In Brief:
The City Council in Charlotte, N.C., voted last week to back a plan to invest billions of dollars in transportation infrastructure to keep up with the demands of its fast-growing population. The plan involves raising the sales tax in Mecklenburg County and directing the funding toward roads, trains and buses. The money could help pay for long-sought commuter rail projects, better bus service, and basic street infrastructure like sidewalks in many communities outside the region’s core. Some leaders say Charlotte, like other Sun Belt cities, is already falling behind in its efforts to manage its mobility needs.
Sales taxes are a popular way of funding public transit projects in the U.S. Cities often turn to them when they are seeking a dedicated funding source to expand their transit systems. Charlotte voters approved a half-cent sales tax in 1998 that helped expand the city’s bus system and paid for its first light rail line, which opened in 2007. But big cities face a growing set of obstacles to adopting and capitalizing on sales taxes for transit expansion. That includes skepticism from conservative state legislatures and the astronomical costs of building new transportation infrastructure in the U.S. — which have only grown as construction costs have outpaced broader inflation in the last few years.
When voters are asked to approve dedicated sales taxes for public transit and other transportation infrastructure, they typically say yes. The success rate for local transportation-related ballot measures is about 80 percent around the country, according to Jeff Davis, a senior fellow at the Eno Center for Transportation.
“Generally in the last five or six years, there’s been a pretty good climate for that kind of thing,” Davis says. “The more localized the ballot initiative is, and the more specific benefits that can be explained to voters, the likelier it is to pass.”
While sales taxes are regressive, putting the heaviest burden on people with the lowest incomes, they are popular partly because they are broad-based and less volatile than other types of taxes, Davis says. At the state and federal levels, most transportation funding comes from fuel taxes, which are beginning to shrink as cars become more fuel efficient and electric vehicles make up a greater share of automobile purchases. Sales taxes offer a relatively stable funding source, loosely pegged to inflation, that cities can borrow against for capital projects.
But despite their good success rate, the measures don’t always pass muster with voters. Nashville voters famously rejected a plan to fund five new light rail lines and a tunnel beneath their downtown in 2018. (The city’s new mayor is pushing another measure this year with a more modest set of transportation improvements.) Seattle voters rejected a series of measures across several decades in the 20th century before approving the bond measures that have helped create the city’s modern rail system.
Convincing the Legislature
Even when transportation tax measures are successful, cities often struggle to deliver on the promises they made to voters in the process. Austin approved a massive transit expansion called Project Connect in 2020, funded with a property tax increase, but the effort has been slowed down by political disagreements between city and state leaders and challenged by the growing cost of construction. Atlanta’s transit system reduced the number of projects it had said it planned to build when voters approved the More MARTA plan in 2016, also partly because of cost inflation.
Charlotte’s plan will be challenged both by political headwinds and construction cost increases. The state Legislature, controlled by Republicans, needs to grant permission for the sales-tax measure to be put before local voters. Local leaders have already pared back their transit ambitions in anticipation of state opposition. State leaders indicated they wouldn’t sign off on a plan that would direct most of the tax revenue to rail projects. So local leaders have offered draft legislation for the General Assembly that would dedicate 40 percent of the funding to roads, 40 percent to rail projects, and 20 percent to buses.
Even so, the state Legislature has a limited window to pass a bill in time to get the measure on next year’s ballot. And many of its leaders are lukewarm on the idea of raising taxes to fund public transit.
“That is going to be a huge lift, to get a General Assembly that is resistant to tax increases to open that door,” says state Sen. Vickie Sawyer, the Republican co-chair of the Senate Transportation Committee. “That’s not to say it cannot happen. But I don’t want to disillusion any of the folks that have been working on this that it’s going to be easy.”
No formal plan for how exactly to spend the funding is yet in place. The plan would be developed by local communities and the Metropolitan Transit Commission only if the state Legislature allows the ballot measure to move forward.
