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.

  • Looking forward to next weeks discussion of increasing the commercial off-street parking tax. It is a great way to increase funding while pushing forward San Francisco’s Transit First policy because:

    * Increases parking costs by 10%. Muni fares have increased dramatically in the last few years. Parking costs should also go up.
    * No cost for collecting the increase. SF already collects a parking tax. So there is no additional cost for bureaucracy, parking meters, enforcement, etc. The entire increase goes to improving transit. Compare this to the idea of congestion charging!
    * Affects only a small percentage of San Francisco voters so it can more easily pass.
    * Affects the poor far less. After all, you don’t to drive to downtown SF.
    * Promotes alternative forms of transportation by making driving to downtown more expensive.
    * Makes building parking garages less financially attractive.
    * Doesn’t require state legislation and Govenator’s approval like any proposed VLF increase does.

  • those dudes

    leno claims that the guvs support is a mystery? any politician who doesnt know if theyve got support @ the top is either full of it, or isnt worth their weight in chickenfeed.

    what ever happened to the ta study on congestion pricing – why isnt mirkarimi pushing that?

  • patrick

    With regard to revenue measures related to private autos, these are my order of priority:

    1) Increased Meter Rates
    2) Increased parking garage tax
    3) Congestion Charging
    4) Increase residential street parking permit costs
    5) Increase VLF

    My reasoning is that the first 3 are based on usage, and can be avoided by taking transit. It also collects money from non-residents as well as residents based on the amount of an impact they have on the city. I’m still in favor of VMT increase, but I think the other 3 are most in accordance with transit first. For 4 & 5 I could probably be swayed to switch the priority of those two.

  • There’s really only one time to try and pass an increased VLF before the public. Put too many on the ballot, or one that’s weak (i.e. not dedicating the money to transit) or too low, and you risk losing out entirely.

    People would support something like this if they can be assured the money will be spent properly. However, after the massive looting by Newsom and Co. after 2007’s Prop. A passed, people aren’t going to be too keen on anything unless it’s got some ironclad guarantees the money won’t be spent on bullsh*t.

  • The cynical side of me worries that we’ll pass some measure to get some more funding that is dedicated to MUNI, and the state will respond by siphoning off some of the money MUNI already gets taht is not dedicated already.

    See: Lottery vis-a-vis schools.

  • patrick

    @John Murphy, too true! Or the city itself with more work orders or reductions in transfers from the general fund…

  • Yes, the work orders need to simply be eliminated so that money intended for Muni doesn’t get siphoned off to pay for absurd police retirement benefits and such. This should be part of any ballot proposition so that voters will actually believe that the money will be used as intended. In fact, I believe that Elsbernd’s charter amendment already includes such language.

  • JohnB

    Dave Snyder says, “So if your theory is, tax the rich to pay for transit, then VLF is about the only way we can do that locally.”

    Well, that’s not my theory, however well it plays to the local class warriors.

    I prefer Greg’s idea that if we have to raise taxes and fees at all (and I think it’s a really, really bad idea in a recession) then at least make it related to transit and those who use it.

    A sales tax hits people who can’t just drive down to San Mateo County to do their shopping, which would by then have a 0.75% sales tax advantage over SF. Totally unfair and destructive to the local economy.

    Ditto a parcel tax, which will hit older homeowners who maybe rarely go anywhere.

    So if we have to raise revenue, then it should be either a Muni fare hike, higher parking fees or both.

    But I’d rather cut Muni staff pay, benefits, pensions and healthcare than adopt any revenie increases. We’ve tried tax and fee increases before and they always come back for more. The beast has a tape worm.

  • Alex

    What about rolling back the street cleaning cuts? The Chron predicted it would cost the city about $3.8 million annually. Street cleaning represents the lowest hanging fruit for the PCOs, and at least offers something that drivers may appreciate.

    As for the VLF, I think that should be a higher priority than residential permits. Increasing the permit fees until they’re profitable would require action at the state level. It’s something that, IMO, should be done along with doing away with free parking for handicapped placards. Folks with handicapped placards absolutely deserve more convenient parking, but judging by some of the expensive luxury cars I see with placards, perhaps they ought to pay *something* to help offset the cost of discount disabled transit passes. Alas, these are part of the bigger picture. Something to aim for, sure. But by virtue of requiring a broader consensus, it’s perhaps less important.

    The VLF, OTOH, is something that can and should be done locally. I’d rather see it done in conjunction with a congestion charge (to capture whatever proportion of SF drivers who register their cars in a different county to avoid fees). The $10 proposed surcharge seems a bit low.

    An interesting nugget to come out of the “march against muni” was Mirkarimi showing up for a photo op. His proposals included rolling back props A and E, having some MTA board members be chosen by the BoS… but not actually merging the MTA and SFCTA.

