Measure R sales tax hike goes into effect Wednesday

A new half-cent sales tax to build transportation projects in Los Angeles County goes into effect today, raising the county’s rate to 9.75%. But the measure passed by voters in November might generate about $1.8 billion less than originally estimated.

Officials for the Los Angeles County Metropolitan Transportation Authority said that the worst recession since World War II would probably reduce the revenue collected under Measure R from about $40 billion to roughly $38.2 billion during the next 30 years.

They noted that the economic downturn cut revenue from Measures A and C -- the county’s two other transportation sales taxes -- about 19.5% in January through March, compared with the same period last year. During the last three months of 2008, the decline was about 13%, compared with the same period in 2007.

Terry Matsumoto, the MTA’s treasurer and chief financial officer, said the drop in Measure R’s projected revenue is based on an analysis prepared last month for the MTA board. The study assumes a robust recovery of the nation’s economy in the years ahead.

If all goes well, Matsumoto said, the drop in estimated revenue should not be that serious, though the decline might reduce the amount of matching funds the MTA could obtain from the state and federal governments. He noted that there have been strong economic turnarounds after past recessions.


“This will all depend on how fast the economy recovers,” Matsumoto cautioned. “Using a crystal ball is always a little dangerous. Past performance is not always an indicator of future performance.”

The MTA is scheduled to receive its first Measure R revenue in September, but the amount of the initial installment has not yet been estimated. The money will pay for highway improvements, commuter rail systems, buses and the subway extension to the Westside.

With the activation of Measure R, the basic sales tax rate in L.A. County jumps to 9.75%, one of the highest in the state.

Sales tax rates in Orange, Riverside, San Bernardino and Ventura counties are lower, which may provide some incentive for people to shop there instead of Los Angeles County. MTA officials said the difference, however, would have little effect on Measure R’s revenue.