Caltrain Sales Tax
Creates a 0.125% sales tax dedicated to Caltrain operations and capital improvements
Creates a one-eighth percent sales tax in San Francisco, San Mateo and Santa Clara counties to fund Caltrain operations and capital improvements.
What the Measure Would Do
Measure RR would increase the sales tax in San Francisco, Santa Clara and San Mateo counties (“member counties”1) by one-eighth of a percentage point and dedicate the revenue to Caltrain. This would create the first dedicated funding for Caltrain, which currently relies on annual discretionary appropriations from its member counties. The measure would generate an estimated $108 million per year for operations and capital improvements.2 These funds would eventually be dedicated to implementing Caltrain’s Long-Range Service Vision, which enumerates the train frequency levels, types of service and associated infrastructure that Caltrain aims to deliver by 2040.3 However, first the funds from this measure would be used to sustain Caltrain operations during the period of lower ridership that has resulted from the pandemic.
If Measure RR passes, the member counties would cease their annual contributions to Caltrain’s operating budget and state-of-good-repair capital contributions, thereby increasing the ability of the member counties to fund local transit or other needs. 4
Senate Bill 797 in 2017 authorized the Peninsula Corridor Joint Powers Board (“Caltrain Board” for short) to submit a three-county ballot measure for a one-eighth percentage point increase in sales tax. The law required the measure to be approved by a two-thirds majority in each of seven different entities: boards of supervisors in each of the three counties, the transit agency for each county and the Caltrain Board.
The ballot measure approval process became complex and was delayed when elected officials in San Francisco and Santa Clara counties sought to initiate Caltrain governance and institutional changes aimed at increasing the board’s independence from the San Mateo County Transit District (SamTrans).5 Currently, Caltrain is staffed by SamTrans and shares the same general manager, auditor and general counsel. This gives disproportionate influence to San Mateo County, causing frequent tension between the member counties and making it more challenging to elevate regional priorities. But in a compromise agreed to in August 2020, the Caltrain Board agreed to interim measures that offer some independence from SamTrans until a satisfactory governance model is approved by all three counties.6
Voter approval of Measure RR requires a collective two-thirds majority vote across all three counties. Only the total percentage matters, not the percentage in each county.
As a sales tax, albeit a small percentage, Measure RR would add some additional burden for low-income people, who are disproportionately impacted by sales taxes. (Recent SPUR research has established that low-income people in the Bay Area pay three times more in sales tax, as a share of income, than high-income residents do.) On the other hand, investing in Caltrain could benefit historically underserved communities. In September, the Caltrain Board took action to make Caltrain a more equitable service by passing its Equity, Connectivity, Recovery and Growth Policy Framework.7 The policy proposes more equitable service planning through increased off-peak service, improved station access, more equitable fares and a strategy to better understand the needs of customers.
If Measure RR passes, local transit services in the member counties would likely benefit because counties would keep the funds they have historically contributed to Caltrain. Transit operators would have the option of applying this additional revenue to serve low-income communities.
- Caltrain is a key part of the region’s rapid transit network, reducing congestion and greenhouse gas emissions while increasing access to jobs and services. Measure RR would allow Caltrain to continue operations at or near current levels. Without the increased funding from this measure, Caltrain might need to severely reduce or shut down operations until the pandemic ends and strong demand for service returns.
- Currently, the lack of dedicated funding for Caltrain is a major obstacle to reliable operations planning and rational governance.8 In the past, differing priorities among the three counties have made it difficult to fund regional improvements.
- The funding from Measure RR would support the implementation of the Caltrain Service Vision9 and Caltrain Business Plan,10 a strong foundation for growing Caltrain ridership, improving efficiency, updating infrastructure and charting a course for better governance. These critical steps are needed for sustainable growth, transit efficiency and reduced automobile dependence in the core of the region.
- Caltrain’s polling shows that 70% of frequent Caltrain riders plan to use Caltrain again once the pandemic is over, at least as often as they did before COVID-19. This points to the need to continue investing in the transit system.
- Caltrain staff estimate that projects and operations associated with the measure would create 16,000 jobs over the next several years.
- Sales taxes are regressive, and the impact of Measure RR would fall disproportionately on lower-income households in Santa Clara, San Mateo and San Francisco counties. And Caltrain’s relatively wealthy ridership12 makes a regressive tax even less desirable as a funding mechanism.
- Although surveys suggest a strong return of Caltrain ridership post-pandemic, the future is unclear given the extraordinary growth in remote work, particularly among the types of knowledge workers that form a large share of Caltrain riders. This uncertainty makes it more difficult to know which transit investments should be highest-priority.
Without this additional funding, Caltrain faces significant risk of shutting down or reducing operations to such a limited service that it will be difficult to return to the agency’s promising pre-pandemic trajectory. Caltrain is a key part of the region’s rapid transit network and one of its best-performing agencies — and major investments such as the downtown rail extension in San Francisco, high-speed rail and the potential new transbay transit crossing are all linked to Caltrain’s ongoing success. SPUR has supported the agency’s visionary but realistic planning over the past several years, and Measure RR would make the implementation of this work possible. It would also free up local revenue for the three contributing counties at a time when funding is badly needed.
Sales taxes are regressive funding tools that SPUR typically does not support. However, Caltrain’s recent equity initiatives and its work toward a more regional governance structure create a promise for increasingly vital service that better serves all riders in the future – reasons enough to justify a small increase in the tax burden.
1. Santa Clara, San Francisco, and San Mateo counties are the three counties where Caltrain operates, all of which are represented on the Peninsula Corridor Joint Powers Board.
2. Caltrain estimates that the tax would generate $26.5 million from San Francisco County, $25 million from San Mateo County and $56.5 million from Santa Clara County.
3. Caltrain, “Caltrain 2040 Service Vision,” https://caltrain2040.org/wp-content/uploads/Caltrain_ServiceVisionFactSheet_V12-1.pdf
4. These contributions were roughly $55 million in the past fiscal year, according to Caltrain data: $15.6 million for San Francisco County, $16.6 million for San Mateo County and $22.2 million for Santa Clara County.
5. SamTrans is the administrative body for the principal public transit and transportation programs in San Mateo County.
6. The Caltrain Board of Directors agreed to hire a general counsel and auditor who are independent from SamTrans. The Caltrain Board will also require a supermajority to approve allocation of sales tax revenue beyond the first $40 million per year until a satisfactory governance model is approved by all three counties. The board also committed to developing a plan to reimburse SamTrans for its past investments in purchasing the Caltrain right-of-way
7. Caltrain, “Equity Policy Framework,” August 6, 2020, https://www.caltrain.com/Assets/government+affairs/pdf/Caltrain+ECRG+Policy+V2.pdf
8. Egon Terplan, Saving Caltrain for the Long Term, SPUR, April 6, 2011, https://www.spur.org/publications/white-paper/2011-04-06/saving-caltrain...
9. See note 3.
10. See https://caltrain2040.org/
11.The proposed funding may be insufficient to fully implement the Caltrain Service Vision given the impacts of the pandemic. It is too early to understand the long-term adjustments to the service vision that will be needed based on the pandemic.
12. The median income of Caltrain riders is estimated at $130,000 per year.