Sales tax hike could fund subway to the sea

Times Staff Writer

If enthusiasm can get a subway built, the long-sought underground rail line from downtown Los Angeles to the Pacific gained a modicum of momentum Thursday after a day-long meeting of leaders focused on getting the $7-billion project built after decades of inaction, study and lots of, well, talk.

Casting an eye toward the November presidential election, several key politicians said they were open to asking voters to approve a tax increase to partially pay for the so-called “subway to the sea” and a slew of other road and mass transit projects in Los Angeles County.

Several officials raised the possibility of a half-cent sales tax hike. If approved by voters, such an increase would bring the county’s sales tax rate to 8.75%, tying it with Alameda and Contra Costa counties’ as the highest in California.


Among those who said they may support the idea were Los Angeles Mayor Antonio Villaraigosa and a pair of county supervisors, Yvonne B. Burke and Zev Yaroslavsky.

“I’m a cynic by design,” said Yaroslavsky, current chairman of the five-member Board of Supervisors. “I’m skeptical you can get 66 2/3 “ -- the percentage of favorable votes need to approve an increase -- “during a recession. . . . Nevertheless, it’s a tool that has to be considered.”

A poll commissioned by the Metropolitan Transportation Authority showed that two-thirds of voters would support a new transportation tax. But the poll’s first question made no mention of a subway but did mention widening eight freeways in Los Angeles County.

Villaraigosa gave a passionate speech about the subway, saying it would have among the most riders of any line in the country. He also said the project would cost $7 billion but offered no firm detail on how to pay for it. MTA estimates have put the cost of the line at $5 billion.

In his speech and in an earlier interview, Villaraigosa said a sales tax hike was an option. But around City Hall, the thinking is that he won’t make a decision on pursuing a transit tax until after Feb. 5, when voters will be asked to authorize a telephone tax that the city needs to balance its budget.

Los Angeles County Federation of Labor chief Maria Elena Durazo said her group of more than 800,000 union members might be willing to support a tax increase for subway construction. More resolute was Pam O’Connor, chairwoman of the MTA board and a Santa Monica councilwoman. O’Connor said the expected high turnout in November could help get such a tax increase passed.

Assemblyman Mike Feuer (D-Los Angeles) said he is pushing legislation that would lower the threshold needed to pass a bond or sales tax hike. Feuer said he is also pursuing legislation that could allow a portion of the property taxes collected from parcels along Wilshire Boulevard to be used for the subway.

More than 300 people attended the meeting at the Cathedral of Our Lady of the Angels. It was organized by several groups that have long pushed for more mass transit.

Denny Zane, the lead organizer, is a former mayor of Santa Monica and a consultant who started the Subway to the Sea Coalition. Zane said the point of the meeting was to show area politicians that a broad coalition of interests would stand behind a campaign for transit funding.

Another organizer, Bart Reed, was more blunt. “Even if we wanted to put something on the ballot, we need the buy-in from the politicians and organized labor and all the power players in the city and the public,” he said.

The officials agreed it would be difficult to raise subway money any other way.

Congress last month lifted a 1986 ban on subway funding put in place by Rep. Henry Waxman (D-Los Angeles), who said the ban was imposed for safety reasons, although critics have long contended the ban was done to please homeowners who didn’t want a subway in their neighborhood. Still, the most the federal government has ever awarded for a single mass transit project is $1.2 billion for a Long Island Rail Road tunnel in New York City.

Meanwhile, the state budget gap of $14 billion appears to preclude any help from Sacramento. In Los Angeles, MTA officials said they have $60-billion in long-range projects but no money to build them. Existing half-penny sales tax increases approved by county voters in 1980 and 1990 are committed elsewhere, and, voters in 1998 prohibited that money from being spent on subway tunneling.

The debate now is whether it’s time to return to voters to create a new pot of money. The MTA quietly spent $65,000 in November to conduct a poll of 1,200 residents across the county. Two-thirds of the voters who responded said they would approve a sales tax increase directed to a variety of projects. “We’re even getting Republicans to support this,” said John Fairbank, of the polling firm Fairbank, Maslin, Maullin and Associates. “Traffic is at such a frustrating level.”

Transit advocates emphasize that any tax increase would not just be for the subway. It would be likely to include an array of projects across the 4,084-square mile county -- freeway widenings, street repairs and rail projects.

A majority of the 13-member MTA board, comprised mostly of elected officials, would have to vote to put it on the ballot.

Tony Bell, a spokesman for Supervisor Mike Antonovich, who is on the MTA board and represents less-densely populated north L.A. County, said his boss would probably not support an increase because “all the money would be drained into the subway.”

Eagerly watching the debate unfold are a number of private interests who want to contribute money as part of a private-public partnership.

Those types of deals come in a variety of forms but typically involve the private sector’s assuming some or all of the cost of building and operating a project in return for a fee or a cut of the project’s profits.

Such deals are becoming popular enough that, last month, the investment committee of the California Public Employees’ Retirement System, the $250-billion state employee pension fund, voted to invest in partnerships that build public works projects.

A CalPERS spokesman said this week that no specific projects are targeted.

“There are hundreds of billions of dollars of private capital that is available,” said Kathleen Brown, head of the infrastructure group for the west region of Goldman Sachs and a former state treasurer. “CalPERS is the tip of the iceberg of public pension funds getting into this.”

Paul Ryan, who runs the infrastructure advisory group for J.P. Morgan, said a public- private partnership on public transit may be profitable -- if the right deal can be struck. He also pointed to another problem facing infrastructure projects: rising construction costs.

“If you delay a project right now for five to seven years, construction cost increases means that delivering the same project to customers is going to cost you 1 1/2 to twice as much,” Ryan said.