Reposted with permission of Jack Brown

The Santa Cruz County Regional Transportation Commission (RTC) is proposing a $4.3 billion Zero Emission Passenger Rail Transit (ZEPRT) project — a 22-mile passenger train line from Watsonville to the City of Santa Cruz. While this may sound like a visionary step toward sustainable transit, the reality is this: it will likely be paid for through a massive, regressive tax hike on local residents — with the greatest burden falling on those it claims to serve.

A detailed analysis of the financial projections shows the staggering local tax implications — and raises a fundamental question: Can Santa Cruz County afford to finance this train at all?

Project Cost Breakdown

The total cost of the project is estimated at $4.283 billion, divided as follows:

$1.96 billion for track, stations, systems, and sitework
$1.04 billion for land, vehicles, and services
$1.28 billion in contingency

An additional $34 to $41 million annually is projected for operations and maintenance (O&M). $37.5 million was used as an average number in this analysis.

What Can Be Covered by Grants?

RTC staff often imply that federal and state grants will pay for most of the project. But in reality, many key project components aren’t eligible for grants:

100% eligible: Track, stations, systems, vehicles
50% eligible: Professional services
0% eligible: Contingency, land, and most O&M

This leaves $2.44 billion potentially covered by grants, and $1.84 billion left to be funded locally — either through bonds or taxes.

Four Scenarios: Varying Grant Support

Depending on the level of grant support Santa Cruz County secures, here’s what the local funding need and tax impact could look like:

The analysis includes:

A 5.02% bond coupon rate (Source Google/S&P Global)
30-year term
6% farebox recovery to offset O&M costs
Current 1% sales tax generates $54 million/year

To fund the combined cost of debt service and O&M, the county would need to increase local sales tax rates significantly.

Regional Sales Tax Impact

Each of Santa Cruz County’s 5 sales tax regions would see different effects based on their current rates. Here’s what an increase might look like under the various grant scenarios based on local 20% match to 50% match:

Under lower grant support (e.g. 50%), the new tax rates could climb above 13.2%, placing Santa Cruz as the highest sales tax jurisdictions in the country. Even 50% state and federal grant support is not guaranteed. The SMART train in Sonoma/Marin, the closest comparison, has only received 34% of state and federal grants. In addition, the current federal administration just canceled $4 billion for California’s high speed rail project.

Regressive Taxes Hit the Poor Hardest

This is where the proposal becomes not just financially unsound — but morally questionable.

Sales taxes are regressive, meaning they take a larger share of income from the poor than the rich. Working families spend a greater proportion of their income on taxable essentials — like clothing, household goods, and school supplies. Under this plan:

A low-income family in Watsonville will pay significantly more in taxes whether they ever ride the train or not.
A wealthier household in the unincorporated areas might not even notice the difference — or may benefit from other deductions and tax-shielded income.

In effect, the very people the train claims to help will pay the highest price for it.

A County Already in Crisis

Santa Cruz County is already one of the least affordable places to live in the country. According to recent reports:

The county ranks in the top 10 nationwide for housing unaffordability relative to income.
Nearly two-thirds of renters are cost-burdened.
Essential workers — from teachers to nurses to restaurant staff — are being priced out.

Layering on a 4%+ sales tax hike to finance a niche rail service that serves just 1,750 unique riders a day will only make the county’s affordability crisis worse.

No Guarantees on Grant Funding

Some say the county will get “free money” from state and federal sources. But the recent history tells a different story:

SMART Train in Sonoma/Marin has only received 34% of funding through grants.
The federal government canceled $4 billion in high-speed rail funds for California just this month.
Grants are competitive, politically driven, and far from guaranteed.The RTC is banking on our little train project between Santa Cruz and Watsonville being labeled “Intercity Rail” which is the only type of rail projects receiving grant funding at the moment. A real example of Intercity Rail is the Acela line between Boston and Washington D.C. providing service to cities with populations in the millions, not thousands.

Planning a massive capital project based on uncertain funding is fiscally reckless.

Conclusion: Wrong Project, Wrong Time, Wrong Funding

Santa Cruz County is facing a defining choice. Do we tax our residents — especially our working poor — at some of the highest rates in the nation to build a train that:

Serves only a tiny fraction of the population
Offers no significant reduction in car trips
Burdens every household and business with massive new taxes
Locks up funding for 30 years, while urgent transportation needs go unmet

The ZEPRT proposal is not just costly. It’s regressive, risky, and unjust. It takes from the many to subsidize the few, all while pushing us deeper into unaffordability.

We need real transportation solutions that are flexible, scalable, and equitable — not a 20th-century train project financed on the backs of those already struggling to stay afloat in Santa Cruz County.

Now is The Time To Take Action

Now is the time to speak up. Tell the Santa Cruz County Regional Transportation Commission (SCCRTC) that enough is enough. Share your opinion and direct them to this analysis.

Contact information for all commission members is available at: linktr.ee/coastaltrail