THE Metropolitan Transportation Commission (MTC), which oversees public transport in the San Francisco Bay Area, has reached an agreement with the state of California for a $US 590m loan that will avert major reductions in service during the 2026-27 fiscal year which begins on July 1.
The agreement with the office of California governor, Gavin Newsom, and the state’s Department of Finance will secure the immediate future of services provided by San Francisco Bay Area Rapid Transit District (Bart), Caltrain, San Francisco Municipal Transportation Agency’s (SFMTA) Muni, and Alameda-Contra Costa Transit District (AC Transit).
Together the operators face a projected deficit of more than $US 800m in the next fiscal year. The agreement authorises the loan to be funded no later than July 1, using money awarded but not yet allocated for Bay Area projects by the California Transportation Commission through the state Transit Intercity Rail Capital Programme (TIRCP).
“Because many transit capital projects have long construction timelines and the TIRCP is continuously replenished, the loan is structured to uphold the state’s commitments to awarded projects while minimising risk to project schedules,” MTC says.
MTC says the loan will have a 12-year repayment term with interest payable only during the first two years. Repayment is secured by the revenue-based portion of State Transit Assistance (STA) that goes directly to the transit agencies.
This state loan provides what MTC describes as a “fiscal bridge” until funding is secured through a proposed increase to a regional sales tax that requires approval by voters, which could potentially be put to the ballot as early as November. If approved, the measure is proposed to remain in place for 14 years, but these funds would not begin flowing until around July 1 2027.
“It was critical to reach agreement on funding that would avert major service cuts this year while also protecting the Bay Area’s priority capital projects and this agreement does just that,” says MTC chair, Sue Noack, who is also mayor of Pleasant Hill.
In addition, Bartgeneral manager, Bob Powers, noted that his agency is currently developing detailed budget plans for two funding scenarios to close its projected $US 376m operating deficit for fiscal 2027. These comprise either new revenue and achieving efficiencies, or undertaking service reductions, station closures, fare increases, staff redundancies, and other cuts.
“A state loan gives us reassurance money will be available to continue to deliver the best service possible for the Bay Area,” Powers says.
San Francisco not alone in funding struggles
Commentary from Railway Age contributing editor, David Peter Alan
THIS story demonstrates how difficult it is to report on the future of rail transit in the United States. Ridership on transit has not recovered to pre-Covid levels, while costs keep rising. In the meantime, the Covid relief money that the federal government provided for transit during the height of the pandemic has run out, or will run out soon, at every transit agency.
To add to the difficulty of reporting these stories, every one of them is local, with each provider facing different fiscal challenges and potential solutions, all of which depend on local politics, and sometimes on the fickle whim of the voters.
New York’s MTA has money from new levies and some capital assistance from congestion charging in Manhattan. New Jersey has a surcharge on the largest corporations in the state, which has 35 months left to run. Chicago enacted some new revenue-raising measures and regionalized the governance of transit. Pennsylvania achieved a two-year reprieve by redistributing money allocated to capital projects to operations - a risky solution. Governor, Josh Shapiro, is now proposing a 1.75% increase in tax allocated to public transport to provide another $US 300m each year.
When the Covid-19 virus struck nearly six years ago, transit in the Bay Area was hit hard. Services were slashed everywhere. Services have recovered substantially since then, but not to pre-Covid levels. There have also been capital improvements, such as the recent electrification of the Caltrain line, which has brought shorter journey times and a strong increase in ridership.
A bridge loan is still a loan, though, and the transit agencies are required to pay it back. In nine months, the voters will have their say. If they go along, San Franciscans and people who live in neighbouring towns and across the Bay Area will be able to breathe easier about its transit until 2041. In California, voters must approve new taxes by two-thirds and not merely a majority. These super-majority votes allowed Los Angeles to expand its rail transit, but will the voters in San Francisco and the outlying counties give their transit a similar vote of support?
Voters kept Caltrain going when it was in trouble a few years ago, and plenty of San Francisco residents and tourists depend on Muni. The issue is whether or not enough motorists in the other counties will agree to come up with the money to keep their transit going at or near current levels. As with all of these unique and risky solutions to transit’s post-Covid financial woes, time will tell.
