A so-called economic “death spiral” affecting BART and AC Transit has been averted for the time being.
After months of negotiations, California Governor Gavin Newsom and the state legislature agreed on a $310.8 billion state budget Monday night that includes a key carve out of $5.1 billion over four years to help transit agencies stay afloat.
State lawmakers and the governor had to balance the budget while resolving a $32 billion deficit resulting from lower tax revenues. Transit agencies, including bus and train systems throughout the Bay Area, have been hit even harder by declining revenues compounded by drops in ridership throughout the pandemic. Activists and elected officials from the Bay Area have warned for months that without state assistance, BART, AC Transit, and other systems could be forced to cut service routes and close stations. Advocates called it a potential “death spiral” and a “fiscal cliff,” referring to sharp drops in ridership and revenues.
Budget negotiations between the governor and legislature had stalled in recent days due to Newsom’s insistence the state drop environmental review requirements for certain types of major infrastructure projects.
“We are accelerating our global leadership on climate by fast-tracking the clean energy projects that will create cleaner air for generations to come,” Newsom said.
The deal agreed to on Monday sets aside $1.1 billion in “flexible” funding over the next four years, money that transit agencies can use for operations or infrastructure. The legislature had originally proposed this same amount of money be made available over the next three years.
The deal also allows transit agencies to dip into about $4 billion in state infrastructure assistance to use this money for operations over the next two years. Most of this $4 billion was originally set aside for big rail projects like the extension of BART to San Jose’s Diridon station. So taking some of the $4 billion and using it for operations, according to advocates, would mean delaying important infrastructure projects, and it could force the state and the Bay Area to miss out on an additional $6 billion in federal matching funds for the rail extension project.
Policy analyst Zack Deutsch-Gross from Transform, the nonprofit advocacy group, told The Oaklandside that while the new budget deal was a “huge win for transit and riders,” the local agencies will still struggle to stay afloat.
“The fiscal needs over the next five years for Bay Area transit is $2.5 billion. So [this deal] only buys us about two years of runways on the fiscal cliff,” he said.
The budget deal also requires transit agencies to follow new “accountability measures,” including the creation of a transportation “task force” that will oversee the use of state money and find ways to increase transit ridership.
The task force will include representatives from transit operators, the state’s transportation department, local government transportation agencies, and metro and regional planning organizations. The task force is expected to issue a report by October 31.
Steve Wells of the state Department of Finance said in a meeting of the Assembly Budget Committee on Monday that regional transit providers will be required in the first year to submit spending plans, including whether they will use the money for operations or infrastructure. In the second year, Wells said, agencies have to also provide data and information about their spending even if they don’t have plans to use infrastructure funds for operations.
Michael Pimentel, executive director at the California Transit Association, the organization that spearheaded advocacy for more state funds to transit agencies, said on the budget call Monday night that he appreciated the legislature and the governor for “reaching an agreement on a robust investment package for public transit, supporting transit capital and operations.”
California transit agencies have struggled financially since the pandemic began over three years ago. In a board meeting last week, BART said that despite recent ridership highs, it only averages about 40% of transit traffic during weekdays and 60% during weekends, compared to pre-pandemic numbers.
State Senators Scott Wiener said in a statement Monday that the $1.1 billion for transit operations is “important but does not come close to filling the transit fiscal cliff.”
Wiener and Senator Phil Ting introduced a bill on Monday to increase transit agency funds through a $1.50 toll hike on seven Bay Area bridges, including the Bay Bridge. That would bring up tolls to $8.50 and raise $180 million annually.
Some oppose this funding plan, saying the increased tolls would mostly fall on middle-income families and workers who have to commute into the city for their jobs. But people who want the state to move away from gas-powered vehicles, which cause about 40% of all pollution emissions, said the hike might incentivize drivers to take a cleaner transit alternative instead.
Transform’s Deutsch-Gross said that “while the toll will be painful to drivers in the short term,” losing transit service would be an inequitable event that would affect people in need the most, including low-income riders. “Our first need to is to preserve these transit agencies and the vital services they provide,” Deutsch-Gross said. Transform is working with state leaders on finding ways to lower the pain points of a higher toll, including giving money in credit to people who take two bridges a day, for example.
Some state leaders, including Senator Steve Glazer, said they would oppose proposed toll hikes until and unless transit agencies like BART agree to a more independent Inspector General to oversee agency finances. Glazer claimed the BART board has “starved” the IG office of funds, rendering it obsolete and powerless.
“If the traveling public is going to invest additional money into transit, we must have the fiscal oversight to ensure that the systems are run safely, efficiently and honestly. The status quo is [a] failure and we should not put in another penny to support it,” he said.
