After Measure W passage, SamTrans looks to future

Measure W, which voters approved in November, is a half-cent sales tax increase that will generate an estimated $80 million a year for 30 years, or around $2.4 billion total. Fifty percent of the money will support SamTrans and Caltrain and the other half will be spent on congestion relief efforts.

Despite the additional revenue, projections show that expenditures still outpace revenue, with the former reaching $245.3 million by 2020 and the latter sitting at $242.7 million that year.

Hansel said sales tax has historically provided between 39 percent and 53 percent of SamTrans’ operating funding and, by 2020, he expects it will account for 60 percent of revenue.

He also stressed that sales tax revenue fluctuates with the economy.

“Measure W makes us more susceptible to sales tax volatility,” he said. “If I were a betting man I’d say a [recession] is coming soonish. This business cycle is very long in the tooth. … We’ve got to consider the fact that sales tax revenue is volatile. We are at peak sales tax and we will have years that get much leaner.”

Later in the presentation, Hansel referenced several upcoming and costly capital projects, including new express bus routes that will be rolled out in phases starting this year plus electrification of the SamTrans fleet. Capital spending is expected to shoot up from $6 million in fiscal year 2019 to $48.3 million in fiscal year 2020 in part because of those projects.

“We need to be very cautious about embedding into the fixed cost of the system things where we get to 2030 and say ‘how’re we going to pay for that?’” Hansel said. “We’ve got to be very disciplined from a financial perspective in looking at the system and operations.”

Hansel said there the agency’s central administration building is in dire need of upgrades and needs to be addressed as well as the agency’s pension liabilities, though he cautioned against aggressively paying them off so soon after the passage of Measure W.

“If the first thing we did with Measure W is a big paydown on pension liabilities that would not be a great thing for us to do as our first thing. We need to get some organizational wins first,” he said. 

At several points in the presentation, Hansel reminded those in attendance of one encouraging milestone on the horizon.

“We get that shot of financial adrenaline in 2034 when the existing debt goes away,” he said, referring to money owed to BART for its expansion. “That’s a big help, it really is.”

zachary@smdailyjournal.com

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