Caltrain tax plan dying slow death

Pine and other San Mateo County officials have warned the absence of a dedicated source of revenue for Caltrain could lead to a system-wide shutdown as the railroad struggles to stay afloat amid historically low ridership due to the pandemic.   

To be placed on the November ballot, the proposed eighth-cent sales tax must be approved by the Caltrain board as well as the boards of supervisors and transit boards in San Francisco, San Mateo and Santa Clara counties, the three counties served by the railroad.

The three counties have not been able to agree on ballot language for the proposed tax, largely because of disagreements about Caltrain’s governance structure. The inter-county impasse also became an intra-county one with Friday’s vote.

“I feel I have to vote no. I worry that the current resolution is unwinnable and vulnerable,” said SFMTA Board Member Cheryl Brinkman, who cast the only opposing vote on the board, though one of her colleagues noted the conditional iteration of the tax was not their preferred approach.

If all seven boards do somehow come to a consensus on a Caltrain ballot measure, they would need to do so before the Aug. 7 deadline.

But Pine said there’s no indication that the San Francisco Board of Supervisors will reverse course and adopt a clean measure. He also said it’s unclear if Santa Clara County will take any action at all in light of SFMTA’s vote or if the boards in that county have the requisite number of votes for an alternative or clean measure.

If SFMTA had approved the conditional tax, San Mateo County officials likely wouldn’t have considered it anyway, Pine said Thursday.

“I do not foresee the SamTrans board or the San Mateo County Board of Supervisors considering the San Francisco alternative given that it is legally flawed, would be unwinnable at the polls and would impair Caltrain’s ability to effectively operate and expand the railroad,” he said.

Pine’s assertion that the alternative measure is legally flawed has been echoed by San Mateo County Counsel John Beiers, San Mateo County Transit District Special Counsel James Wagstaffe and State Sen. Jerry Hill, D- San Mateo, among others. Hill authored Senate Bill 797, which establishes the process whereby a sales tax can be placed on a ballot for Caltrain.

‘Strings attached’

Hill said a ballot measure with conditions such as the one proposed by the San Francisco Board of Supervisors is illegal and not the intended outcome of SB 797.

“There were not strings attached to a vote and no conditions on where the money would go other than directly to Caltrain. Not to an escrow account, not to be held somewhere for years and not a bait and switch to voters,” Hill said.

San Francisco’s alternative measure includes six conditions listed verbatim below:

• Revenues will be held in a special escrow account to be disbursed by the Caltrain board for eligible expenditures at any time with a two-thirds majority;

• Up to the first $40 million collected shall off-set member operating contributions and replace COVID-related fare losses if no/limited additional federal emergency relief funds are made available;

• If a governance solution is found, the special escrow account is closed and funds transferred to Caltrain board regular accounts/administration;

• If no governance solution is found by Sept. 30, 2021, another $40 million shall be made available to operations;

• If no governance solution is found by Dec. 31, 2022, all parties commit to working with state delegation on a legislative solution in 2023 legislative session; and

• The Caltrain board shall appoint an independent special counsel and auditor (separate from SamTrans) within 90 days of placement of this measure on the November 2020 ballot

Wagstaffe expanded on Hill’s perspective in a letter that says a ballot proposal for Caltrain must be “clean” and without conditions. SB 797 states “the net revenues from the tax” must “be used by the board for the operating and capital purposes of the Caltrain rail service,” according to the letter.

“Simply put, the law means the political bodies needing to approve the ballot measure must not impose collateral or delaying conditions on use of the funds,” Wagstaffe wrote. “Thus, the law prohibits linking the straightforward fiscal measure designed to save Caltrain to unrelated — if even salutary — organizational or other objectives.

“Specifically, it is my strong opinion that larding approval with requirements of changed governance or targeted or restricted spending requirements will render the tax subject to a successful taxpayer legal challenge,” Wagstaffe said.

Wagstaffe added there is nothing in the legislation that prevents the three counties from discussing structural changes to Caltrain, but said “the California Legislature was saying you can do that, just don’t tie such political negotiations to the overall economic well-being of the railway.”

Attorneys for San Francisco and Santa Clara counties have not publicly announced an opinion on the conditional measure.

Concerns over governance

San Francisco supervisors, in particular Aaron Peskin and Shamann Walton, have argued Caltrain’s current governance structure is unfair because it gives San Mateo County too much control over the railroad. While the Caltrain board, which decides policy, has equal representation among the three counties it serves, the railroad is managed by SamTrans, San Mateo County’s bus agency, and it’s legally entitled to that role as long as it chooses.

SamTrans became the managing agency of Caltrain in exchange for advancing funds for both Santa Clara and San Francisco counties for the purchase of the right-of-way from Southern Pacific railroad. San Mateo County provided $82 million for the purchase and is still owed roughly $20 million.  

Caltrain’s operating budget today totals $155.7 million with $106 million coming from fare box revenue. The three counties served by the railroad in fiscal year 2020 contributed a total of $52.4 million to both the operations and capital budgets.  The eighth-cent sales tax was estimated to raise about $108 million a year and preclude the need for the individual counties to contribute money because it would provide a dedicated funding source. The additional money was also anticipated to fund some service expansion in a previously approved Caltrain Business Plan.

Peskin and Walton ultimately want to split Caltrain from SamTrans and have it be run by its own staff and legal counsel. They also want San Francisco and Santa Clara counties to have equal say over the hiring and firing of Caltrain’s executive director, who is currently selected by the SamTrans board.

“It is time to have shared governance,” Peskin said during Tuesday’s Board of Supervisors meeting. “It is time to extract Caltrain from SamTrans and their intermingling of responsibilities and potentially funding.”

Land ‘at stake’

During the meeting, Peskin also said developable land owned by Caltrain is “at stake” in the ongoing governance discussions.

“What’s at stake is a lot of land,” He said. “There are somewhere around 700 acres of land within the Caltrain right-of-way in these three counties. Many of them are developable for smart growth for affordable housing. Heretofore we have not been able to have those conversations because in essence the [Caltrain board] is a paper board.”

Hill found those remarks revealing as to the motives behind demands for governance changes.

“It’s about taking over control of the Caltrain real estate holdings, potential development of the station at Fourth and King and the miles of right-of-way that potentially could bring revenue to the city of San Francisco,” Hill said. “The motivation is land, money, greed and it’s power. San Francisco thinks they have to be in control of everything they touch.”

zachary@smdailyjournal.com

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