To avoid the roller coaster of periodic financial emergencies, Caltrain needs a stable source of operating funding. There are a variety of ways to potentially pay for Caltrain operations. This year, the Silicon Valley Leadership Group, an organization of business leaders, held a series of forums bringing together leaders and residents to brainstorm funding options. The Leadership Group then hired a consultant to review the revenue potential of the various choices.
Why does Caltrain need funding, and how much does it need?
Caltrain currently gets nearly half of its revenue from riders, which is comparable to some of the best known, most heavily used commuter transit systems in the US such as New Jersey Transit and Long Island Railroad. This leaves nearly half of its operating budget to come from public funding. Public funding for transit is the norm in the US, and in Europe as well.
Sources of Caltrain Operating Funding (graph from Caltrain)
Other major transit services in the Bay Area have dedicated funding sources. For example, VTA and SamTrans are funded by sales taxes, and BART is funded by a combination of sales and property taxes. But Caltrain is unique in having minimal dedicated funding. The largest amount of Caltrain’s public funding – 25 – 30% of its budget – comes from a consortium of three transit agencies in Santa Clara, San Mateo, and San Francisco Counties. When any of these services has financial trouble, they prioritize their own directly run services, reducing their contribution to Caltrain. This leaves Caltrain on a roller coaster ride, often needing to cobble together emergency funding.
More Information and Analysis on Funding Options for Caltrain
Based on the Leadership Group’s financial analysis, and additional analysis from Friends of Caltrain, Friends of Caltrain has summarized the major options to pay for Caltrain, as well as additional funding options that would not fully cover the need.
Major public funding options
According to the Leadership Group analysis, the major potential sources of funding include sales tax, parcel tax, gas tax, and payroll tax.
Funding option Rate Amount raised Comments/Issues
|Sales Tax||1/20 cent||28 million||Familiar means of funding transit in the region, but regressive|
|Parcel Tax||$35||30 million||In 2012 a parcel tax would compete with measures to pay for schools|
|Gas Tax||2.5 cents/gallon||$30 million||Helps discourage driving. Sensitive with high gas prices.|
|Payroll Tax||Not analyzed, but SF levies a 1.5% sales tax.||$5 – $20 million||Could be adjusted by income to be more progressive; Opposed by the Leadership Group, a major source of support for Caltrain.|
This table lists the level of tax that could cover Caltrain’s need for operating funding, if all of the money raised went to Caltrain. It might be better for voter approval if the tax went for more purposes in addition to Caltrain, such as other transit services or road repair. The leadership poll will test these possibilities. If so, a higher level would be needed. The table below shows the amount raised from different levels of tax.
|Sales tax||1/10 cent||$56 million|
|1/8 cent||$70 million|
|¼ cent||$140 million|
|Parcel tax||$25||$20 million|
|Gas tax||2.5 cents/gallon||$30 million|
|5 cents/gallon||$60 million|
|10 cents/gallon||$121 million|
The consultant to the Leadership Group also reviewed the option of full highway tolling for all drivers on 101 and 280. In theory, this could raise over $20 million. But it is harder and less practical to implement than allowing single occupant drivers to use the carpool lane for a fee, which is quite practical with transponder technology. Also, tolling all drivers on 101/280 would be expected to garner major opposition and be very hard to pass.
A regional gas tax?
The Metropolitan Transportation Commission is also investigating the potential for a Bay Area regionwide gas tax to help with the financial sustainability of transit regionwide. Caltrain isn’t the only transit agency facing challenges. The state’s financial problems have cut a hole in the budget for Bay Area transit overall, and a regionwide tax would compensate. The MTC already has legislative authority to collect this tax, if it is approved by the voters. If a regionwide gas tax is on the ballot, then Caltrain funding would be included in this overall plan, instead of raising funding for Caltrain separately.
