What is a fiscal cliff?

For transit agencies, a fiscal cliff occurs when money available to fund operations (drivers, energy/fuel, mechanics, etc.) is significantly less than what’s needed to pay for the cost of existing transit service. For agencies that are heavily relying on federal emergency funds to run service, the fiscal cliff occurs when that one-time money runs out.   

Why are many Bay Area transit agencies facing this fiscal cliff?

Many Bay Area transit agencies historically have relied on the money collected from fares to pay for a significant share of their operations. This is good news for the traveling public: funding operations with strong fare revenue allows an agency to run more service and make other improvements with the other public funds, such as local sales tax dollars or bridge toll money, they receive. 

When the COVID-19 crisis hit in March 2020, Bay Area transit ridership dropped by about 90%. Lost fare revenue created a huge, immediate budget hole for local transit agencies. The federal government stepped in to provide limited relief funding to backfill lost fare revenue under the condition that agencies did not lay off workers and maintained service for essential workers. This federal money helped Bay Area transit agencies – and those in other major metro areas across the country – offset their farebox losses. But the money is now running out. Meanwhile, though ridership is slowly climbing at many agencies, fare revenues are still far below pre-pandemic levels and costs have grown by about 30%. The COVID-driven shift toward remote work has been especially acute in the Bay Area. 

How much funding is needed to address Bay Area transit operating needs and when? 

The funding needs and fiscal cliff timelines vary by transit agency, but some will face potential service cuts due to the fiscal cliff as soon as next fiscal year (July 1, 2023-June 30, 2024). The Metropolitan Transportation Commission (MTC) estimates that between $2.5- $2.9  billion is needed over the next five years to allow Bay Area transit to survive and thrive. 

How much COVID relief money did Bay Area transit agencies get from the federal government and how much is left?

Bay Area transit agencies received a combined total of $4.4 billion through three separate COVID relief bills passed in 2020 and 2021. The amount still available varies by agency with fare-dependent agencies seeing their relief funds depleting more quickly. 

If most transit agencies received emergency funding during the pandemic, why is there a fiscal cliff?

Federal relief funds were temporary pots of money to offset immediate COVID-related revenue losses and help pay for operating expenses. The hope had been that transit ridership and revenue would recover by the time the funds ran out. But this hasn’t been the case. So, for many transit agencies, once the COVID relief funds run out, the fiscal cliff begins. The relief funds are not recurring or sustainable, and no additional federal funds are anticipated to help with  the COVID-related revenue losses that continue to hit transit agencies hard.

Can the fiscal cliff be avoided, and who can help stop it?

Yes. Transit agencies across the state are calling on the Governor and state Legislature to step up and provide a multi-year commitment to invest in transit operations to prevent California transit agencies from falling off the fiscal cliff while they adapt to new travel patterns and make necessary service improvements. 

California has invested billions of dollars in modernizing and expanding transit systems across the state to attract more riders, but without a new source of state operating assistance to keep the buses, trains, and ferries running, some agencies will be forced to make deep service cuts that will strand existing riders, harm the economy, and deter new riders from choosing transit over driving.  

How much money is needed to keep Bay Area buses, trains, and ferries running without interruptions?

Bay Area transit agencies need an additional $2.5-$2.9 billion over the next five years to ensure local transit service can survive and thrive. The acute need begins in the fiscal year starting July 1, 2024, when Bay Area agencies face a shortfall of over $400 million, but agencies need to know by July 2023 if they will have sufficient funding the next year to maintain current service levels and fund other critical needs. 

Is the financial status of the Bay Area's public transit similar to or worse than Southern California and other major cities across the state?

The Bay Area’s needs are more acute than those in Southern California because a higher proportion of the Bay Area’s pre-COVID transit riders had other travel options and relied on transit primarily to commute to work. The Bay Area transit systems with the lowest rates of ridership recovery are the commute-based systems, namely BART and Caltrain. Compounding matters, these systems also had the highest share of their operating expenses covered by fares. With the Bay Area leading the nation in terms of work-from-home rates, these commute-based transit trips have been hit hard. National surveys indicate the Bay Area has experienced slower return-to-workplace recovery than any other U.S. metro area, including Los Angeles, San Diego and Sacramento. 

On the other hand, Bay Area bus systems are seeing recovery rates on par with other parts of the state due to the fact that bus riders use transit for a variety of trip purposes, not just commuting, and bus riders are less likely to have other travel options.  

What would new transit operating funding from the state pay for in the Bay Area?

