Shared from the 5/21/2023 San Francisco Chronicle eEdition

Outlook grim for transit bailout

Advocates warn ‘death spiral is closer than we think’ without aid

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Photos by Jessica Christian/The Chronicle 2022

Commuters board a Muni train at the Van Ness Station last July. The agency faces a $130 million deficit starting in 2025.

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Riders exit a BART train at the Embarcadero Station. BART may have to consider service cuts and layoffs next spring.

Gov. Gavin Newsom and Sacramento lawmakers have one month left before they must pass a state budget, and it appears unlikely it’ll include a $5 billion bailout for BART, SFMTA and the state’s transit agencies.

That’s the amount agencies said they need to avoid “doomsday” service cuts after they exhaust what’s left of the $4.5 billion in federal aid they’ve used to operate trains, buses and ferries during the pandemic. About half of that $5 billion accounts for deficits in the Bay Area alone, where many agencies are struggling with steep ridership declines.

Newsom’s revised budget proposal didn’t include any transit bailout funds and kept a $2 billion cut to capital funds as California tries to plug its own $31.5 billion deficit.

In his first public remarks on the issue, Newsom told reporters in Sacramento on Friday that he was “very concerned” about transit agencies’ fiscal cliffs. But, he said, “We’re just not in a position to solve for their short-term needs at the moment.”

Anxious Bay Area transit officials and advocates say state budget negotiations over the next few weeks could determine the fate of the region’s transit system.

Here’s what we know.

Transit death spiral could start this summer

There’s one main reason transit supporters say a subsidy is needed urgently: The Bay Area’s largest agencies say they will have to make service cuts soon.

For Muni, it would mean cutting service on 20 transit lines to head off a $130 million deficit starting in 2025. SFMTA Director Jeffrey Tumlin said that without state funds, the agency will eliminate one Muni line per month for 20 months starting this summer to balance the budget.

San Francisco’s transportation agency has already said it will extend metered parking hours this summer to subsidize transit service.

Officials at BART, meanwhile, would likely have to consider service cuts and layoffs next spring when board directors adopt a budget for the 2025 fiscal year — when the rail agency’s massive deficit begins.

Last week, seven of the agency’s nine directors opposed making cuts in their upcoming budget to address a $92 million deficit that begins in March 2025 once federal aid runs dry. They’re holding off on cuts and betting that schedule changes in September and efforts to improve safety and cleanliness will lure more off-peak riders and boost ridership, which is at about 40% of 2019 levels.

In June, the agency’s board is expected to approve 11% inflationary fare increases over two years.

Of the region’s largest transit agencies, BART is in the tightest corner. Officials at the fare-dependent agency, which receives 5% of its operating funds from the state, say BART can’t survive without subsidies from California or local taxpayers.

Transit advocates say the Muni service cuts this summer could signify the start of the region’s transit death spiral.

Similar to downtown San Francisco’s “doom loop,” this is how the vicious cycle works: Reduced transit service causes riders to ditch buses and trains, which depresses fare revenues, leading to further service cuts and ridership drops.

“The transit death spiral is closer than we think,” said Laura Tolkoff, transportation policy director for SPUR, the public-policy nonprofit. “If we don’t save transit and make it better in the next five years, we will not have transit in 50 years. This is really a now-or-never moment.”

California’s budget forecast clouds odds for a subsidy

Transit agencies asked Newsom and the Legislature in late April to include a $5 billion bailout in the budget.

Their request would give them a five-year subsidy for transit operations via the state’s diesel fuel sales tax and cap-and-trade program. Bay Area agencies also want lawmakers to divert state highway funds toward transit operations.

Several Democrats in the Legislature, including San Francisco state Sen. Scott Wiener and Assembly Member Phil Ting, say they’re pushing for state assistance for transit. But California’s own precarious budget outlook is the main barrier for securing a bailout.

H.D. Palmer, spokesperson for the California Department of Finance, said the Newsom administration is “certainly willing to listen” to subsidy proposals from the Legislature.

“But the reality is that we’ve got to close the $31.5 billion budget shortfall,” Palmer said. “That does not lend itself to adding $6 billion to a budget where you’re paring back expenditures.”

Ting, who chairs the Assembly’s Budget Committee, acknowledged the state’s budget constraints. But, he said, “I’m going to be doing everything possible to make sure that the state can help all the transit agencies.”

Transit officials hope a state subsidy gives them more time to put a transit tax measure on the 2026 ballot. Some lawmakers want agencies to pursue a gas tax increase in 2024, though polling shows there’s not enough voter support yet to succeed.

Lawmakers want accountability and reforms

Ting and several lawmakers said they want transit agencies to tell them how they plan to reach financial solvency before they receive any state funds. Others have called for greater financial oversight.

Legislators grilled transit officials in recent hearings over their plans to recover ridership and how they’d address crime, homelessness and cleanliness on trains and buses. Though remote work caused a steep drop in transit riders, the Bay Area’s ridership declines started years before the pandemic because of these issues.

Several polls show many current and former BART riders don’t feel safe riding trains and want the agency to better enforce its own rules of conduct.

The transit agencies’ initial request didn’t include accountability proposals.

“I don’t think there’s anybody in the Bay Area who would be pleased with that type of proposal — to give the transit agencies money just to maintain the status quo,” Ting said.

Transit advocates are proposing several measures that could address lawmakers’ concerns, they said. This includes requiring agencies to submit annual recovery plans to the state and compelling Bay Area agencies to follow through on transformative changes to wayfinding, scheduling and fare integration.

Ian Griffiths, policy director for Seamless Bay Area, which advocates for unified transit in the region, said the state should also consider another key reform: “It is time to analyze consolidations,” he said.

One of riders’ most frequent criticisms is that the Bay Area’s fragmented transit system makes it too difficult and confusing for people to choose transit over driving cars.

Consolidating some of the region’s 27 agencies, Griffiths said, would make it simpler for people to take transit and reduce the region’s transit administrative costs, which are above the national average.

Griffiths and other advocates fear long-lasting damage to transit systems if subsidies arrive after agencies make drastic service cuts or shut down.

“The moment service goes away, and the moment service is not reliable, people will change their habits,” he said.

Reach Ricardo Cano: ricardo.ca-no@sfchronicle.com; Twitter:

@ByRicardoCano

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