SMART board laying groundwork for sales-tax renewal amid looming financial crisis
The daunting financial challenges disclosed last week by the North Bay’s commuter rail system have only increased the urgency within SMART to convince voters to renew a sales tax that funds the 2-year-old train line and underpins its future.
SMART officials are beginning to craft the talking points for a campaign to persuade voters that, despite past rail agency missteps, they should extend the agency’s tax funding another two or three decades, allowing it to more readily refinance its mounting debt costs.
To be successful, members of the Sonoma-Marin Area Rail Transit board say, the campaign must show voters how the system has improved the quality of life across the region, beyond its 1.4 million riders to date, and enhanced the economies of the two counties it serves.
“I think it’s a reasonable ask,” said Sonoma County Supervisor Shirlee Zane, a nine-year board member. “We’re asking to extend a sales tax in order to assure that we’re here and healthy for the next 30 years, and can continue to expand and be convenient for riders. That’s the message.”
To renew the tax, however, SMART also must overcome its faults and earn the trust of two-thirds of the voters in Sonoma and Marin counties. Revenues have fallen far short of initial projections, construction costs have doubled, and buildout of the rail line and parallel bike path is far behind the original schedule.
SMART is unable to state outright when it will extend service north to Healdsburg and Cloverdale, finishing off the last 22 miles of its planned 70-mile line. Forty-three miles of track are laid, connecting San Rafael in the south to the northernmost station near Charles M. Schulz-Sonoma County Airport. Another 2 miles of track south to Larkspur is set to be ready by the end of the year, and service 3 miles north to Windsor is scheduled to be added by the end of 2021.
Measure Q, the quarter-cent sales tax that voters passed in 2008, also promised an accompanying bicycle and pedestrian path. Only 20 miles have been completed - less than a third of what had been envisioned.
But SMART hopes to frame the conversation by focusing on its accomplishments and the long-term advantages of maintaining and expanding rail service. While the official decision to seek renewal of the sales tax will not be made until fall, a majority of SMART’s 12-member board already supports the idea and has started putting together the campaign to build its case before the March 2020 primary election.
The tax is scheduled to expire in 2029. Renewing it almost a decade early, SMART officials say, will give the agency its best chance to complete construction of the rail line and avoid deep cuts they fear could threaten its very survival.
SMART directors blame the economic downturn in the late 2000s as the main reason construction is taking longer than expected, the result of tax revenues that fell short of expectations. Yet they are proud they have delivered a more than $500 million public works project after receiving only $289 million from the sales tax through the summer of 2018. That required securing $323 million in federal, state and regional grant funding to date - a model SMART believes sets the agency up for future success.
“We have a great track record,” said Deb Fudge, vice mayor of Windsor and one of SMART’s longest-tenured board members. “What we can’t tell people is exactly when, but we need to get the money with the extension of tax, and that makes extensions (of rail service) north much more certain.”
It is expected to cost $364 million to construct the final segment of the rail line from Windsor to Cloverdale, according to Erin McGrath, SMART’s chief financial officer. That would bring the total cost of the 70-mile line and bike path to $944 million - nearly double the rail agency’s initial estimate a decade ago of $541 million.
The miscalculation, fueled in part by rising construction costs, has compelled longtime board members to defend their numbers, then and now.
“We were estimating what it costs. It was theoretical in 2008; it’s not theoretical now,” said Fudge. “We were being honest at all times. Now we’re being sort of brutally honest.”
The alarm sounded by SMART staff members last week was not the first, but it was the loudest yet. They warned that without early renewal of the sales tax, SMART would need to slash passenger service and significantly downsize its workforce starting in 2022 to cover rising debt costs.
“It was a little bit of a shock,” Zane said. “I think the staff definitely wanted us to realize what’s at stake in getting a measure passed for the next 30 years.”