Senate Bill 1 (SB1)
SB1, the Road Repair and Accountability Act of 2017, is a landmark transportation investment package that increases funding for transportation infrastructure across California by more than $50 billion over the next 10 years. SB1 investments, funded by a combination of gas taxes and vehicle registration fees, are split equally between state-maintained transportation infrastructure and local transportation priorities including local streets, transit, and pedestrian and bicycle projects.
SB1 provides San Francisco with over $60 million per year in formula-based funds that will be used to repave and maintain our roads as part of the Pay-Go Program, maintain and upgrade our rail infrastructure, and increase Muni service on our city’s most crowded lines. In addition, regional transit providers like BART, Caltrain, and the San Francisco Bay Ferry will receive over $25 million per year for much-needed improvements including escalator upgrades, hiring more police officers and station cleaners, improving safety and reliability, and enhancing ferry service.
Regional Measure 3 (RM3)
RM3 was passed by voters on the June 2018 ballot in the nine-county San Francisco Bay Area to build major roadway and public transit improvements with increased tolls on all Bay Area toll bridges except the Golden Gate Bridge. RM3 would implement toll increases of one dollar in 2019, one dollar in 2022, and one dollar in 2025. The revenue would be used to finance a $4.5 billion slate of highway and transit capital improvements along with $60 million annually to provide new bus and ferry service in congested bridge corridors and improved regional connectivity at the future Transbay Terminal. A legal challenge that was filed against the measure recently failed, but funds from this source have not been released to the City as of the time of publication.
Gross Receipts Tax for Homelessness
In November 2018 San Francisco voters approved Proposition C, a business tax measure to fund homelessness services. The measure applies a tax of 0.175% to 0.69% on gross receipts for businesses with over $50 million in gross annual receipts, or 1.5% of payroll expenses for certain businesses with over $1 billion in gross annual receipts and administrative offices in San Francisco.
The San Francisco Controller estimated that tax revenues under Proposition C would total between $250 million and $300 million annually. Tax revenues from Proposition C would be allocated to permanent housing, mental health services for homelessness individuals, homelessness preventions, and short-term shelters. Though the expected use for Prop C funds is primarily services, costs for shelter construction, supportive housing, or capital costs that could help end homelessness would be eligible uses for this source. As with RM3, Proposition C was approved by voters, but a legal challenge has been filed against the measure. The Treasurer’s Office will collect the tax, but the funds will be placed in reserve until the legal challenge has been resolved.
Hotel Tax for Arts and Culture
In November 2018 San Francisco voters approved Proposition E, which allocates 1.5% of the base hotel tax to arts and cultural purposes through the Hotel Room Tax Fund. Proposition E will provide a set-aside for various arts and cultural services including grants and a cultural equity endowment. Arts-related capital projects such as those at the City’s cultural centers would be an eligible use for the Arts Commission from this source at a baseline level of approximately $1 million. The Controller’s Office estimates an overall additional $13 million to arts spending in FY2022 as a result of this measure, depending on fluctuations in the tourist economy and growth of the hotel tax overall.
Homelessness Prevention Housing Bonds Measure
In November 2018 California voters approved Proposition 2, authorizing the state to bond against revenue from the so-called “millionaire’s tax” for homelessness prevention housing for persons in need of mental health services. San Francisco has a longstanding need for homelessness prevention housing and mental health services and facilities, and a full spending plan for these revenues is under development.