Bay Area Transit Faces a Fiscal Crisis. Newsom’s Budget Plan Could Make It Worse

Bay Area transportation officials, advocates and elected leaders are expressing concern about Gov. Gavin Newsom’s latest budget proposal, which they say could deepen the imminent financial crisis facing transit operators across the region.

At issue is Newsom’s move to shift $1.5 billion in revenue from the state’s cap-and-trade climate program to Cal Fire, while omitting funds that had been committed to both day-to-day transit operations and longer-term capital projects under previous budget agreements.

State Sen. Scott Wiener, D-San Francisco, sounded the alarm on the proposal in a social media post, warning that the state’s biggest transit agencies, including BART and San Francisco’s Muni, could each be big losers if the governor’s proposal stands.

“Diverting this money will take hundreds of millions of dollars away from Muni, hundreds of millions of dollars away from BART, and it’ll take money away from transit systems around the state,” Wiener said in an interview. “And that is going in the opposite direction that we’ve been trying to go, which is to increase support for transit so that we avoid service cuts.”

The California Transit Association estimates $3 billion in transit funding could be at risk over the next five years. Most of that would have gone to a range of projects to improve service over the long run, including a program that pays for agencies to purchase zero-emission vehicles.

The potential loss of funds comes as the Bay Area’s largest transit agencies face deficits that, if unsolved, will result in major service cuts.

An analysis presented to the Metropolitan Transportation Commission this week reported that five of the agencies — BART, Muni, AC Transit, Caltrain and Golden Gate Transit — face a combined $3.7 billion deficit between mid-2026 and mid-2030. Muni and BART account for the majority of that total, each forecasting total deficits of more than $1.4 billion during that period.

The deficits are a legacy of the pandemic, which triggered steep declines in ridership and fare revenue, and also lowered the sales tax revenue that flows to many transit operators.

As part of a budget presentation last week, BART finance official Pamela Herhold said the cuts in Newsom’s proposal could involve funds that the agency is counting on to balance its budget in the coming year.

BART had been planning to use $350 million of the capital funding that’s now at risk for its core-capacity project. That’s a program that’s been years in the making to modernize its train-control system and significantly increase the frequency of trains. An additional $375 million that could now disappear had been committed to the BART-VTA extension through downtown San José.

“So, a lot is up in the air right now, and we’re actively monitoring the situation,” Herhold said. “It’s concerning, but it’s not a done deal.”

Wiener, serving this session as chair of the Senate Budget Committee, said, “There’s a lot of support for reversing this cut” through negotiations with the governor’s office.

Newsom’s latest budget proposal also ignored an urgent request from Bay Area lawmakers for an additional $2 billion in emergency funding that could be used by transit agencies facing hundreds of millions of dollars in deficits beginning in mid-2026.

Wiener said that the proposal isn’t dead, though getting emergency aid will be a struggle given the state’s need to address crises in health care, housing and homelessness funding.

Newsom’s proposal to cancel transit funding from the cap-and-trade program “makes it more challenging, because now you’re digging out of a hole, because that was a cut to existing funds,” Wiener said. “But there is definitely a lot of support in California for making sure that we have strong public transportation systems.”

In response to a request for comment from the governor’s office, California State Transportation Agency spokesperson Kimberly Erickson acknowledged challenges facing transit and said the administration is committed to negotiations with the Legislature.

“Transit ridership in California has been declining for many years, and the lingering impacts of COVID-19 have only heightened this challenge,” Erickson said in an emailed statement. “Despite substantial investments, increasing ridership remains the most pressing challenge for many transit agencies across the state.”

She said the goal of negotiations over cap-and-trade resources “is to align limited funding with shared statewide priorities while considering regional differences in need and fiscal capacity.”

The Legislature faces a June 15 deadline to approve a balanced budget.