Planetizen highlighted an Op Ed piece in the Toledo Blade that called for a new transit funding source. Toledo relies exclusively on property taxes to fund their transit system.
The Toledo Area Regional Transit Authority is one of the nation’s few transit agencies still funded by local property taxes. It’s an inadequate, unreliable, unsustainable, and unfair way to pay for the 3.4 million rides TARTA provides each year.
As with any tax source, revenues fluctuate. In Toledo's case, the variability was considerable.
[P]roperty tax revenue fluctuates with property values: Two years ago, TARTA lost more than $1 million in revenue, spokesman Steve Atkinson told The Blade’s editorial page.
Based on the examples of Grand Rapids and Denver, the paper's staff seems to think that sales tax-funded transit systems do not suffer from the same fluctuations in tax receipts. That, of course, is not the case. One might recall Denver's struggles after sales taxes fell short of initial estimates (e.g., 2010 Examiner article).
Furthermore, shifting the burden from property owners to consumers has other consequences. It happens that CityLab just published a piece on the regressive nature of sales taxes.
Of the three main forms of state taxes—sales, property, and income—the sales tax hurts the poor most, says Gardner. State sales taxes are highly "regressive," he says. That is, they end up taking a bigger chunk of change from people that have smaller sums of money and slower income growth.
Respected individuals in the transport field have also been talking about the issues of shifting our focus away from user fees to local sales taxes. For example, Marty Wachs has noted the inequity of sales taxes and discussed the governance issues that arise from voter-approved funding plans tied to specific transportation projects.
I certainly wouldn't argue that Toledo's transit needs are fully met. Nor would I suggest that they abandon their search for new transit funding. However, I would caution them from trading a viable and relatively equitable and efficient source of transit funding, the property tax, for a sales tax. To supplement their property taxes, perhaps they should consider hotel/motel taxes, business income taxes, or taxes and fees that discourage driving and encourage transit use. For example, Toledo could enact a vehicle license tax, a gas tax, congestion charges, or mileage fees. There are many revenue sources that would be preferable to sales taxes.
Ian Carlton is a transportation and land use expert specializing in transit-oriented development (TOD). He helps clients - including transit agencies, planning departments, and landowners - optimize real estate development around transit.
Special thanks to Burt Gregory at Mithun for permission to use the Portland Streetcar image above.