Budget documents, the official voter pamphlet and the measures’ own text show what Proposition H and the regional transit sales tax would and would not pay for, what happens if only one passes, and how much of Muni’s gap would remain either way.
By Staff Reporter
San Francisco voters are being asked on Nov. 3 to approve two new taxes for public transit at once: a citywide parcel tax dedicated to Muni, and a five-county sales tax that would raise the city’s rate by a full percentage point. Supporters, led by Mayor Daniel Lurie, say the two together are what stands between Muni and the deepest service cuts in its history. Opponents say neither measure requires the transit agency to change how it spends money.
A review of the San Francisco Municipal Transportation Agency’s budget records, the city’s official voter pamphlet and the legal text of both measures shows a narrower picture than either campaign usually presents. If both pass, the revenue the agency has described would cover most, but not all, of the shortfall it projects beginning in July 2027. If only one passes, the agency would face a gap of roughly $150 million to $200 million a year, by its own figures. And the outcome of the sales tax will not be decided by San Francisco alone.
The size of the hole
The agency’s Board of Directors in April unanimously approved a two-year operating budget of $1.5 billion for the fiscal year that began July 1 and $1.6 billion for the next, according to an agency announcement. That budget closed a $307 million shortfall in the current year and a $344 million shortfall in the next.
It did so in part with borrowed money. The first year includes a $200 million loan from the State of California, routed through the Metropolitan Transportation Commission. The agency said the loan carries a 12-year term: about $8 million a year in interest-only payments for two years, then about $30 million a year in principal and interest for 10 years. Those payments will be a fixed cost in future budgets regardless of how voters decide.
The agency says the underlying problem is structural. Federal pandemic relief and other one-time money has run out, and “mandatory increases in healthcare and retirement contributions have led to personnel expenses outpacing revenue growth,” it said in April, even after cutting 89 positions in the new budget. On a page titled “Bridging Our Budget Gap to Save Muni,” the agency puts the annual shortfall at about $350 million starting in July 2027, and projections presented to its board in February showed the gap growing to as much as $434 million by 2030.
What each measure would raise
Proposition H, placed on the ballot by petition, would impose an annual parcel tax from July 1, 2027, through June 30, 2042. Under the digest prepared by the city’s Ballot Simplification Council in the official voter information pamphlet, most single-family parcels would pay $129 a year, with per-square-foot charges above 3,000 square feet. Multifamily parcels would start at $249, capped at $50,000; nonresidential and mixed-use parcels would start at $799, capped at $400,000. Rates would rise with inflation. Most homeowners 65 or older living in their primary homes would receive a discount or pay nothing, and landlords of rent-controlled units could pass through half the tax, up to $65 per unit a year.
The city controller, Greg Wagner, estimated in the pamphlet that the tax would raise about $177 million a year, with administration costing $2 million to $3 million to start and $4 million to $6 million annually after that. He noted that total revenue “will depend on the number of exemptions requested and granted.” The transit agency, in its own materials, counts on about $150 million a year for operations from the tax plus about $10 million for service-quality improvements.
The regional measure, listed on the ballot as Regional Measure RTM, would impose a 14-year sales tax of 0.5 percent in Alameda, Contra Costa, San Mateo and Santa Clara Counties and 1 percent in San Francisco, raising an estimated $980 million a year across the region, according to the impartial analysis by Kathleen Kane, legal counsel to the new Public Transit Revenue Measure District. San Francisco’s combined sales tax rate, now 8.625 percent according to the California Department of Tax and Fee Administration, would rise to 9.625 percent. The measure exempts the same items as the state sales tax, including most groceries and prescription medicine.
The measure’s Section 12 directs 62.87 percent of the revenue raised in San Francisco to Muni operations, 29.14 percent to BART, 3.97 percent to Caltrain and smaller shares to the San Francisco Bay Ferry, Golden Gate Transit, fare discounts, accessibility programs and administration. Muni also receives 7.40 percent of San Mateo County’s revenue and 1.09 percent of Contra Costa County’s. The commission’s fact sheet estimates the total Muni allocation at $155 million in the 2027-28 fiscal year; BART would receive $310 million.
The arithmetic
Taken together, the two measures would give Muni about $305 million a year for operations under the agency’s own estimates: $155 million from the regional tax and about $150 million from the parcel tax. Set against a shortfall of about $350 million, that leaves roughly $45 million a year that the agency would still need to close with savings or other revenue, before accounting for growth in the deficit after 2027 or the loan payments that rise to about $30 million a year later in the decade.
The agency has said as much. An overview of SB 63 posted by the agency notes that it “is not expected to fully close deficit for BART or Muni, necessitating further cost savings by operators.” A March report by SPUR, the urban policy group, said the agency had identified the need for up to $102 million a year in savings and new revenue from its own operations as part of its plan.
If only one measure passes, the gap widens sharply. Without the regional tax, Muni would be short roughly $200 million a year even with the parcel tax; without the parcel tax, roughly $195 million even with the regional money. The agency’s published contingency, if it cannot close future gaps, includes eliminating up to 20 routes, doubling wait times on Muni Metro, Rapid and frequent lines, cutting service between 9 p.m. and midnight by up to 60 percent, and reducing or ending cable car and F-line streetcar service.
San Francisco does not decide alone
The two measures differ in a way that matters for the city. Proposition H needs a simple majority of San Francisco voters. Regional Measure RTM, a voter initiative authorized by Senate Bill 63, the 2025 law written by State Senators Scott Wiener of San Francisco and Jesse Arreguín of Berkeley, “requires 50%+1 affirmative votes of all votes cast in the five Bay Area counties to pass,” according to the pamphlet. A strong yes vote in San Francisco could be outweighed by no votes elsewhere, and the reverse is also true.
