A $750 million bridge loan from California to help San Francisco Bay Area transit providers maintain service until a proposed tax measure heads to voters in November 2026 is on shaky ground.
The loan,
Local transit agencies lack options for generating revenue to fill budget gaps until late 2026, when the tax ballot measure is expected to appear on regional ballots.
Newsom's office said in a statement it is working closely with all stakeholders on the parameters of a funding deal and the shared goal is to reach an agreement on the terms by this fall.
The
As of Friday, the administration had "received only a general outline of proposed loan terms from the Legislature — which by itself doesn't constitute a complete legislative proposal that's necessary to fulfill the provisions of the Budget Act," as spelled out in the budget trailer bill, Palmer said.
The sections Palmer pointed to required setting a repayment schedule and interest rate and an explanation of which funds would cover the repayment.
The San Francisco Bay Area Rapid Transit District was counting on the funding to help it avoid a proposal floated earlier in the year that could have drastically reduced the number of trains from 4,200 to 500 per week. The other Bay Area transit operators also anticipating loans — the San Francisco Municipal Railway, San Francisco's local bus and light rail operator; the Caltrain commuter rail service; and the AC Transit bus service in the East Bay — have also threatened steep cuts.
BART has already
It closed a $35 million shortfall for fiscal 2026 through cost controls including freezing or eliminating 45 open positions, shortening trains and with plans for a 6.2% fare increase set for January.
"A state loan will keep things running while we allow the public to decide on the ballot measure and, if successful, while we wait for the revenue to kick in," said Christopher Filippi, a BART spokesman.
On Thursday, the BART board will be asked to approve drawing capital funds from an earlier federal TIFIA loan to provide "funding flexibility that could help provide short term relief to prevent layoffs and dramatic service cuts," Filippi said. "We understand self-help measures like this are an essential step in solving our budget crisis while we also ask for help and investments from others."
Moody's Ratings affirmed its Aa1 rating and Fitch Ratings its AAA rating before BART priced $925.8 million in new money, taxable debt and a refunding and $73.44 million in sales tax revenue bonds, in two separate deals in late August.
Moody's had downgraded the ratings to Aa1 from AAA in June, citing lagging ridership recovery, but revised the outlook to stable from negative.
The taxes backing those bonds are viewed as highly segregated from the district's operating budget.
S&P and Kroll Bond Rating Agency assigned AA-plus ratings and Fitch an AA rating to the sales tax bonds. Both affirmed a stable outlook.
Sens. Scott Wiener, D-San Francisco, and Jesse Arreguin, D-Berkeley, criticized the Department of Finance for not approving loan terms
The $750 million loan included as a trailer bill in the June budget would have been repaid over time to prevent service cuts between now and 2027, the senators said.
The threats to Bay Area transit come as other big cities, including
"Bay Area lawmakers, along with transit operators and advocates for public transportation, worked all summer proposing various terms to implement the loan to Bay Area transit operators, as contemplated in the June budget agreement. It's essential that this loan happen," Wiener and Arreguin said in a joint statement.
"California has a long and bad history of not adequately funding public transportation, particularly compared to other large blue states," they said. "The state needs to step up and ensure we don't see debilitating service cuts at BART, Muni, Caltrain, AC Transit, and other operators."
