Future Financing Options to Meet Highway and Transit Needs (2006)

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NCHRP 20-24(49) – Future Financing Options to Meet Highway and Transit Needs B-1 Appendix B Highway and Transit Local Option Taxes for Transportation In 2001, the University of California at Berkeley published the results of an extensive research that investigated the use of local option taxes for transportation investments. The study explored the different types of local transportation taxes available to local govern- ments, enabling legislation by state, and the state-of-the-practice. This appendix summarizes the 2001 work1 and then includes examples of recent ballot measures for transportation- related local option sales taxes that have been referenced in the main report. „ Overview of Local Option Taxes for Transportation In 2001, the University of California at Berkeley published the results of an extensive research that investigated the use of local option taxes for transportation investments. The study explores the different types of local transportation taxes available to local govern- ments, enabling legislation by state, and the state-of-the-practice. Since the completion of that study, many local governments have adopted, increased or extended existing local option taxes for transportation. According to the study, local option taxes for transportation have been adopted in all but four states (i.e., Delaware, Maine, New Hampshire, and New Jersey). The following sec- tions present some of the findings from this study. Local Option Gasoline Taxes Figure B.1 shows states that have enabling legislation to implement local option gasoline taxes and the states in which local government have exercised the option. As of 2001, 15 states allowed the use of gasoline taxes at the local level. Municipalities in five of these states had not used local gas taxes for transportation. 1 Goldman, Todd, Sam Corbett, and Martin Wachs. Local Option Transportation Taxes in the United States (Part One: Issues and Trends). Institute of Transportation Studies, University of California at Berkeley. March 2001. Available at http://www.its.berkeley.edu/research/localoptiontax/ localoptiontaxmain.html.

NCHRP 20-24(49) – Future Financing Options to Meet Highway and Transit Needs B-2 Figure B.1 Map of Local Option Gasoline Taxes for Transportation Source: Institute of Transportation Studies, University of California at Berkeley, Local Option Transportation Taxes in the United States, March 2001. Local Option Vehicle Taxes Thirty-three states authorize the implementation of local vehicle taxes (in the form of vehicle license or registration fee), as shown in Figure B.2. Local governments in six of these states had not adopted this type of local option tax for transportation.

NCHRP 20-24(49) – Future Financing Options to Meet Highway and Transit Needs B-3 Figure B.2 Map of Local Option Vehicle Taxes for Transportation Source: Institute of Transportation Studies, University of California at Berkeley, Local Option Transportation Taxes in the United States, March 2001. Local Option Sales Taxes Local option sales taxes have become very popular, especially as a funding source for transit agencies. Thirty-three states allow local governments to implement sales taxes for highway and/or transit investments. (It should be noted that in some states, like New York, only a very few counties are using these revenues for transportation.) Figure B.3 shows where this type of local option tax has been enacted by local governments as of 2001.

NCHRP 20-24(49) – Future Financing Options to Meet Highway and Transit Needs B-4 Figure B.3 Map of Local Option Sales Taxes for Transportation Source: Institute of Transportation Studies, University of California at Berkeley, Local Option Transportation Taxes in the United States, March 2001. Income, Payroll, and Employer Taxes Figure B.4 shows what states have enabling legislation, and either have or not adopted some type of local income or payroll taxes for transportation. Only five states had implemented this type of local option tax, including Washington, Oregon, Indiana, Kentucky, and Ohio.

NCHRP 20-24(49) – Future Financing Options to Meet Highway and Transit Needs B-5 Figure B.4 Map of Local Option Employment Taxes for Transportation Source: Institute of Transportation Studies, University of California at Berkeley, Local Option Transportation Taxes in the United States, March 2001. „ Recent Examples of Local Option Tax Initiatives Missouri’s Local Option Sales Tax Local governments in Missouri have the authority (subject to voters’ approval) to imple- ment local sales taxes, ranging from one-eighth to 1 percent, for capital improvements and transportation-specific improvements (including roadways, bridges, and transit capital and operations). Table B.1 shows the sales tax proposals included in the ballots in 2005. Of the five proposals, three were approved by voters.

