• Before the COVID-19 pandemic, agencies like BART and Caltrain were heavily reliant on passenger fares to maintain service, about 75% and 70% respectively. When transit ridership fell dramatically at the depths of the pandemic, federal funding helped fill gaps so agencies could continue serving frontline workers and essential travel needs. 

    While transit ridership has been steadily increasing on agencies like Muni, AC Transit, BART, and Caltrain, ridership is still considerably lower than pre-2019 levels due to changing travel patterns. Regional services like BART and Caltrain are experiencing more sluggish recoveries (45-55% of ridership), while local services like AC Transit and Muni are recovering faster (70-80%).

    The situation is particularly acute for BART and Caltrain, which had some of the highest "farebox recovery ratios” of US transit agencies. Most other transit agencies get the majority of operating funds from local, regional, and state funding sources – not fares.

    Muni's anticipated $300+ million budget deficit is due to lower parking revenues from San Francisco's general fund, in addition to reduced Muni fare revenues.

    AC Transit's budget deficit is being driven by lower sales tax and diesel tax revenues.

  • If no action is taken BART, Caltrain, Muni, AC Transit, and Golden Gate Transit will face upwards of $900 million in cumulative annual budget shortfalls beginning in FY2027. Other transit agencies like SamTrans and VTA are expecting deficits in upcoming years.

  • As written, the funding measure authorized by SB 63 will appear as a sales tax in the participating counties. The default rate is set at 1/2 cent, with the exception that San Francisco may have up to 1 cent to provide additional support for Muni. The exact rates must be negotiated and finalized by July 31, 2025, by which time the transit agencies and local governments must also submit a spending plan to allocate revenue generated by the measure.

    However, a poll commissioned by the Service Employees International Union (SEIU) shows a "gross receipts tax” on big business revenues would shift the financial burden onto larger corporations. 

  • Recent polls (conducted by MTC, Santa Clara and San Mateo Counties) have consistently shown that more than 50% of Bay Area voters support new funding for public transit. Voters say it’s important that any funding effort prevent service cuts, support vulnerable groups who rely on transit, improve the rider-experience, and ensure transparency and accountability of public funds. 

    If a government agency were to put the regional measure on the ballot, two-thirds of voters would need to vote yes. This is required by the California Constitution for "special taxes” imposed for specific purposes.

    Unfortunately, support for a 2026 regional measure has never exceeded the two-thirds threshold, but thankfully, a measure can pass with 50% +1 voter approval if the measure is placed on the ballot by a citizens’ signature gathering effort.

    Notably, a gross receipts tax on big businesses is more popular than a sales tax.

  • The exact funding raised from a regional measure is still up in the air because there are outstanding questions about how many counties will participate, how revenue will be generated (sales tax or gross receipts tax), and the rate of a tax. 

    Earlier research found that a 1/2-cent sales tax measure in 4-counties (not including Santa Clara) would raise $540 million annually. The bill currently allows San Francisco to propose a 1-cent sales tax on their ballot measure to provide additional support for Muni. 

    A 0.136% gross receipts tax on the top 2.4% of Bay Area businesses would raise approximately $800 million per year, according to economic analysis commissioned by Bay Area unions and community groups. This tax would not impact small businesses – it will only apply to some 18,000 businesses, who together generate $591 billion in gross receipts with the average qualifying business generating about $32.5 million annually. 

    This would mean more funding to not only save transit, but expand service for VTA, SamTrans, and other agencies.

  • The basics of good transit are frequent, fast, convenient, well-coordinated service.  The measure provides funding to prevent service cuts and a set of policies to improve the rider ridership by making public transit faster, more affordable, and convenient. These include:

    • Free/reduced priced transfers when taking trips between agencies and a standard low-income discount program that are both predicted to increase ridership.

    • Integrated mapping and wayfinding signs across the region to make navigating transit stations easier.

    • Transit priority infrastructure investments to make transit that runs on streets and roads faster, more reliable, and more cost-effective

    • Funding to coordinate paratransit and accessible transportation to make an extremely cumbersome system more user-friendly for people with disabilities and older adults.

    The exact amount of funding towards these "transit transformation” initiatives has not been determined, but MTC has proposed $45 million.