Caltrain at its recent Board Meeting outlined “significant service cuts and operational impacts,” including the potential elimination of weekend service and of half-hourly trains, “to reduce budget shortfalls despite strong ridership recovery and high rider satisfaction” if the proposed regional transit funding measure fails in November 2026 and no new external funding is available, according to the California regional/commuter railroad, which provides service along the San Francisco Peninsula, through the South Bay to San Jose and Gilroy.
Gov. Gavin Newsom on Oct. 13 signed SB 63, the Bay Area Transit Sales Tax Ballot Measure that is intended to fund “fiscally distressed” transportation authorities in the Bay Area, according to the California Transit Association. Authored by Sens. Scott Wiener and Jesse Arreguin, the approved measure ”takes the next step in ensuring that the proposal will appear on the 2026 ballots of voters in the counties of Alameda, Contra Costa, San Francisco, San Mateo and Santa Clara,” the Association reported late last month. “Notably, the measure will not automatically go to voters; the newly formed Public Transit Revenue Measure District overseen by the Metropolitan Transportation Commission must first approve the measure for the ballot, which would require a ⅔ majority vote for its approval (alternatively, the measure could be placed on the ballot as a voter-initiated measure, which would require only a simple majority for its passage). If the measure does appear on the ballot and if it is approved by voters, it will impose a half-cent sales tax in four counties and a full-cent sales tax in San Francisco with the goal of generating nearly $1 billion in annual revenues for the transit operations of AC Transit, BART, Caltrain, Muni, County Connection, Tri Delta Transit, LAVTA, Union City Transit, WestCAT and SF Bay Ferry. SB 63 also requires financial audits of the major transit systems facing fiscal cliffs (AC Transit, BART, Caltrain, SF Muni) and provisions for stronger regional network management.”
Caltrain on Nov. 7 reported that as “transit agencies across the Bay Area are confronting structural budget shortfalls as post-pandemic travel patterns continue to reshape commuting behavior,” it has responded by:
- Taking “significant cost-cutting measures, including FTE freezes, crewing efficiencies, and reductions to professional services and other non-labor expenses.”
- Working on “monetizing available resources and diversifying revenue through a non-fare revenue strategy portfolio that includes expanded advertising, property leasing, selling fiber optic cable and Transit Oriented Development.”
- Modernizing and expanding service—“boosting train frequency beyond traditional commute hours, improving reliability, and enhancing the rider experience following electrification.”
Caltrain in September 2024 fully launched its electrified service with 23 Stadler Rail-built KISS bilevel EMUs (electric multiple-units), transforming the now 161-year-old corridor from diesel to electric power. The railroad runs every 15 minutes at most stations during peak hours and half hourly service at all other times including on the weekend.
Caltrain’s preliminary FY25 budget end results ”are showing positive impacts from the cost efficiencies and more revenue than budgeted,” according to the railroad. “The focus on quality service is also paying off: ridership has risen 55% compared to September last year with weekend ridership doubling and four consecutive months of over one million riders.” It noted that 91% of polled riders approve of the agency and results from a recent rider satisfaction rating “are the highest they have ever been in the 27 years of surveying Caltrain riders.”
According to Caltrain, the SB 63 measure “would establish a stable funding source for Caltrain and other Bay Area transit systems to maintain reliable, accessible service.” If the measure fails, Caltrain said it “would be forced to take actions to reduce the structural funding gap, unless new external funding sources are identified”; these actions, it noted, “would significantly undermine the progress Caltrain has made in recent years to rebuild ridership, improve service reliability, and support clean air goals through electrification.”
The railroad said without external funding, the potential impacts would include:
- “Closing more than one-third of stations.
- “No weekend service.
- “Reducing service to once an hour.
- “Ending operations by 9 p.m.
- “Cutting segments of service.”
Caltrain said it will “continue to work through budget scenarios with the Board in early 2026, with additional details on savings and the downsides of service cuts, which include significant loss of riders and associated revenue.” It noted that it “remains committed to transparency about its financial outlook and to working with regional partners to identify sustainable, long-term solutions that protect the service improvements, ridership increases, and environmental benefits the agency has worked hard to achieve.”
In June, Caltrain’s Board approved its operating and capital budgets for FY 2026, which began July 1, 2025, and ends June 30, 2026.
The FY26 operating budget is nearly $260 million, with funds coming from fares, Measure RR, state SB 125 funding, and utilization of State Transit Assistance (STA) carryforward funds. The railroad said it identified $10.9 million in operating cost reductions compared with its earlier financial projections by reducing both labor and non-labor expenses. These reductions were said to be achieved while maintaining current service levels, reflecting “Caltrain’s commitment to cost control and financial stewardship.”
Caltrain’s FY26 $34.8 million capital budget is funded through a combination of federal, regional and state grants; local funding; and member agency funding. It focuses on state of good repair and safety and includes funding for grade crossing safety improvements, such as LiDAR and camera-based artificial intelligence systems.
Caltrain in June said it was projecting an average annual deficit of close to $75 million between FY 2027 and FY 2035, without an “injection of funding from a regional sales tax measure or other external sources.”
“Caltrain has made tremendous strides in improving service, expanding ridership, and earning the trust of our riders and communities,” Executive Director Michelle Bouchard said on Nov. 7. “The regional funding solution would provide a sustainable funding source to continue those efforts, but should it fail to pass we will face a number of scenarios that will affect years of progress, affect tens of thousands of daily riders who depend on Caltrain, increase traffic, and adversely affect the Bay Area’s economy.”
