Reasons Why You Should Vote for Metro’s Sales Tax

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In the comments section on yesterday’s post about the BRU editorial in the Times, a commenter pointed out yesterday that I’ve used a lot of space detailing the arguments why people shouldn’t vote for the proposed sales tax, should it reach the ballot this fall, and precious little space devoting time to why people should vote for it.

Fortunately, Darell Clarke gives some details of the proposal and his opinion why it is a balanced compromise plan at LA Visions.  Specifically, on the issue of bus funding, Clarke points out:

Bus advocates call for lower fares and more service in the face of limited operations funds and rising costs. The solution is a bigger pot, which is where 20% of the sales tax would generate $7,880 million for bus operations over 30 years, a 70% annual increase from existing (Draft LRTP) levels.

And how regressive is a sales tax that doesn’t apply to groceries, rent, transit, utilities, or services?

To read his thoughts on the equity issue being pushed by San Gabriel Valley pols or the lack of a bicycle and pedestrian set-aside, visit LA Visions. 

Photo: Reto Kurmann/Flickr 

  • Basically, Villaraigosa has agreed to freeze fares until 2010 for all regular fares and until 2013 for seniors, the disabled, and students, meaning that LA will have some of the least expensive transit in the country if the sales tax passes. Seniors and the disabled will be able to board buses 128 hours a week at just a quarter, and the student and senior passes will be some of the lowest in the country. The consequences are fare increases and service cuts since the structural deficit will have to be filled some other way.

  • Yes, fares for transit will be the lowest in the country – but how much is the “fare” to use the freeways of L.A. County?

    How much are the “fares” to use the widened highways, developer-subsidized parking spaces, and the MTA’s highway car-towing service?

    ZERO. There are no car user fees – only indirect fees.

    The mayor would do himself a favor to build a support base for the future among those who don’t give a crap for the happy motoring pipe dreams of the 20th century.

  • Sorry, I meant to say “there are no fees at the time of use for cars, only indirect fees and subsidy from general taxes on the entire populace”.

  • Wow. There are a lot of ways of spinning a sales tax increase, but stating it’s not regressive? LOL!

    That’s Darrell Clarke for you ladies and gentlemen!

  • Matt Gleason

    1# There are road user fees. They’re called gas taxes. We have them at both the federal and state levels. They’re not perfect, but they do exist.

    2# Sales taxes are the very defintion of regressive taxation. Exempting a few key transactions does not change that.

  • I do believe that sales taxes are generally regressive; I do not believe, however, that this would be an unfairly regressive tax given the circumstances and given that the revenue it generates is going to be so directly invested into basic county transportation services that lower income Angelenos depend on.

    I would prefer it wasn’t a sales tax, but the California constitution is so damned bonkers that it’s nearly impossible to pass simple things like assessment fees that charge individual areas for transit improvements (last time I read up on it, I think you need not only a two thirds approval, but an approval of only property owners and weighted by the value of their property, ie the rich get to vote double or triple).

    Brayj, regarding your philosophy of anti-car policy, while I do hope it gains steam in the future, I think you’re demanding the impossible in the current Los Angeles. The base of support of people who think transit policy should discourage single occupancy vehicles is a very small base, but it can grow if more transit projects are built and more people realize that life can be better without a car. Without the highway funding in this bill, it wouldn’t stand a prayer of passing.

    I’m a broken record at this point, but I think if you want a better Los Angeles transit system that isn’t so car focused, this bill is a step in the right direction, and the alternative is essentially standing still while the ground gives way beneath the city.

  • To oppose this sales tax because it’s not perfect enough for bikes or the SGV or because it gives money to highways is basically making the perfect the enemy of the good. For people who truly understand SoCal politics, this is not going to come up again next year if it fails, it will not come up again in five years – we would probably not have another chance to do this for another 15 years. I don’t think it’s perfect, and I’m downright irritated that the SGV line is getting pork as a reward for a fiscal hostage crisis. But I’m willing to sacrifice my pride on the altar of civic development.

    Yes, a sales tax is regressive. But unless we’re going to re-write the California Constitution, a sales tax is the only kind of tax we could hope to pass. By the way, I don’t think re-writing the California Constitution is a bad idea, but that’s going to have to wait for a true fiscal crisis, not just Ahnold faking it.