NCHRP 20-24(49) – Future Financing Options to Meet Highway and Transit Needs B-6 Table B.1 2005 Ballot Measures for Missouri’s Local Option Sales Tax City/County Type of Sales Tax Result Comments Poplar Bluff Sales Tax Increase (0.5%) Approved (68%) One-half percent increase to provide local matching funds for upgrades to U.S. 67. The tax will expire after 30 years. City of Moberly Transportation Tax Extension (0.5%) Approved (72%) Extended 0.5 percent transportation tax for another 10 years. The tax was last extended in 1995. City of Washington New Transportation Sales Tax (0.5%) Approved (54%) New 0.5 percent sales tax to add capacity along 12 miles of Highway 100. The pro- posal also included funds to overlay all city streets. The money from the sales tax will be used for debt service on bonds issued for the road improvements. St. Francois County New Transportation Sales Tax (0.25%) Defeated St. Francois County was proposing to issue $15 to $20 million in bonds for high-priority road projects. Macon, Shelby, Ralls and Marion Counties New Transportation Sales Tax (0.5%) Defeated These five counties were asked to approve a 0.5 percent sales tax for improvements on the U.S. 36 corridor. The tax had to be approved in all counties to be implemented. Ralls County was the only county not to approve the sales tax. Source: American Road and Transportation Builders Association. Transit Local Option Sales Taxes Most recent ballot initiatives for the approval of sales taxes for public transportation included either the extension or increase of existing sales taxes. Since 2004, voters in local jurisdictions in California, Arizona, and Missouri approved the extension of existing sales taxes used for transportation. Sales tax rate increases and new sales taxes have been approved in California, Colorado, Ohio, South Carolina, Texas, Utah, and Washington. Most recently, the cities of Tucson (Arizona) and Canton (Ohio) approved implementation of local sales taxes for transportation. Table B.2 summarizes the most recent sales taxes enacted to support transit investments over the last three years. Of the 30 sales tax pro- posals in those states, 11 provide funding exclusively for transit investments; the others include a combination of transit and highway investments. Information posted in the Center for Transportation Excellence web site shows several proposals that were included in the November 2006 ballot for implementing or extending local option sales taxes for transportation in the states of California, Florida, Missouri, Ohio, Texas, and Washington.2 Three ballot measures in California (Kern, Santa Barbara, and Sonoma and Marin counties) were defeated, as well as a sales tax ballot measure in Broward County, Florida. 2 Center for Transportation Excellence, http://www.cfte.org/success/2006BallotMeasures.asp.

NCHRP 20-24(49) – Future Financing Options to Meet Highway and Transit Needs B-7 Table B.2 Recently Approved Local Option Sales Taxes for Transit Investments State/Location Type of Sales Tax Date/Percent Approval Transit Only? Y/N Comments Alaska – Juneau Sales Tax Extension (1%) October 2005 (54%) N Sales tax extension for 33 months. Revenues will be used for local infra- structure projects, including a new downtown transit center and parking facilities. Arizona – Phoenix Sales Tax Extension (0.5%) November 2004 (57%) N Sales tax extension for 20 years to support Maricopa 2020 transportation plan. Sales tax revenues will support both highway and public transporta- tion improvements. Arizona – Tucson New Sales Tax (0.5%) May 2006 (58%) N Sales tax to support a regional trans- portation plan. California – Contra Costa County Sales Tax Extension (0.5%) November 2004 (70%) N Sales tax extension for 20 years. Sales tax revenues will support both high- way and public transportation improvements. California – Sacramento County Sales Tax Extension (0.5%) November 2004 (75%) N Sales tax extension for 30 years. Revenues will support both highway and public transportation improve- ments. The Transit Congestion Relief program will receive 38.25 percent of the sales tax levies. California – San Mateo County Sales Tax Extension (0.5%) November 2004 (75%) N Sales tax extension for 25 years. Sales tax revenues will support both high- way and public transportation improvements. Thirty percent of the sales tax levies will be used for transit. California – Sonoma County New Sales Tax (0.25%) November 2004 (67.2%) N New sales tax to be levied over 20 years. Sales tax revenues will support both highway and public transporta- tion improvements. California – San Bernardino County Sales Tax Extension (0.5%) November 2004 (79%) N Sales tax extension for 30 years. Sales tax revenues will support both high- way and public transportation improvements. California – Marin County New Sales Tax (0.5%) November 2004 (71%) N New sales tax to be levied over 20 years. Sales tax revenues will support both highway and public transporta- tion improvements. California – San Diego County Sales Tax Extension (0.5%) November 2004 (67%) N Sales tax extension for 20 years. Sales tax revenues will support both high- way and public transportation improvements. California - Fresno Sales Tax Extension (0.5%) November 2006 (77%) N Sales tax extension for 20 years. Sales tax revenues will support both high- way and public transportation improvements; projected to generate $1.7 billion over the next 20 years.

