Caltrain assesses potential losses

“I think we have got to figure out a way to avoid these worst-case outcomes,” Heminger said.

Sebastian Petty, Caltrain’s deputy chief of planning, presented financial information at an April 28 Caltrain Work Program Legislative Planning meeting showing Caltrain faces a ridership hit and corresponding financial problems from 2023-2030, with projected deficits in the coming years.

According to a staff presentation, Caltrain faces a potential “best case” lowest annual deficit in 2030 of around $20 million, while the “worst-case” highest annual deficit would be around $60 million, even with the application of all Measure RR revenue. Petty noted that while Measure RR would not address all expenses, the deficit numbers do not include any revenue from potential fare increases, which could reduce the deficit or create a surplus.

“While the presentation I give does reflect a degree of uncertainty, I think we are in a far better position than we would have been without Measure RR,” Petty said.

Caltrain is preparing for four possible ridership scenarios in the coming years after the pandemic, ranging from low ridership to a return of ridership in preparation for anticipated operating deficits. Staff provided four long-term scenarios possible for Caltrain’s financial prospects from 2023-2030, based on ridership models from consultants.

The four scenarios are Back on Track, Butterfly, Shark Tank and Downward Spiral. Back on Track assumes ridership returns quickly and electrification helps open new markets for ridership increases. The Butterfly plan forecasts steady recovery with expanded all-day service with help from outside funding and a transit-supportive policy environment. Shark Tank assumes there is some recovery, but bad financial conditions lead to limited Caltrain service expansion. A Downward Spiral assumes ridership never fully recovers due to remote work and economic stagnation and estimates below pre-pandemic numbers, ensuring low ridership numbers and no expanded service or train cars. Caltrain said the scenarios are not plans or final, just potential options in the coming years.

“It’s deliberately intended to provide a broad spectrum of what the future could look like,” Petty said of the potential scenarios.

Petty thinks Caltrain is somewhat moving toward either Back on Track or a Butterfly scenario. However, Caltrain officials will watch how travel patterns evolve and if workers return to the office. He acknowledged the key to avoiding deficits is understanding how the market evolves and making the service as attractive as possible to bring riders back.

“I think there are reasons for Caltrain to be very optimistic based on the level of support we have seen from the railroads through Measure RR and the support for transit we see at the federal level,” Petty said.

Board Member Cindy Chavez felt the deficit was something the rest of the Caltrain board should hear about at a future meeting, with Board Member Charles Stone, also the Belmont mayor, agreeing.

“I think this is a really important discussion and should be heard by the whole board,” Chavez said.

Caltrain is currently going through major system expansion Peninsula Corridor Electrification project that will raise fixed costs further, while ridership dropped by as much as 98% during the pandemic, with a lack of clarity about when or if ridership returns to normal levels. Fare revenue will always be an essential revenue component, but Measure RR funds approved in 2020 and additional funding sources are needed to overcome anticipated deficits.

Heminger suggested a low carbon credit program as a way to increase revenue. Petty said the program is a possible major source of revenue, with initial estimates in the teens of millions for revenue. Petty said another presentation would happen at the next Caltrain meeting.

curtis@smdailyjournal.com

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