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Future of BART dependent on increased public funding, officials say

'Death spiral' -- 9-figure deficits could be on horizon

Cutting BART service enough to shore up its projected nine-figure annual deficits in the coming years would result in a "death spiral" for the transit agency, officials said last week.

A BART train arrives at an East Bay station. (Photo by Ray Saint Germain/BCN Foundation)

BART planning officials prepared a five-year financial outlook at the behest of the Metropolitan Transportation Commission, the regional transit coordination agency, to estimate how three levels of post-pandemic ridership recovery would affect service.

A full return to the transit system's pre-pandemic ridership levels would enable BART to balance its budget each year, but such an outcome is "not feasible" without a new source of annual revenue.

Meanwhile, BART recapturing 85% of its pre-pandemic revenue by the 2028 fiscal year would result in annual deficits of $125 million.

Those deficits would climb to $233 million per year if fare revenue remains stagnant through mid-2029, when the 2028 fiscal year ends, according to BART officials.

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But the agency's budget officials argued that BART cannot realistically make cuts to its operating costs to fully close those deficits because rail transit has high fixed costs -- in BART's case, roughly 30% of its overall operating costs are fixed.

According to BART financial planning director Michael Eiseman, the cuts necessary to at least meet the annual deficits with stagnant fare revenue would eliminate service on the Richmond-Millbrae and San Jose-Daly City lines, close nine stations, reduce service to weekdays only and limit trains to arriving once every hour.

"Cutting to balance in two of the three scenarios results in minimal service that would not meet the region's needs or even provide enough capacity to meet demand," Eiseman said to the BART Board of Directors on Dec. 1.

"Critically, this poor service would lead to further loss of ridership fare revenue and further deterioration of our fiscal position," he said.

BART officials were quick to stress that the agency is not considering cutting service or eliminating train routes at this time.

Transit officials across the region have already floated ideas to save transit agencies that have suffered heavily from reduced ridership during the COVID-19 pandemic, as fewer riders are traveling into and out of downtown San Francisco for work five days per week.

Those proposals have included a ballot measure for a regional tax as well as identifying consistent state or federal funding. For BART, a new revenue source will likely be needed by mid-2025, when the agency is set to exhaust its federal relief funding.

"Ultimately, BART's future depends on working to develop a funding model that includes more public investment so that we are less reliant on passenger fares," Eiseman said.

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Future of BART dependent on increased public funding, officials say

'Death spiral' -- 9-figure deficits could be on horizon

by Eli Walsh / BCN Foundation /

Uploaded: Sun, Dec 4, 2022, 4:23 pm

Cutting BART service enough to shore up its projected nine-figure annual deficits in the coming years would result in a "death spiral" for the transit agency, officials said last week.

BART planning officials prepared a five-year financial outlook at the behest of the Metropolitan Transportation Commission, the regional transit coordination agency, to estimate how three levels of post-pandemic ridership recovery would affect service.

A full return to the transit system's pre-pandemic ridership levels would enable BART to balance its budget each year, but such an outcome is "not feasible" without a new source of annual revenue.

Meanwhile, BART recapturing 85% of its pre-pandemic revenue by the 2028 fiscal year would result in annual deficits of $125 million.

Those deficits would climb to $233 million per year if fare revenue remains stagnant through mid-2029, when the 2028 fiscal year ends, according to BART officials.

But the agency's budget officials argued that BART cannot realistically make cuts to its operating costs to fully close those deficits because rail transit has high fixed costs -- in BART's case, roughly 30% of its overall operating costs are fixed.

According to BART financial planning director Michael Eiseman, the cuts necessary to at least meet the annual deficits with stagnant fare revenue would eliminate service on the Richmond-Millbrae and San Jose-Daly City lines, close nine stations, reduce service to weekdays only and limit trains to arriving once every hour.

"Cutting to balance in two of the three scenarios results in minimal service that would not meet the region's needs or even provide enough capacity to meet demand," Eiseman said to the BART Board of Directors on Dec. 1.

"Critically, this poor service would lead to further loss of ridership fare revenue and further deterioration of our fiscal position," he said.

BART officials were quick to stress that the agency is not considering cutting service or eliminating train routes at this time.

Transit officials across the region have already floated ideas to save transit agencies that have suffered heavily from reduced ridership during the COVID-19 pandemic, as fewer riders are traveling into and out of downtown San Francisco for work five days per week.

Those proposals have included a ballot measure for a regional tax as well as identifying consistent state or federal funding. For BART, a new revenue source will likely be needed by mid-2025, when the agency is set to exhaust its federal relief funding.

"Ultimately, BART's future depends on working to develop a funding model that includes more public investment so that we are less reliant on passenger fares," Eiseman said.

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