State Budget Agreement Gives Bay Area Transit a Near-Term Lifeline

The fiscal 2023-24 state budget agreement released today by the Legislature features $1.1 billion in flexible transportation funding to help California transit agencies avoid a near-term ‘fiscal cliff’ that likely would have led to deep service cuts as early as this year by Muni, BART and other transit agencies whose fare revenues remain well below pre-pandemic levels. The Legislature’s budget agreement also includes the restoration of a $4 billion commitment for local transit capital improvements that was included in last year’s budget agreement and the option to flex these funds toward transit operations. The Bay Area's share of this $4 billion total is estimated to be $800 million, but Gov. Gavin Newsom earlier this year had proposed to cut the program in half, which would have put at risk billions of dollars in federal matching funds and jeopardized thousands of construction jobs.

Both the state Senate and the Assembly are scheduled to vote on the new budget Thursday, after which it will be sent to Gov. Newsom for his signature. Legislative leaders today made clear the new budget agreement has not yet been endorsed by the administration, so further changes are possible before the 2023-24 state budget is finalized.

“We expect the new budget deal to allow Bay Area transit agencies to maintain their current service levels for at least the next two years,” said MTC Chair and Napa County Supervisor Alfredo Pedroza. “Crafting a balanced budget that recognizes both the downturn in state revenues and the continued importance of transit to meet our state’s mobility, climate and equity goals required some hard choices and a lot of heavy lifting. We're deeply grateful to our Bay Area legislative caucus and to Senate and Assembly leaders from around the state. The leadership on this issue shown by Sen. Scott Wiener of San Francisco, who used to be an MTC Commissioner, was tremendous; as was the work done by Senate Budget Committee Chair Nancy Skinner and Assembly Budget Committee Chair Phil Ting. We also appreciate Senate President Pro Tem Toni Atkins' and Assembly Speaker Anthony Rendon's recognition that we can't deliver an economically thriving, sustainable and equitable future if we don't keep transit moving across California. There’s still a lot of hard work ahead to deliver the world class transit network a region like the Bay Area deserves. But the Legislature has given us a chance to keep focused on the work that’s already started. We know the Legislature intends for there to be accountability provisions to accompany these funds, and we look forward to helping in that effort to deliver the most important outcome--more Bay Area residents riding transit.”

If approved by the Legislature and signed into law by the governor, the new budget plan will allow California transit agencies to use up to a combined $1.1 billion from select sources, including the state’s Cap-and-Trade program for greenhouse gas emission allowances, over the next three years to support operating costs (fuel, drivers, mechanics, etc.) as well as to cover capital expenses associated with the transition to zero-emission transit as required by the Air Resources Board's Innovative Clean Transit rule. Most of this $1.1 billion consists of shifts in funds that otherwise would go toward state grant programs to support the zero-emission transit transition. While the Legislature has not yet released full details, MTC is expected to receive the Bay Area's share of these funds and then to determine the ultimate distributions to Bay Area transit agencies. 

The restoration of the full $4 billion in capital funds for fiscal 2023-24 and 2024-25 will help keep on track major Bay Area projects such as BART’s Transbay Core Capacity initiative to boost service frequencies through the Transbay Tube linking San Francisco and Oakland, and the BART extension to be built by the Santa Clara Valley Transportation Authority from Berryessa/North San Jose through downtown San Jose to a new terminus in Santa Clara. The Major Projects Advancement Policy (MAP) adopted by MTC last year identifies these projects as the primary recipients of  future transit capital dollars that will flow to MTC for distribution.