Caltrain seems poised to balance its budget this coming fiscal year due to a one-time state loan, but officials warned leaders that serious service cuts are still imminent without longer term funding.
A recent board discussion builds on previous reports about how Caltrain could eventually cut all passenger service, or at minimum close more than one-third of stations and greatly reduce service, if it doesn’t close its projected $75 annual deficit expected to begin next July, the beginning of fiscal year 2028.
The recent state loan, nearly $50 million, allows Caltrain to balance its operating budget through fiscal year 2027, which starts this July. The loan buys the agency more time, but Caltrain officials reiterated that the potentially balanced budget will be a result of one-time funds and doesn’t address its gaping structural deficits.
“We need a new ongoing external funding source as a structural necessity to maintain our operations,” Melissa Jones, deputy director for Policy Development, said during a recent Caltrain board meeting. “These one-time sources that have really bridged our finances will be exhausted in [fiscal year 2027.]”
Without external funding, staff said Caltrain could sustain reduced service for one to two years before a complete shutdown would become necessary.
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The external funding could come from a likely sales tax ballot measure going before Bay Area voters in four counties, including San Mateo, an initiative known as Connect Bay Area, which would impose a 14-year sales tax. If passed, the funds would close the current deficits for major agencies, such as Caltrain, BART and MUNI, as well as provide counties with discretionary funds for local needs.
BART has also presented a dire scenario if it doesn’t receive funding to shore up its projected $376 million annual budget deficit, which would involve significant station closures.
Caltrain and BART would have to undergo an independent third-party cost efficiency review as a condition of receiving new state funding. Board members raised a few suggestions to boost revenue or cut costs, ranging from trying to expand Go-Pass use to increasing leasing and housing development opportunities.
“Being candid, being honest and being credible … is important. It’s not to scare. It is to have an honest conversation at the table of the reality of what is before us,” said Board Member Rico Medina, also the mayor of San Bruno.
In June, the board will adopt the budget and adopt the contingency plan should the ballot measure fail.
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