When Measure X was approved by the voters of Monterey County in 2016, it was estimated that the sales tax would generate $600 million over 30 years for transportation improvements. However, the receipts for the first two years came in significantly higher than expected at $28.03 million and $30.46 million for fiscal years 2017/18 and 2018/19 respectively.  Agency staff took the conservative approach to continue programming Measure X funds to match the initial estimate of $20 million per year while building up a reserve of funds in anticipation that revenues may eventually decline from these higher amounts.

On March 19, 2020, Governor Gavin Newsom issued Executive Order N-33-20 directing all individuals in the State of California to stay at home or at their place of residence, in order to protect the health and well-being of all Californians due to the State of Emergency resulting from COVID-19 pandemic. The resulting economic downturn related to the pandemic have left many jurisdictions across the State with decreased revenues while also diverting existing revenues to address emergency relief projects.  The decrease in consumer spending has had a direct impact on the projections for near-term Measure X revenues.

Based on forecasting from the Transportation Agency's sales tax consultant, HdL Companies, Measure X receipts from January through March were 24.0% below the first sales period in 2019 as many taxpayers took advantage of the State’s tax payment holiday. After accounting for the missing payments and other reporting issues, actual sales were down 1%.  The State’s response to the pandemic and the limitations it placed on travel and commuting had an immediate and negative effect on gas stations and restaurants. Auto sales and construction activity were also notably lower.

The net effect is that Measure X sales tax revenues will decline below prior projections across at least the next three fiscal years (current year plus two). The projected result is a 22.7% decline from $30.46 million of revenues in 2018/19 to $23.53 million 2019/20. In 2020/21 revenues are expected to show an increase of 16.3% to $27.38 million, and in 2021/22 a slight drop of -2.3% to $26.75 million. These figures are approximately $10 million to $11 million below last year's projections, and are subject to change as the full implications of the COVID-19-related economic downturn are better understood.

This forecast from HdL Companies reflects the shift from shelter-in-place isolation to a gradual re-opening of the economy. It anticipates that: social distancing will reduce sales; the public will be hesitant to go out at first; persistent unemployment and concerns about long-range financial security will dampen spending; and corporate and government spending on capital outlay will diminish until stimulus funds are available. It does not assume that a second round of shelter-in-place orders will be issued.  As these issues are continuing to be in flux, Transportation Agency staff is working closely with HdL Companies to update these projections on a quarterly basis as more information becomes available.

While the decline in Measure X revenues as projected from the prior year presents challenges, the conservative approach taken by the Agency still provides full-funding for near-term projects as programmed in the 2019 Integrated Funding Plan.  The Measure X program's existing fund balance along with new revenues will allow the Measure X program of projects to stay on track to meet programmed local match requirements for the next four years.  Priority projects that are expected to start construction during this time frame include the Imjin Road Widening project, which uses $17 million of Measure X funds as match to a $19 million SB1 Local Partnership Program grant, the Highway 218 Segment of the Fort Ord Regional Trail and Greenway, which uses $1.0 million of Measure X funds as a match to a $9.2 million Active Transportation Program grant, and the State Route 156 / Castroville Boulevard project, pending receipt of $20 million of grant funds with $2.5 million of Measure X as match.