Breaking down the options for transit tax
By Hunter Riggall
In a Tuesday presentation to the Cobb Board of Commissioners, the county’s transportation director laid out two proposals for a transportation sales tax.
Cobb plans to hold a countywide referendum on a mobility special- purpose local-option sales tax, or M- SPLOST, in November 2024.
The plans laid out both envision a 1% sales tax to fund transportation projects. One option would put the tax in place for 10 years, while the other envisions a 30-year tax.
Commissioners Keli Gambrill and Joann Birrell, the board’s two Re- publicans, have voiced reservations about a sales tax of up to 1% for up to 30 years to fund mass transit expansion — a proposal favored by Chair- woman Lisa Cupid and her two fellow Democrats on the board, Commissioners Jerica Richardson and Monique Sheffield.
Both originally advocated a five- year tax, but Cobb DOT did not offer a proposal for a tax over that time span at Tuesday’s meeting.
The MDJ sat down with Drew Raessler, the transportation director, to dis- cuss the details of the two proposals in detail.
Questions and answers about the proposals are listed below, informed by our conversation with him.
Financial figures are estimates.
HOW MUCH WOULD A 1% TAX COLLECT?
A 10-year, 1% sales tax would collect $2.8 billion. A 30-year, 1% sales tax would collect $10.9 billion.
HOW MUCH WOULD THE COUNTY SPEND IN 10 YEARS?
If a 10-year, 1% sales tax is approved, the county plans to spend $3.4 billion. That number comes from $2.8billion in tax collections, plus $600 million in anticipated federal grants.
If a 30-year, 1% sales tax is approved, the county plans to spend $4.5 billion in the first decade.That number comes from $2.8 billion in tax collections, plus $800 million in anticipated federal grants, plus $900 million in SPLOST revenue bonds.
WHAT ARE SPLOST REVENUE BONDS, AND WHY WOULD THEY BE USED?
SPLOST revenue bonds are a type of municipal bond. Such bonds are issued by local governments to raise money for capital investment. Lenders purchase the bonds by loaning the government money. Governments pay back the bondholders over a period of time, with interest, using tax revenue.
In this case, Cobb would only issue bonds if a 30- year tax is approved.
The county would issue $900 million in bonds to quickly raise the money to build out the transit system within the first decade. Over the rest of the tax period, the steady stream of sales tax revenue would be used to pay off the debt.
The use of bonds doesn’t change how much the county would invest. They are rather a tool to front load the investment.
The bonds are also a hedge against inflation — the county can invest more money, quickly, before inflation increases constrution costs.
HOW MUCH WOULD THE COUNTY SPEND OVER 30 YEARS? It’s not entirely clear.
The county would anticipate collecting and spending at least $10.9 billion in local tax revenue, plus any federal funds it receives. With the county hoping to receive $800 million in federal grants in the first decade of a 30-year tax, the to- tal expenditure over 30 years could be more than $11.8 billion.
Raessler said that hav- ing a 30-year transit tax will make Cobb more competitive when applying for federal grant funds.
Raessler told the MDJ the options presented to commissioners this week are meant to show, in the case of a 30-yeartax,what could be delivered in the first decade.
“The goal in showing the two 10-year scenarios, it becomes very difficult to project out exactly what will be done in 15, 20, 25 years, right? Just because of the unknowns of what economies will do … over that timeframe,” Raessler said.
A key difference between the 10-year and 30-year proposals is how much capital the county can invest in the first decade, he added.
The goal, under a 30- year proposal, is to build as much of the system as possible in the first decade, then use revenue over the next 20 years to maintain the system and pay off any debt.
“Build out the system within that 10 years, to the best of our ability. … and then for that remaining time frame, years 11- 30, would provide funding for continued operations … state of good repair … so that initial investment is protected,” Raessler said. “And then paying back the bonds through that revenue.”
IF APPROVED, WHAT WOULD THE SALES TAX IN COBB COUNTY BE?
The sales tax would rise to 7%.
Presently, the sales tax has a base rate of 4%. Two SPLOST taxes, 1% each, are already in place. One funds the county government and six of its cities, the other funds Cobb’s two school systems.
WHAT DO THE PROPOSALS FUND, OTHER THAN HIGH- CAPACITY TRANSIT?
While the two proposals would deliver different lev- els of high-capacity transit, they would both allocate $1.6 billion to other aspects of the county’s transportation system.
said, is that BRT will have more protected lanes, while ART will mix with other traffic.
“It’s very similar technology,” he said. “The difference is, bus rapid transit is going to be, the majority, in dedicated lanes. And those dedicated lanes through congested ar- eas allow for that faster trip, to have that same production time as light rail.”
WHAT WOULD THESE DEDICATED LANES LOOK LIKE?
Raessler said the lanes would look different in different parts of the counties. Where possible, they would be physically separated — not just a regular road lane with the word “bus” painted on it. That could include some grade-separated and flyover lanes.
HOW WOULD THE COUNTY FUND THE TRANSIT SYSTEM AFTER 10 YEARS, IF A 30-YEAR TAX IS NOT ADOPTED?
Raessler told commissioners the county would have three options:
- Hold another referendum after 10 years, to continue funding transit;
Both proposals also call for $350 million to be invested in operational improvements and accessibility in the first decade.
Examples include improvements to trails, intersections, corridors, and bicycle and pedestrian infrastructure.
WHAT DOES THE COUNTY MEAN BY HIGH-CAPACITY TRANSIT?
… two types of high-capacity transit, bus rapid transit (BRT) and arterial rapid transit (ART)…. BRT in dedicated lanes, ART will mix with traffic…..
In some areas, the transit system will use existing shared lanes, and have no dedicated lane. But Raessler said in the interview that on balance, the system will not worsen traffic.
HOW MANY MILES OF HIGH-CAPACITY TRANSIT WOULD BE BUILT?
Under the 10-year proposal, there would be 53 miles along five BRT routes.
Under the 30-year proposal, there would be 108 miles along seven BRT routes and three ART routes.
WILL THE BUSES BE DIESEL OR ELECTRIC? Raessler said the market
of high-capacity bus vehicles is a mix of diesel and electric technology.
He said hydrogen fuel cell buses, a less developed technology, could one day be incorporated.
“We would look to incorporate, if passed by the voters, as much alternative fuels as we’re able to do, and as the market bears,” Raessler said.
WHO WILL OPERATE THIS MASS TRANSIT SYSTEM? Raessler said the system
….. would be operated by the county’s own Cobb Linc.
State authorities will also have to sign off on the proposal before it’s voted on. The umbrella agency which oversees transit throughout the metro area is the Atlanta Transit Link Authority, also known as the ATL.