A bill in the California legislature would give Caltrain, the commuter trains that connect San Jose with San Francisco, “permanent financial stability.” That’s good news if you think you will be riding Caltrains one thousand years from now, but it’s bad news for the taxpayers who will have to “permanently”–however long that is–pay for running empty trains.
Many transit agencies already have dedicated funds, by which they mean taxes that go straight into their coffers, but those that don’t whine and moan endlessly about how they would be much better off if only they had a dedicated fund. They even love to make fine distinctions: Atlanta’s MARTA complains that it has no dedicated funds from the state, but it does get a 1 percent sales tax, half of which has to be spent on capital improvements.
Transit advocates also like to point out that highways were built with a dedicated fund. Yet the gas taxes that go into that fund are highway user fees. In that sense, every transit agency has a dedicated fund because it gets to keep its user fees.
But user fees are not enough to sustain transit’s hungry appetites. As the article about Caltrain says, fares cover only 70 percent of operating costs. Instead of saying, “Maybe that means it isn’t worth it,” the article argues that everyone in San Francisco, San Mateo, and Santa Clara counties should pay a sales tax to support the 1.5 percent of Bay Area workers who take Caltrain to work (according to the 2015 American Community Survey).
We know from this list of major transit agencies with dedicated funds–which includes New York’s MTA, Boston’s MBTA, and several others with huge maintenance backlogs, that dedicated funds don’t solve an agency’s financial problem. What they do instead is give transit agencies a large chunk of money they can waste without worrying about whether anyone is actually riding their buses or trains.
Some smaller transit agencies are already threatened by Lyft and Uber. What will happen when a big transit agency with a dedicated tax loses most of its customers to private competitors? The few remaining customers it has, along with transit unions and others dependent on transit spending, will lobby to keep that dedicated tax even when alternative transportation is less expensive.
For this reason alone, legislators should be wary of creating new taxes dedicated to transit. A permanent tax to support an impermanent service is a permanent waste.