SMART approves sales-tax extension measure for March 2020 ballot

Voters in Sonoma and Marin counties will decide in March whether SMART is worthy of 30 more years of sales-tax revenues after the rail agency on Wednesday finalized a funding renewal measure for the 2020 primary ballot.

The Sonoma-Marin Area Rail Transit board spent just minutes formalizing what its members recognize is a turning point in the commuter rail system’s decadelong existence. It was done with little fanfare as the 12-member board saw the step as procedural after it supported the same choice last month with a unanimous vote following a half-year of deliberations.

Given the March vote’s implications for the agency’s long-term financial health, it will essentially serve as a referendum on how SMART has performed and delivered on its promises since train service began in August 2017. If residents in the two counties offer their support as they did in 2008, it will extend the agency’s quarter-cent sales tax for a 30-year period to guarantee SMART’s primary funding stream into 2059. If they fail to provide the two-thirds majority the measure needs to pass, it could jeopardize future expansion and lead to cuts in service, the agency’s leaders warn.

“For me, it’s a fairly easy decision,” said Gary Phillips, SMART’s board chairman. “The consequence is pretty significant, because if it does pass - and hopefully that’s the case - it opens up a lot of possibilities, such as continuing operations as we know it and expanding some. Without that, it’s hard to imagine operations as they might be, because they would change significantly from the lack of additional cash-flow that this would provide.”

Since April, top staff with SMART have cautioned that rising costs will overtake revenues as soon as a year from now. The agency would be forced to burn through the $17 million it has in its rainy-day funds in a matter of a few years if it can’t find a way to restructure growing debt tied to initial buildout of the system by spreading payments out over additional years.

Without early renewal of the sales tax, which SMART conservatively estimates will initially generate $40 million per year, chief financial officer Erin McGrath has stated over the course of several months that the agency would have to consider slashing $9 million from its annual operating budget that is projected to top $60 million by 2021. The result would be deep cuts to daily service, which SMART plans to expand by the end of the year, as well as layoffs for a number of its roughly 200-employee workforce.

Opponents of extending SMART’s sales tax contend the agency has fallen short of its pitch to the voters who authorized 2008’s Measure Q and hasn’t done enough to earn what some have billed as a blank check well into the middle of the century.

They point to the current 43-mile line from north Santa Rosa to San Rafael when the original tax measure promised 70 miles of service, from Larkspur to Cloverdale, with trains every 30 minutes compared to gaps of 90 minutes or more. They reference the multiuse pathway for bikes and pedestrians that was supposed to run parallel beside the full system that is only about one-third complete and in noncontiguous segments. They openly question whether SMART has improved congestion along the still-jammed Highway 101 corridor, if it has reduced greenhouse-gas emissions in the region or if its ridership justifies the roughly $600 million invested in the system to date.

SMART’s proponents contend the cash-strapped agency has accomplished much, despite annual revenues that missed early but lofty projections and a failed attempt to repeal the sales tax just two years after voters backed it with 70% support.

They point to the difficult decision of shifting to phased construction where penny pinching ultimately led to more track being built than expected. They reference the more than $323 million in regional, state and federal grants awarded to extend service north and south and build more segments of the pathway. And they present the more than 1.5 million riders, including 150,000-plus bicyclists, who since opening day have chosen the train as an alternative to commuting by car and further polluting the corridor.

SMART’s general manager, Farhad Mansourian, has argued the agency is just hitting its stride and that a sales-tax extension would ensure the long-term health and viability of a public transportation system that has weathered numerous challenges.

Examples of the rail agency’s successes, board members say, include completion of the 2-mile extension south to Larkspur and a new downtown Novato station - both of which are expected to open by the end of 2019 with SMART’s new expanded train schedule that cuts down on several service gaps. The board on Wednesday also approved a $48 million construction contract for the 3-mile extension and pathway north to Windsor, which SMART anticipates will be finished by the end of 2021.

“It’s been a very complicated and long process,” said Windsor Vice Mayor Deb Fudge, who is one of the SMART board’s longest-serving members. “This is a very exciting day, not only for Windsor, but for Healdsburg and Cloverdale because this gets us one more stop closer.”

Approval of the sales-tax renewal still would not offer the money to complete the last 22 miles of the line north, which SMART estimates will cost $364 million. But it would set up the agency well for more outside grants by using the millions in annual debt payment savings as leverage, plus provide the $5 million per year to cover the costs of service to the two north county cities once built.

Whether voters believe SMART’s renewed promise, that improved financial footing will allow the rail agency to finish what it originally sought to do a decade ago, is the central question of the ballot measure. They’ll now have until March 2020 to weigh that decision and help decide SMART’s fate going forward.

You can reach Staff Writer Kevin Fixler at 707-521-5336 or kevin.fixler@pressdemocrat.com. On Twitter @kfixler.