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.

The base 18 cents per gallon state excise tax on gasoline rose 12 cents on Nov. 1, 2017 to 30 cents per gallon. This marks the first increase in the state's base gas tax since 1994. The 18.4 cents per gallon federal excise tax on gasoline has not been raised since 1993.

The increase in the state gas tax was authorized through state Senate Bill 1 (Beall, 2017), which was approved by the state Legislature and signed into law by Gov. Brown in April 2017. The 12-cents-per-gallon increase restores the purchasing power of the state gas tax to mid-1990s levels.  Learn more about Senate Bill 1.

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.

Below is the 2018 Short Range Transit Plan Revenue Forecast. It contains a draft ten year forecast of operating and capital revenue for transit operators in the San Francisco Bay Area for Fiscal Years (FY) 2018-19 through 2027-28. One additional year (FY 2028-29) is included for use by transit operators who will begin their SRTP updates in 2019. These forecasts are prepared to provide transit operators with an estimate of available revenue for the Short Range Transit Plan (SRTP) period. This SRTP revenue forecast is intended to be used by transit operators in the preparation of their SRTPs.

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