06/11/2012 07:10 pm ET Updated Aug 11, 2012

Why Do Transportation Sales Tax Measures Succeed?

Local roads are falling apart, transit riders have been left behind, and the money to fix it all is disappearing just as quickly. After a few decades of successful local sales tax measures, a statewide infusion of bond funding in 2006, and one-time funds from the federal stimulus bill in 2009, the prospect of increases in state or federal aid for California transportation projects seem dim. It now appears that the most secure transportation funding option California's local governments can turn to is the local sales tax measure.

Local governments in California currently lack the funds to maintain their local roads and transit system. Under the reasonable assumption that further state or federal aid to do this is not likely, local officials must plan for how to raise the needed funds on their own. The addition of a local sales tax is an option, but the two-thirds majority vote, required in most cases, is an obstacle. This thesis uses regression analysis to determine the local factors that explain the success of past sales tax measures. This information, along with a review of the literature and interviews with stakeholders, offers policymakers five suggestions about the viability of this option for
raising local funds.

The first lesson for future policymakers is that cities in general are more successful at passing sales tax measures. While there are economic and political benefits to having countywide measures, that luxury does not exist in every place. Cities in conservative areas, such as Roseville in Placer County, would improve the odds of a measure passing by going it alone. In Yolo County, the population and the sales tax generating locations are in cities, so only the cities have taken measures forward, and they have been successful.

Second, having an existing measure does not necessarily ensure the success of a future measure. Sometimes jurisdictions have to take a measure for renewal several times before it passes, but there is significant time and expense involved with every campaign. Once a measure initially passes, implementing agencies need to remind voters of what projects they supported and show how their sales tax dollars are being used. This makes it much easier when a renewal is up. While one of the benefits of local-option sales taxes is that they are practically invisible to most consumers, this is also a downside, as many voters are not able to discern the value of an increment of tax from their total sales tax burden.

Third, the politics of the voters matter, and Democrats, in general, are more likely to vote for sales tax measures. Once the decision is made to pursue a sales tax measure, it needs to be crafted with electoral success as the primary goal. Proponents can determine their success in part by choosing their voters -- when is the election, what interests are backing the campaign, and who is actively targeted to turnout.

Finally, the age of the electorate can have a very significant impact on the results. In general, voters under 30 and over 64 years old are less likely to support measures than those in between. Whether this is because of greater transportation needs in midlife, or because of a
higher time-value of money, proponents should target both sets of voters accordingly, and perhaps consider more short-term benefits, such as transit operating subsidies, in communities with a greater share of voters in the youngest and oldest groups.

While local officials cannot change these factors, the success of these taxes is not out of their control. A better understanding of the general tendencies of voters can help policy makers as they develop future measures.

Link to Erik's thesis.