NCHRP 20-24(49) – Future Financing Options to Meet Highway and Transit Needs B-8 Table B.2 Recently Approved Local Option Sales Taxes for Transit Investments (continued) State/Location Type of Sales Tax Date/Percent Approval Transit Only? Y/N Comments California – Orange County Sales Tax Extension (0.5%) November 2006 (68%) N 30-year extension of 0.5 percent sales tax. The extension would raise an estimated $11.8 billion. Sales tax revenues will support freeways, local street and roads, and transit needs. California – Tulare County New Sales Tax (0.5%) November 2006 (67%) N New sales tax to be levied at a rate of 0.5 percent for 30 years. The sales tax can be used to fund construction and maintenance of highways and public transportation. California – San Joaquin County Sales Tax Extension (0.5%) November 2006 (77%) N Sales tax extension for 30 years. Sales tax revenues will support both high- way and public transportation improvements; projected to generate $2.5 billion over the next 30 years. Colorado – Denver Sales Tax Increase (0.4%) November 2004 (57%) Y Sales tax increase for 12 years to pro- vide $4.7 billion for transit invest- ments, including light rail, commuter rail, bus rapid transit, and expanded bus service. Colorado – El Paso County New Sales Tax (1%) November 2004 (55%) N New sales to be levied at a rate of 1 percent for 10 years, and 0.45 percent thereafter. Ten percent of the revenues will be dedicated for transit projects. Colorado – Aspen Sales Tax Increase (0.2%) November 2004 (77%) Y Sales tax increase for 10 years. Missouri – Kansas City Sales Tax Extension (3/8%) November 2006 (54%) Y Sales tax extension for 30 years to fund the new Heartland Light Rail system, feeder services, and an aerial gondola tram system. Ohio – Canton Sales Tax Extension (0.25%) May 2006 (57%) Y Extension of 0.25 percent sales tax dedicated to the Stark Area Regional Transit Authority. Ohio – Franklin County New Sales Tax (0.25%) November 2006 (51%) Y New sales tax to be levied over 10 years. Revenues will go to Central Ohio Transit Authority (COTA) to support bus service expansion. South Carolina – Charleston New Sales Tax (0.5%) November 2004 (59%) N New sales tax to be levied over 25 years. Sales tax revenues will support county roads, transit, and the reservation of parks and green space. Eighteen percent of the revenues will be dedicated to the Charleston Area Regional Transportation Authority (CARTA).

NCHRP 20-24(49) – Future Financing Options to Meet Highway and Transit Needs B-9 Table B.2 Recently Approved Local Option Sales Taxes for Transit Investments (continued) State/Location Type of Sales Tax Date/Percent Approval Transit Only? Y/N Comments Texas – San Antonio Sales Tax Increase (0.25%) November 2004 (58%) N The Advanced Transportation District (ATD) was created within the City of San Antonio. Half of the revenues from the sales tax increase pay for public transportation needs. The remaining funds go to the City for local transportation improvements and to TxDOT for projects within the city. Texas - Grapevine New Sales Tax (0.5%) November 2006 (73%) Y Sales tax revenues will be dedicated to fund commuter rail service connecting to the city of Fort Worth. Utah – Salt Lake County New Sales Tax (0.25%) November 2006 (64%) N Sales tax revenues will be used for highway and public transportation needs. Utah – Utah County New Sales Tax (1/4%) November 2006 (69%) N Eighty-seven percent of the sales tax revenues will be dedicated to fund the new FrontRunner Commuter Rail service to Salt Lake County Washington – Finley New Sales Tax (0.06%) April 2005 (64%) Y The sales tax increase will pay for demand response service provided by Ben Franklin Transit (BFT). Washington – Spokane Sales Tax Increase (0.3%) May 2004 (69%) Y Sales tax increase to support existing public transportation services provided by Spokane Transit Authority (STA). Washington – Everett Sales Tax Increase (0.3%) September 2004 (56%) Y Sales tax increase to support existing public transportation services provided by Everett Transit. Washington – King County Sales Tax Increase (0.1%) November 2006 (56%) Y Sales tax increase to fund bus service. Washington – Selah City New Sales Tax (0.3%) November 2006 (62%) Y New sales tax to fund bus service. Sources: Center for Transportation Excellence; Bureau of Transportation Statistics, 2004 Survey of State Funding for Public Transportation.