California government, MTC reach terms on bridge loan ahead of potential funding measure vote

The Office of California Governor Gavin Newsom, the California Department of Finance and the Metropolitan Transportation Commission (MTC) have reached an agreement for a $590 million loan that will support Bay Area transit agencies to avert major service cuts at AC Transit, Bay Area Rapid Transit (BART), Caltrain and San Francisco Municipal Transportation Agency during the 2026-27 fiscal year beginning July 1. The loan was negotiated in coordination with the affected transit agencies, which face a projected deficit of more than $800 million in the next fiscal year. The MTC says the new agreement will sustain operations used by hundreds of thousands of daily transit riders across the region. 

“California is following through in our support for Bay Area transit and the riders who rely on it every day,” Gov. Newsom said. “This agreement between my administration and the Metropolitan Transportation Commission provides essential short-term financing to support Bay Area transit operations while the region works together on long-term funding solutions. Public transit is essential to our economy and to communities across California, and through continued partnership with regional and local agencies, we are delivering a more stable and reliable system now and for the future.”

A regional funding measure may appear on the November 2026 ballot in Alameda, Contra Costa, San Francisco, San Mateo and Santa Clara counties. If the measure qualifies for the ballot and is approved by voters, it would establish a temporary 14-year sales tax to support transit operations in the region. But if passed, these funds would not begin flowing until July 1, 2027. The loan offers a fiscal bridge until the sales tax dollars may be available.

“Today is a huge win for Bay Area transit and for both transit riders and drivers,” said Sen. Scott Wiener (D-11). “For the past year, we’ve worked hard to craft a bridge loan to ensure BART, Muni, Caltrain and AC Transit are not forced to enact massive service cuts—potentially going into a death spiral—as we build toward a regional revenue measure to stabilize and strengthen these systems for the long run. I’m proud of our work with regional stakeholders and the Governor to make this loan a reality. Public transportation is part of the Bay Area’s lifeblood, and we must do everything in our power to strengthen it and protect it from service cuts. So many Bay Area residents rely on transit to get to work, school, or family and service cuts would also explode traffic congestion. We must not let this happen, and we won’t let it happen.”

The agreement authorizes the loan to be funded by July 1, 2026, using money awarded but not yet allocated for Bay Area projects by the California Transportation Commission through the state Transit Intercity Rail Capital Program (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 minimizing risk to project schedules.

“MTC greatly appreciates the time and energy the department of finance and the governor’s office put into this loan negotiation,” said Commission Chair and Pleasant Hill Mayor Sue Noack. “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.”

Consistent with state Senate Bill 105 enacted last fall, the loan agreement includes a clearly defined repayment structure, a guaranteed revenue source to secure the loan and an agreed-upon interest rate:

• 12-year repayment term, with interest-only payments during the first two years. 
• Repayment secured by the revenue-based portion of State Transit Assistance (STA) that goes directly to the transit agencies.
• Variable interest rate tied to the state’s surplus money investment fund, ensuring the state is fully repaid at the same rate it would have earned had the funds remained in state accounts. 

BART General Manager Bob Powers noted that his agency, "is currently developing detailed budget plans for two funding scenarios to close our projected $376 million operating deficit for fiscal year 2027 through either new revenue and efficiencies or through service reductions, station closures, fare increases, layoffs and across-the-board internal cuts. A state loan gives us reassurance money will be available to continue to deliver the best service possible for the Bay Area. We are thankful to Gov. Newsom and the department of finance for finding a path to fund transit operations during such an unprecedented scenario brought on by the pandemic and remote work. We also thank the Bay Area Legislative Caucus for their supportive efforts and look forward to working with the Legislature on early action to include the loan within the state budget."