Newsom Signs $590 Million Loan to Avert Drastic Bay Area Transit Cuts

Gov. Gavin Newsom authorized a $590 million emergency bridge loan on Thursday to prevent Bay Area transit agencies from shuttering stations and slashing service.

The financing supports the region’s four largest transit operators: BART, Muni, Caltrain and AC Transit. The agencies face a combined $800 million deficit, triggered by the slow recovery of ridership following the pandemic, rising costs and the exhaustion of federal emergency relief funds.

While much smaller than the $2 billion in emergency funds that Bay Area lawmakers requested in 2025 — which Newsom rejected last May — state Sen. Scott Wiener said Thursday the loan is critical to preventing an “unraveling” of the system that connects the region.

“If we don’t do anything, if we just let inertia sit in, we’re going to lose our public transportation systems,” Wiener said. “They will either be a shadow of what they were, or they will not exist at all.”

Facing a $357 million deficit, BART officials warned earlier this month that without a significant infusion of cash, the agency could be forced to move to a “doomsday” schedule that threatens to close up to 15 stations and terminate service at 9 p.m. nightly.

Speaking outside a BART train at the Colma yard, Newsom described the loan as a “value proposition” for the region’s identity and economic future.

“We’ve been frankly living off our inheritance,” Newsom said. “We’ve taken a lot of these systems for granted. We haven’t invested in them over the course of many, many decades.”

According to the governor’s office, the agreement aims to protect service for more than three million monthly riders while agencies pursue a long-term funding solution on the November 2026 ballot.

Assembly Bill 117 authorizes the state to lend the money for a 12-year term. The first two years are interest-free, after which the interest rate will be tied to the state’s surplus money investment fund to ensure the general fund is not “short-changed,” according to Newsom.

The Metropolitan Transportation Commission, the transportation planning and financing agency for nine Bay Area counties, will administer the funds. The commission is responsible for distributing the loan proceeds to the four operators and overseeing the quarterly repayment installments to the state.

To secure the debt, transit agencies must pledge their future state transit assistance revenues as collateral. If the agencies fail to repay the loan, the MTC has the authority to redirect those funds.

MTC Chair Sue Noack described the bill as a “must-pass” measure to protect the 900,000 trips taken daily across the region’s networks.

In November, voters in five counties — San Francisco, Alameda, San Mateo, Contra Costa and Santa Clara — will vote on a regional transportation sales tax measure to fund the struggling agencies. And San Francisco residents will vote on a parcel tax to shore up municipal transit.

While the state loan provides some immediate stability, Newsom warned that local transit leaders must “step up their game” and find more efficient ways to manage their budgets.

“We can’t continue to do what we’ve done because we’ll be right back here in a few years,” Newsom said.