Drivers pass a retaining wall near the Bay/Porter exit of Highway 1 in Soquel. (Stephen Baxter — Santa Cruz Local file)

Measure D, a half-cent sales tax, pays for transportation projects across the county. The measure splits the tax’s proceeds between roads, transit for people with disabilities, highways, trails and rail. 

Since Santa Cruz County voters approved the measure in 2016, the transportation commission has used the tax money as a local match to state and federal grants, including parts of the Highway 1 expansion and the rail trail. But the projects are advancing — and using up the funds — more quickly than the Measure D money flows in each month, and the commission may need to borrow against future Measure D dollars to keep the projects moving forward, according to a staff report.

At the Thursday meeting, financial consultants with Berkeley-based KNN Public Finance are set to present options for possible loans. 

Two of the transportation commission’s largest projects are over budget: the North Coast Rail Trail from Wilder Ranch to Davenport, and Highway 1 expansion.

Segment 5 of the rail trail, which runs from Wilder Ranch State Park to Yellowbank Beach, started construction in 2024. The project was estimated to cost $51.4 million and was fully funded with a federal grant, Measure D money, and grants from the Land Trust of Santa Cruz County and the California Coastal Conservancy. But unexpected work to comply with environmental regulations have raised costs an estimated $18.6 million.

Parts of the trail run through habitat for the California Red Legged Frog, federally considered a threatened species. To make up for negative effects to the frog and the surrounding habitat, the transportation commission must plant native plants and monitor the environment.

The transportation commission would have to contribute $4.4 million, and the federal grant would increase to make up the rest. 

Separately, commissioners are expected to consider overruns from Highway 1 expansion between Soquel and 41st avenues. Since 2021, the transportation commission has worked with the California Department of Transportation to construct the new highway lanes.

In 2024, Caltrans asked for an additional $8 million for staff time, consultants, and construction cost overruns. Commissioners partially filled the gap, and approved up to $3 million for staff and consultant time and consultants, and $2.5 million for construction. Commission staff requested records to explain the staff time and consultant overruns, but the records Caltrans provided were incomplete, according to a staff report. 

Thursday, they are set to consider approving another $1 million for construction overruns from Measure D money. 

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