  • Jerard

    http://www.washingtonpost.com/wp-srv/politics/special/tax/tax.htm

    “A straight sales tax is also the ultimate in regression. Advocates say there are ways to make it less hard on the poor, by exempting such essentials as food, medical care and housing from the sales tax”

    (Sounds like our current County Sales Tax)

    http://findarticles.com/p/articles/mi_qn4182/is_20060403/ai_n16222914

    “Maxwell found that exempting food from the sales tax makes it less regressive, whether applied to annual or lifetime income.

    When applied to annual income, with food exempt, the tax is 27 percent less regressive, he determined, and 36 percent less so when applied to lifetime income..

    Using a lifetime perspective and assuming an exemption for food, the Oklahoma state sales tax is nearly proportional overall and slightly progressive over the first three income quintiles, Maxwell’s report states.

    Adding services to the mix, Maxwell said, high-income households pay relatively more in sales taxes, making the tax less regressive.”

    (This is just an example of only food being exempted from the County Sales tax, like it is currently)

    http://www.jstor.org/pss/1813222

    “Studies have shown that a food exemption does reduce the regressivity or increase the progressivity of a sales tax… A sales tax is considered progressive if the effective tax rate increases with the ability to pay”

  • Matt Gleason

    Simon,
    I do not believe the alternative is nothing at all. The alternative is the smart subsidization of transit with taxes on commercial parking, or congestion tolling, or mitigation fees from developers.

    Besides, we already have 2 of these same sales taxes, and the result is a poorly planned, dysfunctional rail network AND billions in pork to cities and municipal operators.

    I cannot support this tax if its going to waste more money on Metrolink subsidies, local returns, and subsidies to the Munis. Why should the citizens of Santa Monica pay 60% of what Angelenos pay in bus fare?

  • I agree with you that we already have two sales taxes so it’s a tall order to ask for a third, but I think the political climate for this tax will create much better results. The previous subway initiative was forestalled at every turn by politicians. The west side seemed to be at war with it, and the whole thing was doomed before it began because no one had bought into the idea of the subway.

    Yes, Metro is inefficient, but I think the previous problems had a lot to do with the environment they were operating in. They were trying to build rail to places that were blocking them, and the design became dysfunctional and stupid as a result. It was the 90s and gas was cheap and the whole thing just seemed idiotic to the man on the street.

    I’d be interested to hear the numbers for congestion and parking taxes, but I wonder how much money could be generated and how such a tax would be any easier to pass given that you’d be discouraging people from using their cars without first providing them with viable rail and bus replacements for their commutes. Frankly, as someone who’s not reflexively anti-tax, I’d be happy to do both, a sales tax and more congestion pricing as we improve the system.

    As for the rest, I don’t think it’s fair to call Metrolink subsidies or local return a waste. Roads do need to be repaired, people do need to ride those trains. I would prefer something more focused on rail and bus infrastructure, but right now the percentage of the population using those services is low and the chance of passing a bill without money for street repair and carpool lane improvements is even lower.

    I really am a broken record, and I do respect all the criticism of this bill, I simply do not agree that there are better alternatives waiting in the wings. I wouldn’t go so far as to say we’d definitely have to wait fifteen years, but we have no idea whether we could find an alternative that could be passed and these projects will only get more expensive and harder to start in the meantime. My gut says that if this doesn’t pass and we did, god willing, get something else on the ballot in a few years, it’d be just as flawed because that’s politics, that’s what you need to do to get something across the finish line.

  • The stereotypical bus rider who “can’t afford” any fare increase must therefore spend nearly all of their income on groceries, rent, transit, and utilities, none of which pay sales tax in California.

    This tax is projected to cost the average county resident only $25 per year*. A low-income transit rider would pay even less, and come out well-ahead in lower fares and better service.

    *”According to the private nonprofit Los Angeles County Economic Development Corporation (LAEDC), Measure R would cost residents just $25 per person each year.” (“Metro’s Five-Point Plan”, page 6)

    See the “Revenue Alternatives for a Sustainable Transportation System” PowerPoint download for alternatives — such as fees — to sales tax funding presented at the January Subway to the Sea conference, http://www.subwaytothesea.org .