A gas tax is potentially a strong source of funding for transit and transportation. Since the money from the tax would go to relieving congestion by taking riders off the roads and improving roads, there is the most direct connection between payment and result. Also, California has aggressive goals around improving the environment and reducing carbon emissions. California’s AB32 global warming policy upheld by voters who rejected Prop 23 which would have overturned AB32. SB375 is intended to coordinate transit and land use, with the intent of reducing greenhouse gases. A tax on gas helps further these choices by discouraging the driving of polluting vehicles.
Are Bay Area voters willing to support their values with their pocketbooks?
Other public funding options – too small or too slow
There are other funding options that could help fund Caltrain operations, but do not bring in enough funding to fully cover the need, or will take longer to implement.
|Funding option||Amount raised||Comments/Issues|
|Re-examine funding split among MUNI/SamTrans/VTA to reflect current usage||$0-$5M||Could be implemented as soon as FY 2013|
|High Occupancy Toll Lanes (tolls could be adjusted to provide congestion pricing)||$5-$20M||Don’t yet have a carpool lane in North San Mateo County; would take longer to implement|
|Vehicle license fees||$5 – $20M||Builds on existing mechanism. Requires legislative approval to allow VLF to be levied by local jurisdictions with voter approval (SB 653/Steinberg).|
|Transit passes in lieu of parking||$0-5 million||Could be adjusted by income to be more progressive|
|Vehicle Miles Traveled Fee||> $20 Million||More highly correlated with road use than gas tax as cars become more fuel efficient. But the methods to collect are immature and raise privacy issues.|
|Increase bridge tolls||$5-$20 million||Poorly correlated to Peninsula transit/transportation users|
|Sell carbon credits under AB32||$0-$5 M||Carbon trading not yet implemented|
|Congestion pricing – San Francisco only||$0- $5M||Opposition in San Mateo County since traffic is balanced in both directions|
Caltrain marketing and service improvements
Riders and stakeholders had many suggestions for improvements to Caltrain marketing and service. These improvements would not completely fill Caltrain’s operating budget needs, but could improve rider revenue, ridership, and rider support.
|Sports/Entertainment fees||Add transit payment to ticket fee (instead of parking)|
|Wifi on trains||Increasingly common amenity|
|More food vendors/coffee carts|
|Create annual pass|
|Create systemwide pass|
|Increase use of pre-tax commuter benefits|
|Improve connectivity and first-last mile||Better scheduling connections, improved shuttle services|
Next steps for Caltrain funding
Based on its analysis, the Silicon Valley Leadership Group is going to conduct polling on the top several options, levels, and messages. The results will guide decisions about needed legislation and ballot measures for the 2012 election.
In California, taxes and need to be approved by voter initiative with at least ⅔ approval. This is a high level of support, so it is important to test voter preferences.
Of course, voter preferences also can be affected by advertising, information, and organizing. To increase the likelihood of public support for Caltrain, it is important to show the value of the service to the region, to people who benefit from riding, from less traffic on the highway, clearner air and a stronger economy. It is much easier to pay for some thing that you value.
As can be seen in recent MTC polls and public discussion, voters want to see that their transit dollars are spent efficiently. It is important to show the strong performance of Caltrain compared to other services. This is particularly important since voters who hear about Caltrain’s financial problems often jump to the conclusion that it has problems with ridership or is especially inefficient. Neither of these things are true.
Secondary sources and service improvements
There are a number of secondary of funding sources that won’t cover Caltrain’s operating needs in the short term, but are worth pursuing to build funding for transit. These emerging sources include HOT lanes, parking reduction programs, congestion pricing, and VMT charges. It is useful to take incremental steps now to move these initiatives forward, as part of a long-term strategy to have driver pay more of the true cost of driving, and to balance investments in driving with other forms of transportation.
It is important for Caltrain to continue to make improvements to its service and marketing. These changes can improve rider revenue, and reduce the need for operating subsidy as we have seen with recent surges in ridership numbers with Baby Bullet service and bicycle accommodations. They also can significantly improve rider goodwill and perception, which makes riders more eager to advocate for Caltrain. Riders are a minority of voters, but a core constituency for a funding campaign.