Proposed Transit Tax Should Be Paid by Businesses, Not People, Progressive Group Says

As state lawmakers weigh a proposed regional tax measure designed to bail out deficit-ridden Bay Area transit agencies, a coalition of progressive labor and public transportation advocates has launched a campaign aimed at rewriting a key provision and shifting the tax burden.

Bay Area Forward, which includes union locals representing workers at BART, Muni and AC Transit and the advocacy group Voices for Public Transportation, wants legislators to drop the proposed measure’s sales tax in favor of a gross receipts tax on the region’s businesses.

The group argues that a sales tax would impose an unfair burden on Bay Area residents and transit riders who pay high fares and already support public transportation with a variety of sales and parcel taxes.

The coalition also points to recent polling that it says shows voters would be more receptive to a business tax than a sales tax. It also says a business tax measure could raise more money for transit operators who are facing billions in deficits over the next several years.

“At the end of the day, we have a choice,” said Ryan Williams, a political organizer with Service Employees International Union Local 1021 and campaign director for Bay Area Forward. “Do we want a regressive sales tax that would increase the cost of living for folks and that doesn’t quite fund the amount needed for transit, or do you all want a progressive business tax where big businesses pay their fair share and we can have thriving public transit agencies?”

But the group’s proposal has drawn a cool response from the lawmakers leading the effort to pass a bill to authorize the ballot measure. And the gross receipts tax has provoked outright hostility from a host of business groups across the region.

“We understand and respect that there are diverse views about the best funding source to shore up and strengthen our transit systems,” state Sens. Scott Wiener (D–San Francisco) and Jesse Arreguín (D-Berkeley) said in a joint statement. “There are pros and cons to any funding source. We are very late in this multi-year process, and changing the funding source at this point will be difficult.”

Earlier this week, 13 business groups, including the Bay Area Council, Silicon Valley Leadership Group and the San Francisco and San José chambers of commerce, sent a joint letter to leaders of the Legislature’s Bay Area caucus promising “strong and sustained opposition” to a gross receipts tax.

“Introducing new business taxes would undercut our current efforts to make our regional economy more competitive and would not support a vibrant economy,” the groups said.

“That labor is proposing this now at the 11th hour after a more than yearlong process in which they participated is frustrating, to say the least,” the Bay Area Council business group said in a separate statement. “We would not play any role, other than possibly an opposition role, in a campaign in which a payroll, gross receipts or other business tax represented the funding mechanism.”

The Bay Area Forward proposal comes several months after Wiener and Arreguin introduced SB 63, which would authorize a transit tax measure for the November 2026 ballot in as many as five Bay Area counties. The measure passed the state Senate earlier this month and will get its first Assembly committee hearing in early July.

The group’s plan is the latest twist in a process that began early last year, when Wiener introduced an ambitious bill that would have authorized a nine-county vote and raised as much as $1.5 billion a year for transit and other regional transportation needs. The bill included several potential tax options: a payroll tax, parcel tax and sales tax.

Wiener pulled the bill, SB 1031, amid disagreements about how much of the measure’s funding would be returned directly to the counties where it was raised. The Metropolitan Transportation Commission then appointed a select panel of local officials, transit advocates and labor and business representatives from across the region to develop a framework for the 2026 ballot measure.

Although the select committee considered a range of different tax options, disagreements on the panel led the Metropolitan Transportation Commission to recommend that legislators adopt a sales tax as the revenue mechanism in SB 63.

San Francisco-based urban policy research organization SPUR says it has “deep-seated reservations” about a new sales tax because of its regressive nature — it poses a heavier relative burden on the limited resources of lower-income taxpayers than on the more affluent. But the group says it supports the tax in this case because the money it raises will go to fund day-to-day operations of transit services that lower-income people rely on.

Polls conducted by the MTC and BART over the past six months have shown that a new transit sales tax attracts just over 50% support after respondents hear both positive and negative arguments for the levy. Bay Area Forward’s polling on its gross receipts tax proposal gains 57% backing after respondents hear the pros and cons.

Key details of SB 63 are still under negotiation. Currently, the ballot measure that the bill would authorize would take place in only three counties: Alameda, Contra Costa and San Francisco. But the legislation also expresses a preference for San Mateo County to participate and gives Santa Clara County the option of joining. A decision on which counties will be included is due in early August.