New state transit operating funding would allow local bus, rail, and ferry operators to protect and grow our skilled workforce; maintain and expand service levels to help residents get where they need to go; allow agencies to invest in passenger experience improvements to attract more riders; and adapt to changing travel patterns to efficiently meet the travel needs of as many people as possible.

How many daily trips are taken on Bay Area transit? 

About 1 million trips are being taken on transit each weekday right now in the Bay Area. 

What share of those who ride transit today lack access to a car? 

About one in four Bay Area transit riders before the pandemic lacked access to any vehicle but this varies widely by operator. According to AC Transit, nearly half of its riders have no access to a car at home. For BART, it is 44% of their ridership.

What share of those who ride transit today are low-income or very low-income?  

According to the U.S. census, about 50% of those who commute by public transit are considered low income, with a household income at or below $50,000. 

How important is public transit to achieving the Bay Area and state’s greenhouse gas reduction/climate goals? 

Transportation is the biggest contributor of carbon emissions in California, and investing in public transit is the best way to reduce pollution and greenhouse gas emissions from on-road travel. While California has set ambitious goals to shift to zero emission vehicles (ZEVs) and offers incentives for their purchase, there is still a great need to reduce the amount of driving that occurs, given that the vast majority of cars on the road today are gasoline-powered and will remain so for many years to come.  

Every driver who leaves their car at home and instead rides a bus, train or ferry reduces not just their own emissions but also congestion on our freeways and bridges, which reduces emissions associated with idling from those who continue to drive. Robust transit service allows families to choose to own fewer vehicles, further reducing driving and emissions in our communities. Plan Bay Area 2050, the region’s climate plan, assumes an almost 50% increase in transit’s share of commute trips as one of the core levers to achieve our ambitious greenhouse gas reduction goals. 

What is the current rate of ridership recovery in the Bay Area relative to 2019 (pre-COVID)? 

As of November 2022, Bay Area ridership recovery stands at 55%, but rates vary by transit agency, with urban bus agencies seeing higher ridership returns than regional agencies that have historically focused on serving commuters. For example, relative to pre-pandemic ridership on AC Transit, SF Muni, and Santa Clara VTA are each around 60%, while Caltrain is only at 29% of pre-pandemic ridership and BART is only at 35%. Some of the smaller bus systems have seen the most robust recovery, such as Marin Transit at 89% of pre-pandemic ridership and SamTrans at 76%.   

Can transit agencies save money by adjusting their service to reflect reduced ridership? 

Yes, but the ability to reduce service as a way to save money is a tool more available to bus and ferry operators than to rail systems, which have very high fixed costs. Bus and ferry operators have made service level changes to reflect more robust weekend recovery and to enhance flexibility for passengers. Across-the-board service reductions would lead to reduced ridership, which would necessitate further reductions to service levels and lead to further ridership reductions. This is sometimes known as the transit death spiral. In addition, cutting transit will disproportionately harm vulnerable populations and will impact the state’s goals to reduce pollution and greenhouse gas emissions. 

Is the fiscal cliff the reason why there are so many canceled trips on Bay Area transit? Will new money improve reliability and frequencies?

No. The primary factor resulting in canceled trips is staff vacancies. Due to labor market disruptions and the Bay Area’s continuing housing affordability problems, many agencies are having a hard time hiring drivers and other transit workers. Agencies are collaborating and investing in improving the workforce pipeline to ensure transit reliability is high.

If the state provides more funding, how can it be sure the funds will do more than just sustain the current level of service, but also improve safety and the overall experience so more people will ride transit? 

Bay Area transit agencies,along with state and local elected officials, advocates for people with disabilities, business and labor groups, and transit and social justice advocates, approved a 27-point Transit Transformation Action Plan to re-shape the Bay Area’s transit system into a more connected, more efficient, and more user-focused network across the entire Bay Area. MTC and the region’s transit agencies are calling upon the Legislature to provide new operating funding to help fund this plan and ensure transit in the Bay Area thrives. 

Is a regional transportation funding measure needed and if so when would it go on the ballot for voter consideration? 

MTC, county transportation authorities and transit agencies are considering all options, including a potential ballot measure in 2026, to create a sustainable revenue flow that will ensure a faster, more reliable and more customer-focused transit network for all Bay Area communities. The requested state operating assistance would help bridge the gap between the current fiscal cliff and future funding streams.

What would a regional transportation measure look like? What type of tax is under consideration?

It is not yet known what a measure will look like. MTC has begun stakeholder engagement and will conduct a poll and public engagement this year. MTC needs to work with state lawmakers and the Governor in 2024 to get enabling legislation passed in order to place a measure on the ballot.