parking tax and Muni," said Metcalf. "So, I would think that from a tax policy perspective, those would be the two most logical places to look."

In fact, of all the measures the MTA is considering, the VLF has by far the strongest support within San Francisco. It has the endorsement of transit advocates, most of the Board of Supervisors, the city's state representatives, and even the San Francisco Chamber of Commerce.

Supported Everywhere Except at the Top

But the VLF increase doesn't have the support of Governor Schwarzenegger -- a potential deal breaker because state law sets the maximum VLF rate.

Senator Mark Leno is working to change the law, and has introduced legislation in the past that would allow San Francisco to raise its VLF locally. The last time he tried, the bill cleared the state Assembly, but the governor vetoed it. At the time, Schwarzenegger said it was unfair for the bill to only apply to San Francisco. This time, Leno is calling his bluff by reintroducing the bill as a statewide measure, giving any county the authority to charge a VLF as high as two percent if voters approve it.

But will the governor simply veto the bill again?

"It's a mystery," said Leno. "You never know. I would like to think with the business voice of San Francisco urging him to sign this bill," he'll pass it.

The San Francisco Chamber of Commerce, which is rarely keen on new taxes, has strongly supported the bill, said Leno. "We've supported it," confirmed the chamber's public policy director Jim Lazarus. "We've been a co-sponsor along with the San Francisco Labor Council."

"We believe it's one of those fees that are shared. When residents pay and businesses pay, it's a type of revenue stream we could support."

According to a poll released yesterday, which was commissioned by the chamber, a majority of residents agree: 54 percent said they'd support an increase in the VLF to two percent, even without being told what the money would be used for. (A dedicated Muni revenue stream might appeal to even more voters.)

Representatives from state Assemblymember Fiona Ma's office and state Senator Leland Yee's office said they also strongly supported VLF legislation.

"The senator would certainly support the increase in the VLF," said Yee spokesman Adam Keigwin. "In fact, he has authored legislation to do so in the past."

MTA Executive Director Nat Ford said Tuesday that MTA management would meet with the city's state representatives on March 10 to discuss the legislation.

Muni's Not Alone in Seeking VLF Money

There's a wrinkle in the VLF plan: The Board of Supervisors already intends to introduce a separate VLF measure on the ballot. That measure would direct money to the general fund, with Muni sharing the new revenue with other city agencies. This measure would be much easier to pass, since it would only require a simple majority of voters to approve it -- but also not as lucrative for Muni as a dedicated MTA measure.

Board of Supervisors President David Chiu was the lead sponsor of a local VLF bill last year, which failed because it needed unanimous approval of the supervisors (an odd rule requires that such measures have unanimous support from the supervisors in years when supervisors are not up for election). It had the votes of nine of 11 supervisors, which will be plenty to get it through this year, a supervisorial election year. The measure would increase the city's VLF to two percent, pending approval from the state.

The money wouldn't be dedicated to the MTA, but Chiu said the MTA would benefit from it.

"As we're talking about cutting the huge amount we cut this and last year at the MTA, it's important we think about revenue options," he said. "We'll be working in the next couple of months to work on which ideas would get the most support.

The TA's VLF Ballot Measure

Supervisor Ross Mirkarimi, who chairs the San Francisco County Transportation Authority (TA), a source of some MTA funding, is far from optimistic that VLF legislation will be passed at the state level any time soon. "Leno's bill is not going anywhere," he said.

The TA is working on sponsoring another ballot measure this year that would actually allow a modest increase in the local VLF without additional state legislation, he said. Under SB 83, the city has some leeway to charge a higher VLF, bringing in $5 million instead of $33 million. That money would go straight to the TA, which often sends the MTA funds with conditions.

"I highly recommend we stick with this legal framework," Mirkarimi said. "It's the only strategy that has already been allowed by the state on the vehicle license fee."

Mirkarimi said any ballot measure put forward by the MTA would need to be backed up by a demonstration of much greater accountability on the agency's part.

"I think we all have to account for what improvements there's going to be in performance and efficiency," he said. "I'm all about conditions attached to try to instill a new level of confidence in MTA's ridership."

A 'Hail Mary Pass' Worth Throwing

For all the complication of moving forward with the VLF, former SPUR transportation director and current Muni riders union organizer Dave Snyder said it's a good policy, and well worth pursuing.

"The VLF is the most progressive tax we could possibly come up with because it actually tracks better with income as a tax than even the income tax," he said. "So if your theory is, tax the rich to pay for transit, then VLF is about the only way we can do that locally."

"But," he added dourly, "it's probably not going to happen."

Livable City's Radulovich agrees, calling the VLF a "Hail Mary pass" in Sacramento. But locally, he said, voters get it.

"I think the voters do understand the fee for service, that really direct relationship," Radulovich said. "You create an impact on the transportation system by driving more, you're asked to pay more."

To get any measure on the November ballot, the MTA needs to nominate it by June 15. Senator Leno said he's pushing his colleagues in the Assembly to pass the VLF legislation as soon as possible, and the Chamber of Commerce will then lobby the governor to finally sign the bill.

"You hear, so often, cities and counties outraged that the state continues to raid their money," said Leno, who called the bill a tool to give localities more flexibility to raise money.

Besides, he said, a two percent VLF wouldn't exactly be a new idea in California.

"The tax was in place during the golden years of the state of California, 1958 to 1998," said Leno. "It's not that new, it served the state well, it's equitable, and it's progressive by design."

Next week, Streetsblog will look at another potential source of transit revenue: the off-street commercial parking tax.