Monterey-Salinas Transit District: sales and special taxes.

Addis anchors a shift in Monterey-Salinas Transit District funding by phasing out the district’s ability to place new sales or special tax measures on the ballot after 2025, while preserving a path to secure transportation funding through a district-specific transactions and use tax option and a separate, time-limited funding framework. The bill retains the district’s capacity to pursue a traditional retail transactions and use tax under the standard state framework, but only with a two-thirds board vote and subject to voter approval under the state constitution. It also leaves room for the district to rely on fees or other funding sources and to set transit fares by board action.

Under the proposed changes, the district would no longer be authorized to submit ballot measures for sales or special taxes beginning in 2026. It would nonetheless be able to initiate a retail transactions and use tax proposal through the usual process if at least two-thirds of the board approves, followed by a public vote. In addition, the district would be empowered to impose and administer fees or other funding mechanisms, provided they are approved as required by law, and to set fares for services by resolution or minute order. The bill also creates a separate, district-specific funding framework that would allow a dedicated 0.25 percent transactions and use tax for transportation, contingent on a two-thirds board vote and voter approval, and in conformance with the broader tax law aside from a specified cap provision.

The new funding framework would be structured to not count the 0.25 percent rate toward the county’s combined transactions and use tax cap, while requiring compliance with standard tax administration and collection rules. If approved by voters, the 0.25 percent tax would be dedicated to supporting the district’s transportation services and would operate within a sunset structure that terminates if the measure is not reauthorized by January 1, 2035. The framework would also be designed to align with the broader transactions and use tax statutes, except for the cap exception, and would require a district ordinance and constitutional-voter approval to become effective.

In practice, the bill would diversify the Monterey-Salinas Transit District’s revenue options while narrowing the district’s ability to rely on new sales or special taxes after 2025. The district would face two potential funding pathways: continuation of a standard retail tax under the existing state framework (subject to board supermajority and voter approval) or a separate district-specific 0.25 percent tax with its own sunset deadline. For stakeholders, this means a potential reallocation of revenue-raising authority, with implications for governance, tax administration, and budget planning, alongside ongoing authority to set fares and to pursue fees or other funding sources as allowed by law.