  • $25 = 0.005 of $5000. You don’t need to be an economist to know that the overwhelming majority of the county, including a good number in the “poor” category, purchase more than $5000 in taxable goods annually. Just check your online banking account statement from last month, and you’ll see you spent far more than $417 ($5000/12 months) on taxable goods last month.

    $417 is three dates, one new outfit, and lunch every other day of the week!

  • Damien, Proposition A and C currently each generate $694 million. By January 1, 2009 (the effective date of the tax), there will be 10.5 million people in Los Angeles County. Dividing the two gives you $66.09. The EDC is estimating that 62% of all spending is business to business or by customers that don’t reside in Los Angeles County. I don’t buy that number for a second. Still, assuming that the average resident pays $66 a year in additional sales tax, that’s $5.50 a month, or 18 cents a day. The campaign should focus on those numbers, and not on a $25 figure that is dubious without backup on the percentages they believe are spent by out-of-County in person purchases and business to business.

  • Let’s talk about low-income budgets. From the 2007 “Poverty, Jobs and the Los Angeles Economy” at http://www.laane.org:

    “In Los Angeles, the federal poverty line was $20,000 for a family of four in 2006. The California Budget Project estimates that even single adults living in Los Angeles would need more than $24,000 to meet their basic needs. In this report, the number of people living below 200 percent of the federal poverty line serves as a measure of those who lack the income to cover basic necessities and are therefore poor. The federal poverty level is used as a measure of the number of people living in extreme poverty.”

    “An estimated 1,505,004 million people, or 15.4 percent of Los Angeles County residents, live below the federal poverty threshold, considered in this report to be a measure of extreme need.”

    “An estimated 37.6 percent lived below 200 percent of the federal poverty line, which was $40,000 per year for a family of four in 2006.”

    A $10/hour full-time job is about $20,000 per year.

    Let’s add up some round numbers:
    Rent & utilities = $1,000/month
    Metro monthly pass = $62
    Groceries @$100/week = $400/month
    Social Security deduction @6.2% = $103
    Everything else = $102

    That’s what $20,000 per year buys. Sobering.

    But they would only pay $6.12/year = 50 cents/month for the additional 1/2-cent sales tax on “everything else”, far less than their transit benefits received.

  • “Why should the citizens of Santa Monica pay 60% of what Angelenos pay in bus fare?”

    —————-

    That seems a simple enough question on the surface. However, it isn’t so cut and dry. The reality on the ground is that transit-dependent Westsiders who use the Big Blue and/or Culver City Bus Lines, and who also use Metro bus lines, which is practically everyone, also need to buy more expensive monthly EZ-Passes than the regular monthly Metro pass.

    So, I’m not getting a subsidy at all. If anything, I am paying more money for a monthly pass than someone who lives elsewhere in the county. And, because there is avoidance of duplication and I forced to make unnatural transfers at Wilshire/Westwood, Pico/Rimpau or Fairfax/Washington.

    I would personally wish to see the base fare for the Big Blue Bus and Culver City Bus rise to $1.25, but the have the monthly EZ Pass cover everyone for the same cost as the Metro monthly pass.

    Seeing that there is Metrolink and the skeletal Metrorail elsewhere in the county, and that I pay more for a monthly pass than someone on the eastside, who is really subsidizing whom?

  • Damien Goodmon, shouldn’t you be devoting yourself to preparing for the PUC hearings next week? It will be sink or swim for the crusade of you and your allies.

    Anyone who wants to monitor the whole Expo grade crossing thing, the hearings start on the 11th at 10 a.m. at the Junipero Serra State Office Building, 320 West 4th Street, Suite 500 in downtown Los Angeles (and may continue for the rest of the week)
    (may continue August 12-15)

    This is regarding applications for Expo Light Rail grade crossings at:
    Harvard Blvd – A.06-12-020
    Farmdale Ave – A.07-05-013

    The PUC website has documents, etc. on these applications, etc. (search under the A. numbers) and a link to the agency daily calendar that lists the impending hearing:
    http://www.cpuc.ca.gov/puc

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