BART Running Out of Emergency Funds
Agency Needs New Aid Sources to Avoid ‘Death Spiral’ of Service Cuts
BART, the largest heavy rail public transit system in the western United States, is in trouble. Its ridership plummeted when the COVID pandemic struck, and it has not recovered. Emergency aid from the federal government and State of California is keeping it afloat, but that money runs out beginning in FY 2025, and funds to replace it are yet to be secured.
Transit agencies throughout the country lost riders during the pandemic as commuters began to work from home. When restrictions on travel eased many workers did not return to the office or started commuting downtown only a few days a week. BART was one of the hardest hit US transit systems since the San Francisco Bay Area has the country’s highest work-from-home rates.
BART (Bay Area Rapid Transit) commenced operation in 1972 at a time when Washington, DC, and Atlanta, GA, were also building heavy rail systems. In the transit-friendly San Francisco Bay Area it quickly gained popularity and was carrying around 400,000 passengers a day prior to the onset of the pandemic. The system serves 50 stations along six routes that run over 131 miles of track.
Currently around 160,000 people a day use BART, which is about 40 percent of pre-pandemic ridership. Where fares once covered around two-thirds of the agency’s operating budget; now they account for less than 25 percent.
Going forward, BART will need to adopt a funding model that relies less on fare revenue and more on public investment.
Because rail transit systems have high fixed costs and low variable costs, BART cannot cut its way out of its crisis. It argues that reducing service by 65 – 85 percent would only reduce expenses by 20 – 40 percent.
Instead of cutbacks BART’s business strategy calls for investing to provide a high quality service that will attract more riders by improving service levels, staffing, and the overall customer experience . Toward that end it is focused on improving passenger information and increasing staff presence throughout the system.
Much of this effort is focused on stations. BART is installing new fare gates, station entrance signage, tap-and-go parking, LED lighting, and new and improved train arrival display boards.
BART has replaced its legacy fleet, which dates to the system’s opening in 1972, with new rolling stocks that is more reliable and less costly to operate. In addition, it is investing in power infrastructure, track, and signaling to minimize service disruptions, improve service reliability, and increase frequencies.
The investments are paying off for BART customers, who gave the system an 81 percent satisfaction rating for the fourth quarter of FY24. They are benefiting from optimized train lengths and schedules that better match passenger flows.
But they are not generating sufficient revenue to avoid the need for a bailout. With its investments in service improvements, BART’s operating expenses were nine percent higher in FY24 on top of a 13 percent increase in FY23, according to Debora Allen, a member of the agency's board of directors.
BART’s FY26 budget includes a $35 million deficit and projects a deficit of $385 million for FY2027. Because the deficits are structural in nature they will occur every year with future deficits likely to range between $300 million and $400 million. One-time funding sources will not cover them.
Going forward, BART will need to adopt a funding model that relies less on fare revenue and more on public investment. Most US transit agencies operate this way. Without new funding sources the agency will not be able to maintain current service levels. Transit advocates fear service cuts could set off a “death spiral” for BART with further reductions in ridership and fare revenue triggering additional service cuts.
However, at this time there is no plan in place to generate that income. Earlier this year State Sen. Scott Weiner of San Francisco and State Sen. Aisha Wahab of Fremont introduced legislation to authorize a referendum in 2026 on new taxes. The proposal was met with stiff political opposition and in May it was abandoned.
Stakeholders need to first reach consensus on what would be taxed and by how much. Last Monday, a committee of elected officials, urban planners, and business leaders convened at the headquarters of the Metropolitan Transportation Commission to draft a proposed referendum. Instead of making a recommendation they voted to send several versions of the proposal to MTC staff for further evaluation.
Taxing mechanisms under consideration include a sales tax, payroll tax, and parcel tax or a combination of one of more of these vehicles. Any tax plan would need the approval of MTC, the regional transportation planning and financing agency for the Bay Area, and the state legislature to get on the 2026 ballot.
BART does not have a plan B in case the legislature fails to authorize a referendum or voters reject the proposal. Even if voters OK new taxes BART will not see the proceeds until FY28.
Through no fault of its own BART is caught between the proverbial rock and hard place. It did not anticipate the pandemic causing a massive drop in ridership and revenue. It wants to improve service to increase ridership but cannot generate sufficient fare box revenue to support those improvements.
While US transit agencies nationwide suffered severe ridership drops because of the pandemic, some have recovered faster than others. For example, Long Island Rail Road ridership in FY23 was only 23 percent below the peak of 91.1 million riders in FY 2019.
Even with reduced ridership BART and other Bay Area transit agencies still provide vital public services. This is especially true for urban neighborhoods where people either cannot afford to own a car or choose to rely upon public transit. Barring a seismic shift in California politics, I expect state and local officials will eventually come up with a way to stabilize the finances of BART and the other transit agencies to keep the trains running.
A surcharge on taxes paid by projects deemed transit-oriented development, while sounding good, has problems. Landlords would pass the cost onto tenants, and higher rents goes against the goal of providing affordable housing.
I don’t know a lot about transit-oriented development (TOD), but I understand there is some TOD being implemented around some BART stations. There is some TOD built around some BART stations already. What I don’t understand is why some of the builders of these developments aren’t assessed a tax of some sort on the profits that developers of TODs undoubtedly make, and use those dollars to help offset certain transit costs.
While it’s not of BARTs doing that ridership has fallen the way it has, any effort that can be initiated to drive ridership numbers back up should be pursued. And more federal funding should be directed towards programs that contribute toward reducing the negative impacts on air, climate and the environment, with less federal monies being allocated to modes that do nothing but create further such negative impacts AND at the same time add to a worsening traffic-congestion situation. Personally, I liked the idea of the congestion-pricing scheme that was supposed to go into effect earlier this year in June in NYC.