Some Federal Funding Options:

The Federal Transit Administration can fund up to 80% of the capital component of mass transit projects, including Light Rail

We recommend asking for a 60% match in order to score higher on FTA’s ratings, as this is a competitive process

Federal programs include:

• Urbanized Area Formula Program: Federal resources available to urbanized areas for transit capital assistance
• Capital Investment Program: bus and bus -related projects; funding for fleet and service expansion
• New Starts: funding for construction of new fixed guideway systems, particularly Light Rail
• The Surface Transportation Program: Funds may be used for a wide variety of public transportation capital improvements
• Congestion Mitigation and Air Quality Improvement Program: Programs and projects funded in nonattainment and maintenance areas for ozone, CO, and PM-10.

Some Local Funding Choices

We can choose smaller versions of several of the elements from this list to get us the $36 million a year that we need. We recommend that extensive polling be carried out and public input be gathered in order to determine which sources would be preferred by most Tucsonans.

Half-cent city sales tax: Raises approximately $40m per year. Pro: familiar & proven, tax is paid a few pennies at a time. Con: low-income people pay a higher percentage of their income than higher-income people; has been defeated twice.

Repeal sales-tax exemption for gasoline: Raises $12m per year in city limits if gas costs $1.50/gal., $16m per year if gas costs $2/gal. 14 other states are doing this. Revenues increase with price of gas. Tax would add about 2 to 3 cents a gallon to the price of gas in Tucson.

Utility fee: Raises approximately $40m per year. All Tucson Water users pay a $12 monthly fee on their water bills; in return, each billpayer receives a free monthly transit pass. More passes can be bought for $12 each. Increases ridership and transit constituency

City development impact fee: $3,500 fee per new housing unit raises approximately $15m per year. Phoenix communities currently assess impact fees between $3,000 and $5,000 per unit.

City payroll tax: 0.83% tax raises approximately $36m per year. City currently does not charge a payroll tax. Paid by employers. Raises part of revenues from non-city residents who use city services.

Public-private partnerships: Stations can be built and/or upgraded by private developers; they can also fund track extensions to additional stations beyond the starter line.

A blend of sources: Impact fee, smaller utility fee, smaller sales tax increase; OR Smaller sales tax increase, repeal sales tax exemption on gas; OR Repeal sales tax exemption on gas, impact fee, smaller utility fee; OR et cetera…