San Francisco and Santa Clara counties are at odds with San Mateo County over the governance of Caltrain. The dispute could sink a proposed tax measure intended to keep the rail agency running. (Kevin N. Hume/S.F. Examiner)

Board of Supervisors approves Caltrain sales tax measure that includes governance reforms

Three-county struggle struggle over rail network’s leadership and accountability continues

The San Francisco Board of Supervisors unanimously approved a sales tax measure Tuesday to offer voters this November that would provide Caltrain with $40 million annually for two years, or until a compromise on governance reform is achieved.

But the measure faces questions about its legality and opposition from San Mateo County.

Tuesday night’s vote was the latest chapter in what Supervisor Aaron Peskin called an 18-month fight for true regional governance.

“The best time to have this conversation is when money is on the table. I know it’s been an unpleasant conversation,” Peskin told his fellow board members of the wave of public response that’s “inundated” the offices of many supervisors.

Santa Clara and San Francisco county leaders have allied in favor of putting a sales tax measure on the ballot to fund Caltrain, but only if it is accompanied by a plan to address accountability and organizational concerns.

They’ve pitted themselves against their peers in San Mateo County, who advocate for a “clean” measure that would ask voters to weigh in on the ⅛-cent sales tax as a standalone.

San Mateo County Supervisor Dave Pine described the revised measure as “illegal, unwinnable at the polls, and unworkable for Caltrain,” and called it a “poison pill” that would “put the railroad in great peril.”

Caltrain has no stable funding source of its own. It’s tenuously propped up by farebox revenue and contributions from the three counties it serves to make up the difference.

In ordinary times, it’s a precarious arrangement. In the throes of a pandemic that’s gutted county and transit agency budgets and all but emptied Caltrain’s train cars of commuters, the rail agency faces an existential threat.

A ⅛-cent sales tax that was initially proposed for the November ballot, if passed by voters, would have provided an estimated $108 million annually of dedicated revenues to the beleaguered agency. Though not a concept birthed by the pandemic, many say it’s all the more imperative now.

Under the revised version San Francisco leaders are backing, it is only guaranteed $40 million per year. The remainder of revenues collected would go into an escrow account that the Joint Powers Board, Caltrain’s governing body, could use for operational purposes with approval by a supermajority.

Once a consensus on governance reform is reached, the measure stipulates the escrow funds would be released to Caltrain.

In question is the relationship between Caltrain and San Mateo County’s transit agency, SamTrans, which uses its own staff and resources to manage regular operations of the rail network.

Peskin and Supervisor Shamann Walton, who also serves on the Joint Powers Board, nearly submarined the measure when they declined to introduce it as expected on July 14.

They said they couldn’t support a measure that didn’t include a process to disentangle SamTrans from Caltrain.

Though they’re expected to provide nearly 80% of revenue from a ⅛-cent sales tax, San Francisco and Santa Clara counties levy limited influence over the agency’s functions through the Joint Powers Board, according to Peskin, who called it a “paper board” lacking real control.

However, after a public backlash, Supervisor Matt Haney took up the cause and revived conversations with his tri-county counterparts.

Peskin denied claims the attempt to revise the measure is a “power grab,” but he did highlight the roughly 700-acres of land within the Caltrain right-of-way that could be used for “smart development and affordable housing,” if equal regional governance existed.

Walton later emphasized San Francisco having a bigger say in what happens with the railroad will enable future leaders of Caltrain to advance equity measures that will diversify its ridership. Nearly 50% of Caltrain riders are white, and the average annual household income is $158,000, according to a 2019 rider survey.

Critics of the contingencies say while legislators quibble over authority, more than 60,000 people who rely on Caltrain for their daily commute or other essential trips will be collateral damage once the stay-at-home order is lifted.

Though many welcome the idea of change to Caltrain’s structure, they consider it secondary to the more pressing need to guarantee its existence first.

Walton counters that ensuring transparency, equal accountability and regional representation is actually crucial to the long-term success of the railroad, which he calls a “crucial asset to our county and the Bay Area,” and believes this measure gets Caltrain “to where it needs to be” while maintaining the interests of San Francisco residents. That, as he put it to his fellow supervisors, “is our job.”

Critics say SB 797, the statewide law created in 2017 to provide this funding pathway for Caltrain, doesn’t permit counties to collect revenues for any purpose other than running the rail network.

If Caltrain’s receipt of the funds is contingent upon governance reform, the measure doesn’t comply with state law, according to Senator Jerry Hill who penned the legislation.

Getting the measure on the ballot requires approval of the exact same version from the Board of Directors and transit agencies in each of the three counties.

San Mateo County stands united in its opposition. Neither SamTrans nor the Board of Supervisors still have given any indication they would sign off on the proposal, both having already approved a condition-free measure that would put the revenue measure on the ballot unencumbered by governance requirements.

The SFMTA Board of Directors indicated it will follow the lead of the Board of Supervisors, and it will vote on the tax in a special session Friday July 31. SFMTA would no longer make its annual contribution to Caltrain, freeing up an estimated $14 million in its budget facing financial free-fall that would otherwise go to fund the rail network next fiscal year.

Santa Clara’s Board of Supervisors will vote August 6. It postponed last week’s vote when one supervisor wasn’t present, but it’s expected to join San Francisco’s board in approving this same measure.

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