Apr. 1—For the past five years, BART has relied on federal and state assistance to keep its trains running as steep ridership declines sapped its fare revenues.
The regional rail agency will soon run out of the $1.9 billion in subsidies as it forecasts a $26 million operating deficit next year, at the start of fiscal year 2026, according to BART's latest budget projections.
But that deficit is small compared to the massive $349 million shortfall that BART projects in fiscal 2027, which begins in July 2026.
At the heart of the issue is a steep decline in ridership that's caused BART's fare revenues — which accounted for about 70% of the agency's operating costs in 2019 — to shrink by more than half since 2020.
While ridership noticeably increased through early 2023 from the historic lows at the height of the pandemic, it has been mostly flat since last summer. BART's ridership remains at about 45% of 2019 levels, when trains carried over 400,000 people on weekdays. Officials expect marginal growth in the coming years with trains carrying between 159,000 and 189,000 riders during the busiest days of the week by 2026.
Rising labor costs compound the agency's financial challenges. BART officials project about a $97 million increase in labor and benefits costs over the next two fiscal years. Inflation and rising power costs are also projected to stress BART's budget.
The $26 million budget hole next year marks the beginning of the oft-mentioned "fiscal cliff" that BART and other Bay Area transit agencies face this decade. Officials at agencies like BART and the San Francisco Municipal Transportation Agency, for years, have braced for the onset of massive deficits they say could destabilize the region's transit network.
Those doomsday visions have yet to materialize. Last spring, as BART and Muni prepared to make steep service cuts, state lawmakers passed a $1.1 billion transit subsidy that pushed back their fiscal cliffs for a year or two, $352 million of which went to BART.
Yet, BART is running out of financial lifelines.
The agency received $1.6 billion from the federal government between 2020 and 2022, and it's improbable a split Congress will approve more aid to the nation's financially struggling transit operators. And with California facing its own massive budget shortfall, state lawmakers are unlikely to sign off on more subsidies to transit agencies.
BART has held off on cutting service or reducing its workforce, using federal and state aid to offset prior shortfalls since the pandemic. The agency, for example, plans to use $326 million in those funds to stay in the black in fiscal 2025.
BART projects a net increase of 46 employees next fiscal year and is running more train service than it did before 2020, when it had more than double the ridership.
Agency officials have hired more police officers, cleaners and frontline workers over the past year in an effort to improve safety, cleanliness and reliability on BART. The agency is also replacing entry gates across the rail system to deter fare evaders.
The agency is relying on deferrals to shrink its deficit. Officials propose deferring $74 million to its priority capital program, which funds high-priority capital projects, over the next two fiscal years, as well indefinitely deferring allocations to its pension trust that help reduce BART's future pension liabilities.
Officials at BART hope voters will approve a regional tax measure expected to be placed on the 2026 ballot. The measure is intended to provide the agency a long-term subsidy to lessen its dependency on fares and transform how BART gets funded.
State lawmakers are considering a bill, this session, to allow transit agencies to place a funding measure across nine Bay Area counties that would ensure at least $750 million annually in operating funds for BART and other operators. SB1031 also includes a study to consolidate some of the region's 27 transit agencies.
BART is largely banking on the passage of the 2026 tax measure to avoid its fiscal cliff, but, even if approved by voters, it's unclear whether that funding would flow before agency leaders have to ponder critical budget decisions: BART will be four months into fiscal 2027, and its first nine-figure deficit, by the time the ballot question is expected to reach voters.
BART's Board of Directors are expected to adopt a budget through fiscal 2026 in June.
Reach Ricardo Cano: [email protected]; Twitter: @ByRicardoCano
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