In California, more than 80% of residents live in counties where voters have approved a local sales tax for transportation (LOST). Such measures increasingly designate a portion of collected revenues to be returned directly to municipalities and the county to spend on local needs. This funding is commonly known as “local return,” and it is considered important in gaining voter support for LOST measures. The latest Mineta Transportation Institute (MTI) research Do Equity and Accountability Get Lost in LOSTs? An analysis of Local Return Funding Provisions in California’s Local Options Sales Tax Measure for Transportation explores how local return provisions of LOSTs for transportation are allocated and spent to meet local and regional transportation needs while accounting for issues of equity.
The authors found that ensuring voters that a fair portion of the revenue raised will be returned to each city is a key factor in gaining support. The complexity is that fairness is not easy to define and is specific to each county’s needs. A particular county’s voters may be concerned about fairness based on residents’ incomes, whether they tend to drive or take transit, and regional geography.
Most LOST measures do provide local return, but provisions are specifically crafted to achieve equity and to balance the needs of the county, including trying to achieve equity between urban and rural residents, investment in different transportation modes, and more. The majority of measures studied (45 of 58) dedicate some portion of local return funding to give cities the flexibility to direct revenue toward their own community needs, and 29 measures allow all local return to be used flexibly. Some counties place requirements on how a portion of local return is spent, for example requiring spending on local street maintenance, bike and pedestrian infrastructure, or paratransit services.
Researchers also found accountability mechanisms that ensure local return funding is distributed and spent as required by the measure. County agencies almost unanimously publish annual reports tracking their funding disbursements, and some measures further provide transparency by requiring local cities to develop a list of local projects funded by measure revenues. For example, Santa Barbara requires local jurisdictions submit to the county a description of expenditures of local return funds, including specification of funding spent on alternative mode projects.
The study findings also suggest ways that counties can design successful local return provisions in future LOST ballot measures:
Carefully consider which allocation strategy will maximize the fairness and rationality of how local-return funds are distributed by reflecting each county’s unique geography and characteristics
Set up a low-cost but impartial audit process to determine whether revenue has been distributed to and spent by jurisdictions as promised in the ballot measure
Consider posting allocation and spending information on transportation agency websites to increase transparency
Ultimately, local return provisions comprise a crucial part of transportation sales tax measure expenditure plans. Although they vary considerably in important ways, collectively, local return funds enable cities to address their own transportation needs with relatively few conflicts or implementation issues. City governments use LOST funds for maintaining and repairing local streets and roads, addressing policy goals such as congestion management and mitigation of environmental impacts of growth and development, and leveraging additional funding in the form of locally issued bonds and state and federal grants.
The researchers’ methods for this project included analyzing the language of 58 LOST ballot measures, transportation agency annual reports, and interviews with officials in six counties with LOST measures: Alameda, Contra Costa, Fresno, Imperial, Riverside, and San Diego.
ABOUT THE MINETA TRANSPORTATION INSTITUTE
At the Mineta Transportation Institute (MTI) at San Jose State University (SJSU) our mission is to increase mobility for all by improving the safety, efficiency, accessibility, and convenience of our nations’ transportation system. Through research, education, workforce development and technology transfer, we help create a connected world. MTI was founded in 1991 and is funded through the US Departments of Transportation and Homeland Security, the California Department of Transportation, and public and private grants. MTI is affiliated with SJSU’s Lucas College and Graduate School of Business.
ABOUT THE AUTHORS
Jaimee Lederman, PhD earned her PhD in Urban Planning at University of California, Los Angeles (UCLA), concentrating in transportation planning and policy.
Stephanie Kellogg, MURP completed her Master of Urban and Regional Planning at UCLA with a focus in regional economic development. Her interests involve land use policy and political economy.
Peter J. Haas, PhD is a Professor Emeritus at San José State University. He is the author of numerous articles and research monographs on transportation policy as well as the coauthor of the second edition of a text on policy research, Applied Policy Research: Concepts and Cases.
Martin Wachs, PhD is an MTI Research Associate and Distinguished Professor Emeritus of Civil & Environmental Engineering and City & Regional Planning at the University of California, Berkeley, where he directed the Institute of Transportation Studies and the University of California Transportation Center.
Asha Weinstein Agrawal, PhD is an MTI Research Associate and Director of the MTI National Transportation Finance Center. She is also Professor of Urban and Regional Planning at San José State University.
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