CA: SMART's options widen for potential tax revenue

Sonoma-Marin Area Rail Transit officials are taking a wait-and-see approach as potential new paths for critical tax revenue come into play.

Gov. Gavin Newsom approved a bill over the weekend enabling voters in the two counties to place a SMART train sales tax renewal measure on the ballot via citizens' initiative. This method would lower the approval threshold to a simple majority, down from a standard two-thirds requirement.

Senate Bill 904, authored by state Sen. Bill Dodd, a Democrat from Napa, was proposed to help SMART secure its sales tax dollars, which account for nearly half of the agency's total revenue. The tax collects about $51 million annually.

"Obviously, citizens would have to take this up, gather signatures, and if they collected enough signatures that could be validated, then it could be put on the ballot," said Eddy Cumins, general manager of the rail agency. "I'm not aware of any groups organizing to do that."

As of Sept. 6, there were 170,653 registered voters in Marin and 304,906 in Sonoma, according to state elections data. Petitioners would need to gather signature of at least 10% of registered voters, or more than 47,555 verified signatures.

At the same time, the Metropolitan Transportation Commission, the regional planning agency for the nine-county Bay Area, is revamping a regional transit tax pitch to submit to the voters in November 2026. The effort aims to address the fiscal cliff faced by the larger transit operators, including Bay Area Rapid Transit and San Francisco Muni.

If the tax includes Sonoma and Marin counties, and if it's approved, it could potentially negate the need for a renewed SMART tax.

"I think it's a possibility, but it would have to be something agreed upon by the Sonoma and Marin counties' supervisors. It would have to be agreed that a quarter-cent equivalent would go to SMART, and those conversations haven't happened," Cumins said. "There's been a lot of moving parts with this. We're just kind of watching to see what happens at this point."

Rebecca Long, public affairs director at MTC, said the agency convened a committee earlier this year with the goal of finding consensus on a measure to help fund transit operators.

One option under consideration is a 30-year half-cent sales tax for voters in Alameda, Contra Costa, San Francisco and San Mateo counties to focus on the largest transit operators facing budget shortfalls.

This option allows Marin and Sonoma counties, along with Napa, Santa Clara and Solano counties, to choose whether to opt in.

The option is expected to raise $540 million a year within the core four counties, and up to $1 billion if all nine counties are participating, Long said.

As proposed, 10% of the tax revenue would go toward helping transit become more convenient, cleaner and connected across the region. The other 90% would be returned to the county of origin. Of that, 30% would have to be used toward transit.

"At a half-cent sales tax, that's generating twice as much of what the SMART sales tax would be," Long said. "So there would be an opportunity, if Marin and Sonoma did opt in, to consider does this stand instead of the SMART sales tax renewal, because there would be sufficient money to backfill for SMART."

A second option MTC is considering involves a half-cent sales tax across all nine counties, combined with a payroll tax. This option would generate the same $1 billion annually in sales tax revenues, plus another $500 million from payroll tax revenues. In this scenario, about $200 million would be reserved to support commuter benefits.

Long said MTC staff expect to present the proposal to the joint legislative committee in November. The Metropolitan Transportation Commission is expected take a vote on the matter in December, she said.

The SMART board of directors could also take a vote to decide whether to put its own quarter-cent renewal measure on a ballot. But officials haven't decided whether to take that route.

Eric Lucan, a Marin County supervisor and chair of the SMART board, said that with the agency's tax expiring in 2029, it's likely that a tax pitch, a renewal or otherwise, will be presented to voters in 2026. For now, however, Lucan said officials are focused on increasing ridership.

The agency reports it continues to see ridership boosted by a program offering free fares for youths and seniors that launched in April.

In August, SMART set a new monthly record by carrying 91,894 riders in its trains, according to a staff report. That's 27% higher than August 2023.

"We've just got a lot of really positive momentum going and I think that's what's important and what we need to remain focused on," Lucan said. "Yeah, two years away is right around the corner, but I think what we need to deliver on is continuing to provide great service for the taxpayers in Marin and Sonoma."

SMART, which operates 45 miles of passenger rail from Larkspur to Santa Rosa, opened in 2017 supported by a voter-approved quarter-cent sales tax across the two counties. That tax expires in 2029.

In 2020, SMART failed to gain the required two-thirds approval for a 30-year extension, leaving the agency financially vulnerable. The failed measure received a 54% majority vote in favor.

Novato resident Mike Arnold, an economist who worked on the opposition campaign against SMART's tax renewal measure in 2020, said he believes a citizens' initiative will guarantee a loss at the ballot box.

"Voters won't appreciate changing the rules for passing a regressive sales tax that provides huge subsidies for the few affluent riders that find the train a convenient way to travel," Arnold said.

He is also against the idea of MTC's regional tax measure.

"BART and Muni want a bailout and only after they fail to pass a tax will these transit bureaucracies be forced to address the loss of ridership related to remote work and hybrid work schedules," Arnold said.

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