State Budget Buys Time for Transit to Build New Business Model
California transit agencies in June received welcome financial news as the fiscal 2023-24 state budget signed into law by Gov. Newsom includes $1.1 billion in flexible transportation funding to help support their operations. The state investment will help transit agencies avoid a near-term ‘fiscal cliff’ that likely would have led to deep service cuts as early as this year by Muni, BART and other agencies whose fare revenues remain well below pre-pandemic levels.
The new budget also restores a previously imperiled $4 billion commitment for local transit capital improvements, with an option to flex these funds toward transit operations. The Bay Area’s share of this $4 billion total is estimated to be about $800 million.
The new budget will allow California transit agencies to use up to a combined $1.1 billion from select sources, including the state’s Cap-and-Trade program for greenhouse gas emission allowances, over the next three years to support operating costs (fuel, drivers, mechanics, etc.) as well as to cover capital expenses associated with the transition to zero-emission transit as required by the Air Resources Board’s Innovative Clean Transit rule. The Metropolitan Transportation Commission (MTC) is expected to receive the Bay Area’s share of these funds, anticipated to total approximately $400 million, and then determine the ultimate distributions to Bay Area transit agencies.
The restoration of the full $4 billion in capital funds for fiscal years 2023-24 and 2024-25 will help keep on track major Bay Area projects such as BART’s Transbay Core Capacity initiative to boost service frequencies through the Transbay Tube linking San Francisco and Oakland, and the BART extension to be built by the Santa Clara Valley Transportation Authority from Berryessa/North San Jose through downtown San Jose to a new terminus in Santa Clara. The Major Projects Advancement Policy adopted by MTC last year identifies these projects as the primary recipients of future transit capital dollars that will flow to MTC for distribution.
The state budget offers an important but temporary fix for Bay Area transit agencies. Even with this new state funding, some agencies are facing budget deficits in the tens of millions of dollars next year, growing to hundreds of millions the year after. For example, BART anticipates a $93 million operating deficit in the 2024-25 fiscal year and operating deficits of about $300 million each year after that without additional operating revenue sources.
Pandemic Decimates Transit Ridership
The COVID-19 pandemic changed how Bay Area residents live, work, and travel. It hit our public transit system hard, decimating transit ridership and, along with it, the transit fare revenue that many of the Bay Area’s transit agencies rely on to keep their buses, trains, and ferries in service.
We are in an unprecedented moment, with the survival of our transit system as we know it at risk. While many workers, students, and our neighbors who depend on transit continue to ride, others have returned to transit more slowly and less frequently. The Bay Area has one of the highest work-from-home rates in the nation, resulting in fewer commute trips. As of May 2023, current transit ridership in the Bay Area remains at only 58% of pre-pandemic levels, and this, combined with inflation, is making it harder for transit agencies to pay the bills.
What a Transit Bankruptcy Means for the Bay Area
Federal relief funds saved Bay Area transit agencies from bankruptcy, avoided layoffs, and kept transit vehicles moving for everyone to use. But this one-time infusion will soon run out.
Bay Area transit agencies know that part of the answer is to make transit work better and have been redesigning schedules and routes to better serve current riders. They are also addressing this looming crisis by cutting expenses, maximizing efficiencies, and reducing employee overtime, but transit can’t cut its way out of the money crisis.
Without new, long-term funding sources for our transit system, the Bay Area will face devastating transit service cuts, riders will see steep fare hikes, and transit workers will be laid off. Routes that once existed will be cut, and service will be less frequent and reliable.
For the disabled, elderly, youth, and those unable to afford a personal automobile, Bay Area transit is undeniably a lifeline; their travel needs will no longer be met. Those who don’t take transit can expect more congestion and longer travel times on our bridges and roadways as former transit riders take to their cars.
State Budget Funding Helps Bridge the Gap
Financial support from the state for transit operations will help transit agencies:
- Bridge the gap until they can secure more sustainable sources of money.
- Respond to the financial crises they are facing and retool transit service to match the changing ridership patterns that have emerged with the pandemic.
State budget funds will assist the Bay Area’s transit agencies as they recover from the pandemic and develop long-range funding plans, such as a future regional transportation funding measure for voter approval that will support the region’s transit network.
Survive and Thrive
Beyond survival, the Bay Area deserves a transit system that is thriving with better frequency, improved reliability, and better connections to key destinations and between systems.
Residents also deserve a transit system on which they feel safe. The problems people see in many of our cities, such as drug use and people experiencing mental health problems, affect our transit system too. Riders need to feel safe and secure for them to come back. Funding is needed to respond to these challenges as well.
MTC, in partnership with Bay Area transit agencies, business groups and transportation advocacy organizations, released in May 2023 "Survive & Thrive: Roadmap to a Sustainable Business Model for Bay Area Public Transit," a new report that outlines steps that need to be taken over the next decade by MTC, transit agencies and the state government to help the region’s transit network avert a near-term fiscal collapse and adapt to post-pandemic travel patterns; transition to a new business model by the latter half of the 2020s; and then expand its reach and capacity in the 2030s.
Transit is the Solution
For more than 50 years Bay Area buses, ferries, and trains have served as the arteries of our cities, connecting us across the artificial boundaries of cities and counties, bridging us across and below the Bay itself.
The Bay Area needs safe, clean, and reliable public transit now more than ever to advance the core values of what it means to live and thrive in the region.
Be a Transit Champion
- Pledge to think twice about driving and choose transit more often.
- Talk to your friends and family about riding transit and take trips together.
- Spread the word in your local community and associations.
- Join and work with local grassroots efforts in your community.