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Balancing Accountability and Flexibility in California's Local Balancing Accountability and Flexibility in California’s Local Option Sales Taxes A Research Report from the Pacific Southwest March 2020 Region University Transportation Center Martin Wachs, PhD, UCLA Jeremy Marks, UCLA Hannah King, UCLA Jaimee S. Lederman, PhD, UCLA Tamara Guy, UCLA Balancing Accountability and Flexibility in California’s Local Option Sales Taxes TECHNICAL REPORT DOCUMENTATION PAGE 1. Report No. 2. Government Accession No. 3. Recipient’s Catalog No. PSR-18-33 TO-012 N/A N/A 4. Title and Subtitle 5. Report Date Balancing Accountability and Flexibility in California’s Local Option Sales Taxes March 2020 6. Performing Organization Code N/A 7. Author(s) 8. Performing Organization Report No. Martin Wachs, UCLA https://orcid.org/0000-0002-6739-1654 PSR-UCLA-18-33 Jeremy Marks, UCLA Hannah King, UCLA Jaimee S. Lederman, UCLA Tamara Guy, UCLA 9. Performing Organization Name and Address 10. Work Unit No. METRANS Transportation Center N/A University of Southern California, RGL 216 11. Contract or Grant No. Los Angeles, CA 90089-0626 USDOT Grant 69A3551747109 Caltrans Grant 65A0674, Task Order 3411 12. Sponsoring Agency Name and Address 13. Type of Report and Period Covered Caltrans DRISI Final report (Feb. 2019 – Jan. 2020) 1727 30th Street, MS 82 14. Sponsoring Agency Code Sacramento, CA 95816 USDOT OST-R 15. Supplementary Notes Report URL: https://www.metrans.org/research/balancing-accountability-and-flexibility-in-californias-local-option-sales-taxes 16. Abstract Voter-approved Local Option Transportation Sales Taxes (LOSTs) are a major source of revenue for transportation programs in California. LOSTs list projects and programs for voter approval that are to be implemented over long periods of time, often twenty or more years. To respond to changing conditions, agencies often need to amend voter-approved plans. Implementing agencies must be accountable to voters, balancing the need to fulfill commitments made against needs that change over time. Using the text of ballot measures, public utility codes, periodic agency reports, and case studies that included interviews of public officials, this study examines, provisions regarding accountability in California LOSTs, and procedures for amending proposed expenditures. It also reviews lawsuits brought in relation to accountability and plan amendments. It analyzes the ways in which California counties achieve needed flexibility within a framework that demands accountability to the voters. Requirements and patterns differ among counties, but most measures have been adapted to changing circumstances. 17. Key Words 18. Distribution Statement TRT Terms: Taxes No restrictions. Identifier Terms: Equity Based Land-Use Transportation Problem; Projects of Regional and National Significance Subject Areas: I21: Planning of Transport Infrastructure 19. Security Classif. (of this report) 20. Security Classif. (of this page) 21. No. of Pages 22. Price Unclassified Unclassified 92 N/A Form DOT F 1700.7 (8-72) Reproduction of completed page authorized ii Balancing Accountability and Flexibility in California’s Local Option Sales Taxes Contents About the Pacific Southwest Region University Transportation Center .........................................v U.S. Department of Transportation (USDOT) Disclaimer ............................................................... vi California Department of Transportation (CALTRANS) Disclaimer ................................................. vi Disclosure ........................................................................................................................................ vi Acknowledgements........................................................................................................................ vii Abstract ......................................................................................................................................... viii Executive Summary ......................................................................................................................... ix Introduction .................................................................................................................................... 1 Literature Review ............................................................................................................................ 4 Background ................................................................................................................................. 4 Passing LOST Measures............................................................................................................... 7 Avenues of Accountability .......................................................................................................... 7 Project Management and Delivery ........................................................................................... 10 Summary of Flexibility and Accountability Provisions in Ordinance Language ............................ 12 Methodology............................................................................................................................. 12 State Law Guidance – The Public Utilities Code ....................................................................... 12 Findings Related to LOST Expenditure Plan Amendment Provisions ....................................... 16 Conclusion ................................................................................................................................. 23 History of Amendments and Project Changes Across Measures ................................................. 24 Methodology............................................................................................................................. 24 Findings ..................................................................................................................................... 25 Public Oversight of LOST Measure Implementation..................................................................... 25 Independent Financial and Performance Auditing ................................................................... 26 Public Oversight Committees ................................................................................................... 26 Conclusion ................................................................................................................................. 30 Lawsuits and Local Option Sales Taxes in California ..................................................................... 32 Methodology............................................................................................................................. 33 Environmental Review-Related Legal Challenges ..................................................................... 33 Equity-Related Legal Challenges ............................................................................................... 36 Ballot Language and Transparency-Related Challenges ........................................................... 37 iii Balancing Accountability and Flexibility in California’s Local Option Sales Taxes Conclusion ................................................................................................................................. 38 Interpretations, Conclusions, and Recommendations ................................................................. 39 Interpretations and Conclusions ............................................................................................... 39 Recommendations .................................................................................................................... 41 References .................................................................................................................................... 42 Data Management Plan ................................................................................................................ 47 Appendices .................................................................................................................................... 48 Appendix A: Case Study - Fresno County Measure C Extension (2006) ....................................... 48 Background ............................................................................................................................... 48 Expenditure Plan ....................................................................................................................... 50 People Interviewed for Fresno Case Study: .............................................................................. 60 Appendix B: Case Study - San Diego County Transnet Measure (1987) ....................................... 61 Background ............................................................................................................................... 61 Expenditure Plan ....................................................................................................................... 63 Amendments............................................................................................................................. 65 Amendment History .................................................................................................................. 65 Oversight ................................................................................................................................... 67 Local Spending Oversight .......................................................................................................... 68 People Interviewed for San
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