Caltrain's 'Lifeline' Sales Tax Appears to Be on Track for Approval

Updated 9:45 a.m. Wednesday, Nov. 4

Caltrain officials and supporters are breathing a sigh of relief after voters in the three counties served by the rail line appeared to have passed a new one-eighth-cent sales tax that the agency says will help it survive a major drop in ridership due to the coronavirus pandemic, and pave the way for an ambitious program of improvements and expansion in decades to come.

Measure RR, which gives the three-decade-old transit agency its first dedicated source of funding, needed a two-thirds “yes” vote among all ballots cast in the three Caltrain counties — San Francisco, San Mateo and Santa Clara — to pass. With well more than half of expected ballots counted in the three counties by 9:30 a.m. Wednesday, the measure was passing with a 70.4% "yes" vote.

The measure was getting 74% support in San Francisco, traditionally supportive of regional transportation measures, and 72.1% in San Mateo County, which made the initial local investment that bought the rail system from Southern Pacific in 1991 and which has run the agency ever since. The vote was closer — 67.4% "yes" — in Santa Clara County, where officials had expressed particularly vehement reservations about allowing San Mateo County to continue its role as Caltrain's operator.

"It's just phenomenal to have this level of support from the voters and the taxpayers," said Dave Pine, a member of the San Mateo County Board of Supervisors and chair of the Peninsula Corridor Joint Powers Board that oversees Caltrain.

Rail agency officials and supporters had said the tax, which will raise an estimated $100 million a year for the next 30 years, would allow the system to weather the drastic decline in fare revenue that followed the onset of the coronavirus pandemic. The revenue is also intended to help pay for acquiring new electric trains and running more frequent service as part of a plan that would nearly quadruple daily ridership by the year 2040.

Historically, Caltrain has depended on fares to cover about 70% of its day-to-day operating costs — a farebox-recovery level that industry officials say is the highest among all major U.S. transit systems.

But once COVID-19 restrictions took effect, weekday ridership all but vanished, initially falling from about 65,000 a day to about 1,500, a 98% plunge. And despite the agency continuing to run 70 trains a day, average weekday ridership is still only about 3,500 — a 95% decrease.

Pine said the first order of business, now that the tax appears to have passed, is to get through the pandemic.

"Our greatest strength is also our Achilles' heel in that 70% of our revenue is from riders, and we don't have riders," Pine said. "So we have our lifeline to make it through COVID, and then we'll look forward to a future of expanded service, more frequent and faster trains and more ridership on the corridor."

A poll conducted for Caltrain and released in June showed the tax falling just short of the required two-thirds majority, with 63% approval.

That level rose to 70% when survey respondents heard arguments for the measure — essentially that the tax would help Caltrain expand and improve as well as ease congestion on the region's freeways. But a negative message — one emphasizing the uncertainties about transit ridership after the pandemic and questioning whether the tax is needed for a commuter rail system that serves a mostly affluent clientele — led support for the measure to drop below 60%.

Measure RR was supported by scores of elected officials in the three counties, from Sen. Dianne Feinstein to local town council members. Major business, environmental and transportation advocacy groups as well as some of the Bay Area's wealthiest companies also endorsed the tax — and contributed to the "Save Caltrain" campaign's $2.7 million war chest.

Most notable among individual supporters: Pine, the Caltrain board chair, who loaned the campaign $500,000 to help it keep ads on TV when other donations were slow to arrive. He said the campaign has repaid the loan.

The Silicon Valley Taxpayers Association led the unfunded opposition, which argued that a system running at just 5% capacity doesn't need a tax boost and that the agency should be cutting its budget to get through the pandemic. Opponents also objected to an added sales tax as a funding mechanism, pointing out it's a regressive levy that falls more heavily on lower-income taxpayers than on the affluent.

"Caltrain needs to just hunker down, sit back and wait and figure out what to do — cut back as much they can to keep going, but not go and start taking money from people who are losing their jobs and having to cut their own expenses," said Eric Garris, who signed the "No on RR" argument on the San Francisco ballot. "... I'm betting on at least one-third of the people being smart enough to realize that these are just people asking them for more money because they're worried about their jobs and they can take it from us."

The agency has survived the pandemic downturn so far largely thanks to operating subsidies it gets from the three Caltrain counties, but mostly because of a federal CARES Act bailout that distributed $1.3 billion to Bay Area transit systems. Public transportation districts from across the country, including BART and Muni, have lobbied unsuccessfully for months to persuade Congress and the Trump administration to pass a second round of aid.

The uncertainty of future finances has prompted Caltrain staff to study different service scenarios, ranging from a total system shutdown to targeted reductions that would reduce weekday runs and expand the weekend schedule in a move the agency says would better serve lower-income riders and essential workers.

Measure RR's path to the ballot began with Senate Bill 797, a 2017 bill by state Sen. Jerry Hill, D-San Mateo, that would allow the Caltrain board to place the one-eighth-cent tax on the ballot if the boards of supervisors and transit agency boards in Santa Clara, San Mateo and San Francisco all approved the measure.

That requirement for six separate votes nearly derailed the measure when elected officials in both Santa Clara County and San Francisco insisted on a commitment to take away San Mateo County's role as Caltrain manager. A special Caltrain board committee has begun work on the governance proposals, which under an August resolution are supposed to be decided on by the end of next year.