What Comes Next After Toll Hike Ruling?

Last month's court ruling dismissing an attempt to block toll increases on seven regional bridges will likely reopen the spigot for billions of dollars in Bay Area transportation projects.

BY DAN ROSENHEIM

 

Last month’s court ruling dismissing an attempt to block toll increases on seven regional bridges will likely reopen the spigot for billions of dollars in Bay Area transportation projects.

 

The money could include upwards of $100 million in direct funding for the Water Emergency Transit Authority (WETA), the agency that runs the SF Bay Ferry system, as well as several hundred million dollars in additional ferry boat capital from new bonding power backed by the toll increases.

 

But it will be at least two months, and possibly many more, before any money is released from the account where it is currently held in escrow. That release is contingent upon two factors: one, a decision by plaintiff Howard Jarvis Taxpayers Association not to appeal the ruling within a 60-day window; and, two, the resolution of a second lawsuit filed by East Bay businessman Randall Whitney.

 

Tim Bittle, the Howard Jarvis Taxpayers Association’s director of legal affairs, said this week he is “90 percent sure” there will be no appeal but said he needed to complete his review of the judge’s ruling before making a final recommendation to his board. And Bittle added he would not rule out filing an amicus brief in the Whitney case.

 

For his part, Whitney said in a telephone interview that attorneys for the Metropolitan Transportation Commission (MTC), a defendant in his lawsuit, have suggested he “surrender” in view of the judge’s ruling on Jarvis.

 

But Whitney, a principal in the Walnut Creek investment firm Thomas Capital and a member of the Alameda Taxpayers Association, isn’t waving the white flag yet. He said that he, too, wants to study the ruling before making a decision on going forward, adding that he has reached out to the Jarvis group to discuss possible next steps. “I have not had enough time to dig in [to the ruling],” he said. “But I have to review why [the judge thinks] this is not a tax [and determine] how much strength we have.”

 

The parallel lawsuits filed by the Jarvis group and Whitney were intended to block Regional Measure 3, a ballot measure that mandated a series of toll hikes on Bay Area bridges. The first $1 toll increase took effect on January 1 of this year, and subsequent $1 increases are scheduled for 2022 and 2025. The plaintiffs argued the RM3 toll hikes are actually taxes—not fees—and that they failed to receive the two-thirds approval from legislators and voters required for new taxes under Proposition 13. (RM3 won support from 55 percent of voters in the June 2018 election.)

 

In his ruling on the Jarvis suit in April, San Francisco Superior Court Judge Ethan P. Schulman rejected the plaintiffs’ argument, saying a toll increase “to gain entrance to or use of state property” (like state-owned bridges) is not a tax. The bridges in question are the Richmond, Antioch, Benicia, Carquinez, Bay, San Mateo and Dumbarton. The Golden Gate Bridge District, which also recently announced toll increases, is an independent jurisdiction.

 

MTC, which is charged with implementing the seven-bridge toll increase and is effectively a defendant in both suits, hailed the court ruling, albeit in understated terms. “We are pleased, of course,” Scott Haggerty, an Alameda County supervisor and chair of both MTC and the Bay Area Toll Authority—MTC and BATA, while statutorily distinct, share staff and boards—said in a statement. But Haggerty declined to comment further, except to say his organizations “look forward to evaluating next steps.”

 

Asked about the muted reaction, a BATA insider said the agency doesn’t want to say anything that might provoke further action by the plaintiffs. “It is not our style to spike the ball in the end zone,” the insider said. Referring to Bittle’s 90 percent certainty not to appeal, the insider added: “We don’t want to trigger the 10 percent.”

 

Bittle said his reluctance to appeal is based on fears that an adverse trial outcome might set a precedent for other tax litigation. “Yes, we are concerned that a published appellate decision could have larger repercussions,” he said. “Anything you could think of—ambulances, parks, utility costs—could become a source of revenue without any rules attached.”

       

Meanwhile at WETA, the response was more enthusiastic. “Potentially, it’s huge, really exciting,” said Nina Rannells, WETA’s executive director. “We can actually start further development of our regional ferry system. It gets us out of the position of looking for funding to advance things and instead focus on projects and time frames—and let’s go.”