The most recent independent survey suggests the regional measure is not yet assured. The 2026 Silicon Valley Poll, conducted Aug. 5 to 18 by Embold Research for Joint Venture Silicon Valley and the Bay Area News Group, found 48 percent support, 34 percent opposition and 18 percent undecided among 1,801 adults in the five counties, with a margin of error of 2.6 percentage points. A spokesman for the Yes on RTM campaign, Jeff Cretan, told SFGATE that the results “should not be treated as an accurate” measure because the question did not reflect the ballot language, and pointed to the campaign’s own July poll showing 54 percent support, according to the report.
Timing is also tight. The measure’s text makes the tax operative on the first day of the calendar quarter beginning more than 110 days after the election, which by the Inquirer’s count would be April 1, 2027, provided the district has signed its collection contract with the state. The parcel tax would begin July 1, 2027, the same day the agency says its larger shortfall begins.
The case for and against
Supporters argue that the agency has already cut what it can without reducing service. The agency told its board in June, in a presentation included in the same document, that it had saved about $300 million in operating costs from the 2019-20 to 2024-25 fiscal years, $244 million of which it classified as efficiencies, chiefly by eliminating more than 500 vacant positions. In the voter pamphlet, the Yes on H argument says the agency “eliminated 500 vacant positions, trimmed management and doubled fare inspectors,” and quotes Mr. Lurie saying that “strong oversight and independent audits ensures every dollar goes to safe, reliable and affordable Muni service.” Its signers include the mayor, Speaker Emerita Nancy Pelosi, the Board of Supervisors president, Rafael Mandelman, and other supervisors, the San Francisco Labor Council and the San Francisco Chamber of Commerce; the argument says the entire Board of Supervisors supports the measure.
SPUR’s analysis of federal transit data found that Muni compared well with 14 national peers on several measures, including ridership recovery and cost per passenger, which rose 57 percent from 2015 to 2024 compared with a 74 percent average among the peers. But it also identified areas the agency could examine. Muni reported just over $97 million in fare revenue to the National Transit Database in 2024, 66 percent less than its inflation-adjusted 2015 total of more than $283 million, a decline far steeper than its 27 percent drop in ridership. SPUR said much of the drop may reflect fare discount programs adopted by the city, and urged the agency to examine how much stems from fare evasion. Cable cars cost $81 million to operate in 2024, roughly 7 percent of the system’s operating cost, at $871 per service hour. Labor accounted for 72 percent of operating expenses.
Opponents argue that the measures guarantee money without conditions. The San Francisco Republican Party, which wrote the official argument against Proposition H, says nothing in it “requires SFMTA to cut costs, hit efficiency targets, or act on a spending review as a condition of receiving this money,” and notes that the measure’s efficiency review is not due until April 2028, after collections begin. It also objects that the tax is based on square footage rather than property value. Supporters respond in their rebuttal that 95 percent of homeowners would pay the lowest rate and that 70 percent of the revenue would come from the city’s largest properties.
Against the regional measure, Quentin L. Kopp of the San Francisco Taxpayers Association wrote that it would be the largest sales tax increase in the city’s history and that San Francisco “unfairly pays double the tax rate of other counties.” His argument asserts that 338 Muni employees and 539 BART employees received pay and benefits above $250,000 in 2024; the pamphlet notes that arguments are not checked for accuracy by any official agency, and the Inquirer did not independently verify those figures. A rebuttal from Griffin Lee of ConnectedSF, an advocacy group, calls the deficit “a manufactured crisis.” The Contra Costa Taxpayers Association’s president, Marc Joffe, told CBS News Bay Area that the region’s transit agencies “already receive $6 billion of tax and toll revenue” and should work within that.
The regional measure does include oversight provisions. Under SB 63, BART, Muni, Caltrain and AC Transit must undergo a second-phase financial efficiency review, with final implementation plans due in August 2028, and the commission may withhold funds from an operator that fails to comply, according to the impartial analysis. A maintenance-of-effort rule bars operators from using the new money to replace existing funding. Proposition H requires an annual independent audit, an annual report and an efficiency review, but, as its opponents note, does not make funding contingent on carrying out the review’s recommendations.
Who is paying for the campaign
The committee supporting Proposition H, Mayor Lurie’s Yes on H Committee, had raised about $5.14 million and spent about $2.2 million, according to the San Francisco Ethics Commission’s disclosure portal. Its largest contributors include Anthropic, OpenAI, Ripple Labs, Visa and a committee sponsored by Airbnb, at $500,000 each; SF Forward, sponsored by the Chamber of Commerce, at $499,000; and Jeffrey Lawson, a co-founder of Twilio, at $350,000. The portal lists no committee primarily formed to oppose the measure.
What comes next
Election Day is Nov. 3. San Francisco’s results for Proposition H will be certified by the city; results for the regional measure will be compiled across all five counties, and the district has scheduled a board meeting for Nov. 18.
Whatever the outcome, the agency’s next two-year budget, for the fiscal years beginning July 2027, will be the first written with or without the new money, and the first in which the state loan’s repayment begins to grow. If both measures pass, the agency will still be looking for tens of millions of dollars a year in savings. If either fails, the choices about which routes and hours to cut would fall to that budget, which under this year’s schedule would be adopted in the spring.
