Santa Clara County’s Transit Tax Is a Bailout for the BART Extension
Why voters should reject the Bay Area's misleading transit rescue tax.
This November, Santa Clara County voters will be asked to approve Senate Bill 63, a half-cent sales tax sold as an emergency measure to keep local transit running. This narrative is misleading. The tax would give the Valley Transportation Authority (VTA) a flexible revenue stream of roughly $264 million a year, far more than the agency needs to close its modest operating deficit, and the statute lets VTA spend the bulk of that money on capital projects rather than service. The likeliest use of the excess funding is the BART Silicon Valley Phase II, a $12.7 billion extension whose cost keeps climbing, whose opening has slipped toward 2040, and which is projected to lose more than $200 million a year once trains start running. Stripped of the rescue language, this tax is a subsidy for that project, and voters should flatly reject this measure until a subsequent proposal forces a thorough reform of VTA’s management, oversight, and long-term expansion plans.
A closer look at the VTA’s budget, ridership forecasts, and capital obligations reveals exactly why this tax is a bad deal for Santa Clara County taxpayers.
This half-cent transit sales tax is proposed under Senate Bill 63, the Connect Bay Area Act, a 14-year levy. In Santa Clara County the measure would lift the local sales-tax rate from 9.75 percent to 10.25 percent, with several cities higher, and send roughly $264 million a year to VTA, more than $3.6 billion over the life of the tax. That is not an emergency bridge. It is a large, flexible new revenue stream for an agency already committed to one of the most expensive transit megaprojects in the country, and that is the problem.
For BART, Muni, AC Transit and Caltrain, the operations-rescue framing has a basis, because SB 63 steers their money to operations. Santa Clara County is different. The statute sends 84.37 percent of the revenue generated in the county to VTA for “public transit expenses” and roadway repaving on transit routes, and it defines those expenses broadly enough to include capital projects, not just operations. A voter hears “save transit service.” The legal language gives VTA far more room to maneuver, and the agency has an obvious place it would like to move the money.
That place is not the operating budget. VTA projects an operating shortfall of about $868,000 in 2026, growing to roughly $15 million in 2027, is not planning service cuts, and has posted one of the strongest ridership recoveries in the country at 85 percent of pre-pandemic levels. A $264 million annual stream set against a deficit in the low tens of millions is not a rescue; it is a surplus. VTA staff conceded as much when the board opted in, telling the public there would be several hundred million dollars left over each year after the operating deficit was covered.
The surplus funds have a destination: BART Silicon Valley Phase II, the six-mile, four-station extension from Berryessa through downtown San José to Santa Clara, is the most expensive project VTA has ever attempted, and its cost has climbed from $4.7 billion in 2014 to $6.9 billion in 2020, $9.1 billion in 2022, and $12.7 billion today. After VTA sought a $6.3 billion federal commitment and the Federal Transit Administration capped its share at $5.1 billion, the agency leaned harder on local money. The county’s civil grand jury read VTA’s funding chart as assuming $375 million from the November sales-tax measure, leaving a gap of about $1.075 billion. VTA disputes that reading, saying the $375 million is 2018 toll revenue and that no sales-tax money would flow to the extension. Take VTA at its word on the accounting. Money is fungible, and a quarter-billion-dollar flexible stream relieves pressure across a budget no matter which line it lands on.
The case for committing more public money to the extension is weak on its own terms. VTA advertises 55,000 weekday riders, but Phase I is a warning, not a precedent. The first phase opened in 2020, has never met its forecasts and has lost an average of $69 million a year over five years; in January 2026 the Milpitas and Berryessa stations drew 2,789 weekday riders against a launch forecast of 20,110. The grand jury projects that Phase II’s first three years will impose average annual costs of $274 million on VTA against just $60 million in fares, a $214 million yearly loss. That is the figure voters should sit with. The extension does not relieve VTA’s operating problem; it manufactures a far larger one, and the honest reason VTA wants a big recurring revenue stream is to absorb the red ink its own expansion will generate.
Nor will the money buy anything riders can use soon. VTA targets completion in 2037, while the FTA’s oversight contractor forecasts 2039, and the project still relies on a single-bore tunnel beneath downtown San José that adds complexity and risk. Prior experience argues for skepticism about even those dates: Phase I opened in 2020 after originally being scheduled for 2016, four years late. Voters would be taxed every quarter for fourteen years to support trains that may not carry passengers until the 2040s.
The state funding backdrop makes local dollars more tempting still. In February the Legislature authorized a $590 million emergency loan to keep BART, Muni, Caltrain and AC Transit running, drawn from Transit and Intercity Rail Capital Program money that had been awarded to Bay Area projects but not yet spent, money MTC’s own documents describe as honoring prior commitments to Phase II and BART’s Transbay Core Capacity project. The grand jury warns that if the November measure fails or the agencies cannot repay on schedule, the timing of VTA’s own funding could be disrupted. The capital pipeline itself is narrowing: SB 840 makes the old percentage appropriation to TIRCP inoperative after July 1, 2026, places the program behind a $1 billion-a-year priority for high-speed rail, and caps it at $400 million a year, subject to proportional reduction if auction proceeds fall short. As state capital tightens, flexible local sales-tax dollars become exactly the cushion a strapped megaproject needs.
The honest case against the November tax in Santa Clara County is not that SB 63 writes “BART Phase II” on the check. It does not. It is that the measure hands VTA a large, flexible revenue stream at the precise moment the agency is carrying a $12.7 billion project with rising costs, sinking ridership, a slipping schedule, and a built-in operating loss of more than $200 million a year. Unless the ballot and implementing documents erect a hard firewall against using the new money to support or backfill the extension, voters should assume it will do exactly that. The better path is to stop throwing good money after bad. VTA should terminate or substantially down-scope Phase II, a step that would erase both its capital gap and the future operating losses it would otherwise saddle on every county taxpayer, and redirect scarce dollars into the bus and light-rail service riders actually use. Until VTA is willing to have that conversation, Santa Clara County voters should decline to write the check.
Marc Joffe is a Visiting Fellow at the California Policy Center and SHIFT Director of Finance.