SAN FRANCISCO — Caltrain, the commuter rail line that connects San Francisco to San Jose, is facing a fiscal crisis that could force it to cut half its service next year.

Caltrain, the official name of which is the Peninsula Corridor Joint Powers Board, faces a $30 million shortfall for fiscal 2010-11 amid cuts in funding from local transit agencies and a decrease in ridership. The projected shortfall equals nearly a third of the agency’s $97.2 million operating budget.

“Things are very dire here,” said Christine Dunn, public information officer for the agency. “We are taking a look at making some severe service cuts.”

Under a plan discussed at a board meeting late last week, Caltrain would eliminate most night, weekend, and midday service, preserving service for just the peak commuting hours each weekday morning and evening.

“We’re at a watershed moment where there’s a possibility this railroad could go away,” chief executive officer Mike Scanlon told the board, as reported by the San Jose Mercury News.

Caltrain is a joint-powers board formed by the city and county of San Francisco, the San Mateo County Transit District, and the Santa Clara Valley Transportation Authority.

The three member agencies provide about 40% of Caltrain’s budget via operating subsidies. They held their contributions steady this year, but with big deficits of their own, they are planning to cut Caltrain funding by as much as 70% next year.

The agencies are sharply reducing their own services and raising fares on the main systems they operate independently to balance budgets against a backdrop of reduced state aid, declining sales tax collections, and decreased ridership.

In addition to the potential reduction in its operating subsidies, Caltrain is also facing declines in demand because of the weak economy. The San Francisco metropolitan area’s jobless rate was 9.5% in February, and the San Jose region’s unemployment rate was 12.1%. The national unemployment rate was 9.7%.

Caltrain’s average weekday ridership was approximately 35,000 in February, a 2% decrease from February 2009. Fiscal year to date, ridership is down 8.3% to 7.9 million. Fare box revenues have declined 3.9%.

Caltrain had $23.14 million of farebox-backed revenue bonds outstanding as of June 30, 2009, according to its most recent comprehensive annual financial report. The bonds are secured by a first lien on fare collections. 

“We are obligated to make our debt-service payments, and we will make them,” Dunn said.

The bonds are insured by Ambac ­Assurance Corp., which faced multiple downgrades over the past two years and currently has lower ratings than the agency itself. Caltrain’s underlying bond ratings are A1 from Moody’s ­Investors Service and A from Standard & Poor’s.

Standard & Poor’s earlier this month reaffirmed Caltrain’s ratings, citing the “expectation of continued strong support from the three member agencies.” Rating analyst Adam Torres declined to comment yesterday.

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