Sales Tax and Gas Tax Funding | Fund + Invest | Our Work

Sales Tax and Gas Tax Funding

Key sources of transportation funding include excise taxes on gasoline and diesel fuel, and taxes on retail sales.

In addition to supporting highways and local streets and roads, these taxes also help finance the Bay Area's transit network: 

  • Transportation Development Act (TDA) — a state sales tax of one-quarter of one percent on all retail sales in each county, used to finance transit operations, and bus and rail projects as well as special paratransit services for disabled passengers, and bicycle and pedestrian projects. In non-urban areas TDA funds may be used in some cases for maintenance of local streets and roads.
  • State Transit Assistance (STA) — generated from the state sales tax on diesel fuel, these funds can be used for both transit capital and operating projects.
  • BART Half-cent Sales Tax — half-cent sales tax collected in Alameda, Contra Costa and San Francisco counties. Sometimes known as AB 1107 funds for the state legislation that established the tax, the state government allocates 75 percent of these funds to BART and the remaining 25 percent to MTC, which allocates its share of the funds evenly between the San Francisco Municipal Transportation Agency (SFMTA) and AC Transit.

Projects in the State Transportation Improvement Program, or STIP, are funded in large part by the state excise tax on gasoline.

Many California counties, including eight of the nine Bay Area counties, have approved sales tax measures to support transportation investments. These are often referred to as "self-help" counties. Local sales tax measures require approval by two-thirds of voters.

Think about transit funding as you would a coin.  On one side of the coin are the capital assets: trains, rails, buses, fare equipment, stations, benches and the like.  The other side of the coin is operations: fuel, drivers, mechanics, dispatchers, etc. Most transportation funding programs are restricted to capital projects.  Far fewer sources are available to finance the cost of transit operations.

 

The 18.4 cents per gallon federal excise tax on gasoline has not been raised since 1993; and the base 18 cents per gallon state excise tax on gasoline has not been increased since 1994. By 2015, these taxes would have had to rise to 29 cents per gallon to have the same purchasing power they did in the mid-1990s.