California has enjoyed several years of budget surpluses, but this January, Gov. Gavin Newsom announced that the state had a $22.5 billion budget deficit.
During the May budget revision, Newsom announced that this deficit has grown to almost $32 billion. With the governor hesitant to cut services and unable to increase spending, public transit has suffered. Municipal train and bus services, such as the Alameda-Contra Costa Transit District, or AC Transit, are struggling to recover from the lasting impacts of low ridership during the COVID-19 pandemic and face major financial shortfalls without government assistance.
“AC Transit is facing a fiscal cliff brought on by the continued COVID-induced decline in ridership,” said AC Transit media affairs manager Robert Lyles in an email. “Although we received federal emergency funding early in the pandemic supporting fuel, tires, equipment, and staved layoffs, those dollars will soon be exhausted.”
Currently, nearly 1.5 million people are serviced by AC Transit’s 633 buses across 5,400 stops. But a state failure to provide additional funding by the end of this fiscal year in June would result in “severe” cuts to service, according to Lyles.
Cutting service would cause the agency to go into a “death spiral,” where worse service would accelerate the decline in ridership, leading to further revenue loss and more difficulty in accessing public funds, according to Adina Levin, advocacy director for the transit advocacy group Seamless Bay Area.
To prepare for this possibility, AC Transit is soliciting community opinions about which lines to maintain and which to reduce frequency on.
“AC Transit has not made any decision about service cuts,” Lyles said in an email. “We have launched the Realign Survey, which will help our transit district assess not only post-pandemic service but also funding needed to support service.”
According to Lyles, restoring bus lines to full operating capacity would require about 200 new bus operators. However, a lack of funds to pay potential new hires has made hiring difficult.
In addition, AC Transit has tried to incentivize ridership, such as by offering free rides on certain days. However, ridership is down 40% compared to pre-pandemic levels and recovery has been slow.
Ultimately, Levin said cuts to public transit would mainly hurt those with limited financial resources who depend on AC Transit for their daily commute, and Lyles concurred.
“Our bus lines predominantly serve people of color and transit-dependent riders – some of the most vulnerable residents of the East Bay,” Lyles said in the email. “Without state emergency funding, transit for essential workers, access for elderly and disabled riders, and daily transportation for thousands of students remain in danger.”
Daniel Lopez, deputy communications director for Newsom’s office, said the governor had “signaled a willingness” to work with the state legislature on finding a solution to transit shortfalls.
In a May 12 press conference, Newsom called public transit ridership numbers “alarming” but said the state is currently unable to provide additional funding.
“We’re going to have to address those issues and I know a lot of local agencies are aggressively and appropriately doing just that,” Newsom said at the press conference. “We put out a budget last year which provided additional funding. We’re just not in a position to solve their short-term needs.”
Lopez said the government has invested $3.2 billion in statewide public transit from January to April 2023 as part of a multi-year investment program to improve transit options and reduce car dependency. Additionally, he emphasized public transit’s important role in the state’s commitment to meeting its 2045 goals of reducing air pollution by 71% and gas consumption by 94%.
With a potential recession looming, the governor has not taken funds from the state’s reserve fund, an amount totaling about $35.6 billion. However, Levin said additional funding was needed now.
“A transit agency needs to plan,” Levin said. “If it believes it’s not going to have enough funding in the next few years it’s going to start cutting service now or in the near future and that will degrade the system.”
To address the lack of funding, Levin suggested two possible solutions. For one, the funding from a state cap and trade program, currently intended for electric vehicles, could be redirected to provide emergency transit funding.
Alternatively, recent federal and state funding meant for highways could be reallocated for transit agencies, a plan Levin said the Bay Area Metropolitan Transportation Commission, or MTC, has already indicated support for. She added that the MTC would be able to redirect these funds without legislative action.
Levin said currently pending legislation would redirect funding earmarked for capital projects, such as a new BART extension to Silicon Valley, to be used for transit services instead. However, this would result in transit agencies losing about six billion dollars in federal funding that is designated for these projects.
Both Levin and Lyles expressed disappointment about current state plans for transit funding.
“AC Transit is disappointed and concerned that Governor Newsom’s revised budget did not include emergency funding for transit agencies across the Bay Area,” Lyles said in an email. “We have not only made our funding needs known to the governor but lawmakers throughout the state’s capitol. As we work to attract more riders, increase service, and hire new operators, we implore Governor Newsom to reconsider emergency aid to AC Transit.”