Bond Program

On November 7, 2006, the voters of Orange County chose to extend the Measure M1 half cent sales tax for another 30 years from 2011 through 2041. Measure M2 (M2), administered by the Orange County Transportation Authority (OCTA), will generate billions of dollars to improve transportation in Orange County. M2 is designed to reduce traffic congestion and enhance overall mobility. Improvements in the plan include improving key freeways, upgrading major interchanges, and adding capacity and maintaining streets and roads. M2 allocates 43 percent of funds to freeway projects, 32 percent to streets and roads, and 25 percent to transit projects. 

While the COVID-19 pandemic negatively impacted sales tax revenue through the first half of FY 2020-21, the second half of the FY showed tremendous growth as the Orange County economy began emerging from the pandemic. Though restaurants, gas
stations, and brick and mortar retail continued to be impacted in FY 2020-21, the impacts were more than offset by increased online purchases and the benefit of collecting sales tax on out-of-state online purchases, made possible by the Wayfair decision. As a result, sales tax collections for FY 2020-21 grew by 8.6 percent to $345 million, which is the highest annual sales tax collection for M2. Based on the strong sales tax growth in FY 2020-21 coupled with more optimistic near-term economic recovery, the 2021 sales tax revenue forecast for M2 is $13.2 billion. The revised forecast represents a $1.6 billion gross increase from what was assumed in the prior year's forecast.

On December 13, 2021, the 2021 Next 10 Plan was approved by the Board, reflecting updates to the Measure M2 sales tax revenue forecast, external funding assumptions, and project cost estimates. This comprehensive plan sets priorities and funding commitments over a ten-year period (2021-2030) to ensure the realization of Measure M2 commitments, maintain fiscal sustainability, and strive to deliver transportation benefits early. 

The largest component of the overall M2 Program is the Freeway Program. It receives 43 percent of the net sales tax revenue. In the 2021 Next 10 Plan, $4.7 billion in freeway projects are scheduled to be delivered. The I-405 Improvement Project, which at $2.1 billion in estimated cost, will be the largest capital project that OCTA has delivered in its history. This project, slated to open in 2023, is concurrently under final design and construction.

OCTA issues Sales Tax Revenue bonds to provide funds for certain transportation projects, such as the Series 2019 Bonds issued in February 2019 for the funding of the general purpose lanes for the I-405 Improvement Project.  The current bonds outstanding are the Series 2010 A Bonds, and Series 2019 Bonds.  The 2021 Next 10 plan maintains just one bond issuance during the Next 10 Plan timeframe of approximately $200 million in Fiscal Year 2023; the amount assumed decreased by approximately $375 million from the 2020 Next 10 Plan.