In the mid-1980's, the California legislature began authorizing sales taxes for transportation projects in individual counties. Since then, residents of 18 counties - representing 80% of the state's population - have voted to raise their sales taxes for limited periods to pay for county and city ground transportation improvements. Collectively, these "local transportation sales taxes" (LTSTs) generate roughly $2 billion per year for the support of capital investments in new highways and transit systems and the maintenance and operation of existing ones. Since their inception, these taxes have been the fastest-growing source of revenue for transportation in California and have become a major tool with which local civic and political leaders bypass obstacles in the state's system of transportation finance and decision-making.

In the mid-1980's, the California legislature began authorizing sales taxes for transportation projects in individual counties. Since then, residents of 18 counties - representing 80% of the state's population - have voted to raise their sales taxes for limited periods to pay for county and city ground transportation improvements. Collectively, these "local transportation sales taxes" (LTST's) generate roughly$2 billion per year for the support of capital investments in new highways and transit systems and the maintenance and operation of existing ones. Since their inception these taxes have been the fastest-growing source of revenue for transportation in California and have become a major tool with which local civic and political leaders bypass obstacles in the state's system of transportation finance and decision-making.

Over the last 25 years, voters in 20 California counties approved “local transportation sales taxes” to pay for transportation projects. A growing source of revenue, they generate roughly $2.5 billion per year. Four features explain their popularity: they require direct voter approval; funds are raised and spent within the counties that enact them, so voters experience benefits directly; most automatically expire; and they usually specify the improvements to be financed. These taxes are an important revenue source, but tend to favor capital investments over operations and maintenance. They have enhanced local governments' decision-making authority, but may have made regional transportation planning in multi-county regions more difficult to achieve.

Quality of life in California depends in many ways on the freedom of people and goods to move safely from place to place when they want to do so, in a timely manner, at reasonable cost, and with reasonable choices among modes and routes of travel. However, our desire for mobility must be tempered by due concern for the natural and built environment, and like all aspects of public policy, the provision of mobility must be framed by realistic consideration of available financial resources. This report examines the system by which California raises money for transportation and assesses its adequacy and appropriateness for current and future needs.