  • Nick

    Ok, even if this state law is passed, the MTA still has to find $20 million to balance their budget. That doesn’t seem like anything to celebrate.

    I’d like to know more about the defacto service cuts that have ALREADY taken place. I’m noticing less trains in the morning and the ones that do come are pretty full. Theose arriving at 6:30AM used to be 20% full. Now people are standing up because there are no seats left.

  • JohnB

    Nick, Buses in service being 20% full IS the problem. Like planes, buses need to be fairly full to be self-funding.

    There are certain routes around this city, especially the cross-town, bendy, hilly routes, where I routinely see buses in service with just one passenger, or even empty.

    On the basis of both your and my observations, it seems there is easily excess capacity to make service cuts. And I’d like to see that fully explored before going cap-in-hand to people for more, and especially to those who get no benefit from Muni, because they find Muni too inconvenient, slow, filthy or downright scary.

    Just one idea – why do the numbers 5 and 21 run in parallel just a couple of blocks apart? The 5 run is longer, quicker and more frequent, so why not nix the 21?

  • Nick

    So is MUNI aiming for close to full capacity at all times? What may happen after the next round of service cuts is that everyone will have to leave their home 30 minutes early to make sure they catch their bus.

    That means 30 more minutes of lost sleep. If your time is worth $20 an hour, that means MUNI is taking $200 worth of time from you each month (30 minutes a day, 10 hours a month). If this is the case for it’s 700,000 riders, then the City has $140 million in lost productivity each month.

    -JohnB, check the December service cuts for the answer to your question. I think they reconfigured the 5 and 21 to partially eliminate the parallel service.

  • JohnB


    I was simply stating that buses running at only 20% capacity are a drain on the system. I enjoy riding a near-empty bus for the same reasons that you do, but that percent utilization implies to me that the schedule is wrong.

    And with NextBus, people should never have to wait 30 minutes for a bus. From my house, I can wait until Nextbus shows a 7 minute arrival and make it on time. Yes, sometimes it’s crowded but at least I know that run is warranted and justified economically.

    I’m sure you’re right about the 5/21 changes but it still seems to me that they could be merged with nobody being inconvenienced more than 2 walkable blocks. Many folks in SF would love to be that close to a bus route.

  • Fran Taylor

    “…people who get no benefit from Muni…”

    Meaning drivers? How fast would they be able to drive if Muni riders all drove instead? And where would they find parking when they got there if Muni riders added their private cars to the mix instead of using transit? No such people exist.

  • JohnB


    There are many residents of San Francisco who commute out of the city, and therefore don’t use SF roads or parking.

    Or work from home.

    There are disabled and old people who are housebound.

    That’s why I oppose taxing ALL SF residents to pay for transit. I’d prefer parking fees for those who actually use parking, and use fees for those who use trasit.

    That would also collect from those who do not live in SF but who drive and park here, who therefore can’t use Muni, and who would not be paying the taxes you appear to favor anyway.

  • Unless you live next to a freeway onramp, if you commute out of the city, the only way to do so is via city roads. So yes, all those commuting out of town definitely contribute to congestion and benefit from Muni reducing said congestion. Unless they are total recluses, people who work from home still go places. The number of disabled and elderly people who never,ever go anywhere are very small. And even if you never go anywhere, you are still benefiting from the reduced pollution and reduced carbon spewing into the air that Muni makes possible. In fact, the environmental benefit is so great that one could argue that we should pay people to take Muni rather than charge them.

    In addition, there are many people who drive all over the city who do not pay for parking. In my case, the vast majority of places I drive to in the city offer free on-street parking or provide a parking lot. (Trader Joes! Golden Gate Park! Crocker Amazon soccer fields!) Often I am just dropping children off so I don’t need to park at all. I very rarely (less than once a week) pay for parking at a meter or a city lot. However, I have no problem with a portion of the taxes I pay being used for Muni because I understand how very much I benefit from Muni’s existence whether I take Muni, bicycle or drive my car. I’m also fine with raising meter rates–since I’m cheap, it motivates me to take Muni or ride my bike.

    Next Bus is great when you’re leaving home. Really saves on the wait time. But I find it is of little use on the return trip, especially when that trip involves a transfer. I hate coming out of the Castro underground station and finding the next 24 isn’t for 20 minutes.

  • JohnB


    You can call up NextBus on a mobile device for the trip home.

    I know a few people who live near 101 and 280 and make only a minimal use of SF roads on their commute. Moreover, some of SF major thoroughfares are State roads and not City roads e.g. 19th Avenue, Van Ness, Lombard etc.

    Sure, everyone benefits from MUNI to some extent, but some benefit far more than others and so should pay more.

    While we should not give a free pass to those who live outside SF, escaping the taxes, and yet still drive into and park in SF.

    But hey, let the voters decide – tax hikes require a 2/3 majority to pass and I can’t see that happening.


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