California loan Bay Area transit agencies advances under AB 117

California loan Bay Area transit agencies is moving forward after Gov. Gavin Newsom signed legislation establishing a $590 million loan intended to prevent service cuts while the region pursues a long-term funding plan that will go before voters. The move was reported by Trains.

The funding, provided under AB 117, will be directed to the Metropolitan Transportation Commission (MTC), which coordinates transit funding and planning across the Bay Area’s nine counties. Caltrain, Bay Area Rapid Transit (BART), and San Francisco Muni are among the operators expected to receive short-term operating funds, as MTC notes. Also, the loan will be repaid in quarterly installments over 12 years.

California loan Bay Area transit agencies and the AB 117 loan structure

In a press release, Newsom said the legislation “will help protect transit service for more than 3 million monthly riders. … I’m proud of the progress the Bay Area transit service and operators are making on ridership recovery, and this loan will continue to build on that success as the region works together on long-term funding solutions.”

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At the same time, the Metropolitan Transportation Commission said the loan is meant to support agencies facing a projected deficit of more than $800 million in the next fiscal year, helping avoid major reductions in the near term.

Ballot initiative sales tax increase set for November

Meanwhile, voters will be asked this November to approve a sales tax increase to provide transit funding over the next 14 years. The proposal calls for a half-cent increase in Alameda, Contra Costa, San Mateo, and Santa Clara counties, and a cent in San Francisco County. The state legislature approved the measure last year.

Separately, MTC chair Sue Noack, who is also the mayor of Pleasant Hill, framed the agreement as a way to protect service while safeguarding capital priorities. “MTC greatly appreciates the time and energy the Department of Finance and the Governor’s office put into this loan negotiation,” Noack said in a press release. “It was critical to reach agreement on funding that would avert major service cuts this year while also protecting the Bay Area’s priority capital projects and this agreement does just that.”

What the short-term operating funds mean for BART and Caltrain?

BART General Manager Bob Powers said the loan “gives us reassurance money will be available to continue to deliver the best service possible for the Bay Area.” He said BART is currently developing two scenarios to address a projected $376 million budget deficit in fiscal 2027, “through either new revenue and efficiencies, or through service reductions, station closures, fare increases, layoffs, and across-the-board internal cuts.” Still, the more draconian option would come if the ballot measure is not approved.

Caltrain General Manager Michelle Bouchard said the loan “will allow us to preserve the service that made Caltrain the fastest growing transit agency in the U.S.” Caltrain has posted significant ridership gains since electrifying its San Francisco–San Jose corridor, though ridership remains below pre-pandemic levels, according to the state’s announcement on gov.ca.gov.

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