The financial picture is so bleak for San Francisco’s transit agency, its leaders want to sell swag on the side to make extra cash.
To be sure, SF Municipal Transportation Agency officials acknowledge that even the coolest Muni merch — or the ugliest holiday sweaters — won’t plug a multimillion-dollar budget hole, but the Muni brand is “a tangible currency,” SFMTA marketing manager Jeanne Brophy said this week.
BART has already laid down tracks to follow. It began selling holiday sweaters in 2021, and demand has grown each year. Last year, the agency made $106,300 in ugly-sweater profit.
SFMTA has gotten encouragement from a local soccer club that loves Muni enough to put the agency’s “worm” logo on some of its jerseys. But good vibes — and modest sales — from grassroots love won’t help the agency hit its goals.
That was clear at an SFMTA board meeting this week, where agency officials, who oversee a $1.3 billion budget, presented their game plan to tackle a short-term deficit of $13 million. By law, SFMTA must balance its budget every year.
Longer term, the agency projects a massive $240 million deficit for the cycle that begins in 2026. With budget crises at City Hall and in Sacramento, SFMTA can’t count on a boost from San Francisco’s general fund or state grants, two common funding sources. Another unknown is a new labor contract with its union workers; the current contract expires this spring.
But the main driver of this fiscal crisis is the pandemic, which hollowed out Muni’s core ridership of downtown commuters. SFMTA stayed afloat with federal and state relief funds when ridership cratered in 2020. The crisis exposed the agency’s dependence on farebox revenues, as well as parking fees and fines. In 2019, these sources accounted for over half its revenues. Today, they make up about 25 percent.
Weekday ridership is currently 68 percent of pre-COVID levels, up from 60 percent reported in June 2023. Downtown commuters aren’t likely to provide a big boost anytime soon. Unleased office space is equal to 25 Salesforce Towers, city controller Ben Rosenfield said at Tuesday’s meeting. The recovery isn’t going to be fast enough to “catch up with the timeline when the federal relief recedes” in June 2026, he noted.
When SFMTA sends its budget to City Hall, “no one comes to our rescue,” said executive director Jeffrey Tumlin.
‘Survival mode’
One way to understand SFMTA’s budget crisis is to picture a three-legged stool. Federal COVID funds, the city’s general fund, and parking fees and fines make up 70 percent of SFMTA’s revenues.
But two of the legs are wobbly, and the third is about to disappear. In addition to pandemic funds ending, SF is facing an $800 million deficit. Mayor London Breed recently ordered 10 percent cuts at all agencies, with potentially more in store. Parking fees and fines, nearly 20 percent of SFMTA’s revenues, have proven to be a political land mine for the agency.
SFMTA is now in “survival mode,” according to chief financial officer Bree Mawhorter. It can only make changes, such as more bus service, if they don’t increase costs. Instead of an overhaul of the Muni map to fit new travel patterns, the agency can only make smaller adjustments that come at the expense of other routes.
For example, the 29 Sunset, which serves dozens of schools on its route — the longest in SF — will get a boost this year, but the low-ridership 33 Ashbury, which connects the Mission, Haight, and Richmond, will see reductions. The agency is looking to make these adjustments four times a year as it gets better ridership data, Tumlin said this week.
“We appreciate that SFMTA has been proactive in seeking ways to make its service more efficient,” SPUR transportation policy manager Sebastian Petty told The Frisc.
Meanwhile, officials are looking for other cost savings, like using parts from old train cars to make repairs.
Political obstacles
San Francisco politics have also limited the agency’s options. Last year, SFMTA proposed extending parking meter hours into evenings and Sundays to boost revenues by an estimated $30 million per year. But merchants complained about losing customers, and the Board of Supervisors countered with a drastic measure: a charter amendment to require mayoral approval of all SFMTA fare and fee hikes. Supervisors withdrew the amendment in November after the agency agreed to drop the meter plan.
Raising bus and train fares, which the agency hasn’t done since July 2019, might also hit political headwinds. One idea is to end the 50-cent discount for Clipper card or mobile app users. (They pay $2.50 a ride instead of $3, an offer from 2019 meant to encourage these uses.)
Ending the discount would raise $5.2 million over two years, officials said this week, and have less effect on low-income riders, many of whom already ride for free — youth and seniors — or pay cash. (However, SFMTA says 31 percent of Clipper users are low-income.) In this scenario, a single ride using Clipper or mobile would cost $2.75 in 2025 and $3 in 2026. Cash fare for a single ride would remain the same.
Meanwhile, there could be renewed calls for a completely free transit system. Last year, District 1 Sup. Connie Chan, who also chairs the supervisors’ budget committee, said free Muni should be a key piece of the city’s economic recovery. Chan and District 5 Sup. Dean Preston, another champion of free Muni, are both running for reelection this fall.
Transit advocate Cyrus Hall said it was unfair to raise bus and train fares without raising parking fees. Hall pointed out that the city has shifted to a dynamic pricing model for cars, which sometimes means lower fees even though the cost of enforcement, garage maintenance, and other labor keeps rising. “The system is broken,” Hall said during public comment at this week’s meeting.
To close the near-term $13 million gap, SFMTA is considering a 5 percent increase in parking fines — street cleaning and the like — and residential parking permits, and reinstating taxi fees. That should be enough to get through June 2026, when massive deficits are on the horizon.
Officials want to put a huge regional funding measure — $1 billion or more — on the Nov. 2026 ballot. The funds would be spread around the Bay Area’s transit agencies, which combined make the fourth largest system in the country. Muni and BART carry about two-thirds of the region’s ridership, but SFMTA’s Mawhorter called for tempered enthusiasm: SF’s allocation from the previous regional measure was $50 million last year. That’s less than a quarter of the expected long term deficit.
And that’s if the measure passes. Voter approvals to pay for public services are usually a San Francisco slam dunk. But in 2022, a measure to raise $400 million for SFMTA fell just short of a required two-thirds majority. Last year, SF’s representative in the state Senate, Scott Wiener, was working on a bill to fund Bay Area transit through a hike in regional bridge tolls. He withdrew it when he saw how the political winds were blowing.
Meanwhile, the agency is looking to boost ridership any way it can. Maybe some hip merch will help.
Worm swag
When SF City FC was scrambling to find a T-shirt sponsor for the 2023 season, the fan-owned soccer club mocked up three jerseys with the Muni “worm” logo emblazoned across the chest.
The team already pays homage to Muni’s paper Fast Passes with its season tickets, and its fans sing songs about taking Muni to matches. The jerseys “kinda caught fire amongst our fans and lower-league soccer twitter,” said Ian Blackley, SF City’s marketing manager. SF City didn’t want money, just the logo, said Blackley, adding that “we wanted to help promote public transit.”
SFMTA agreed to a sponsorship deal, and the jerseys were unveiled last fall. Blackley said the team ordinarily orders 250 jerseys, but by early November, sales reached 825. Currently, the jerseys are sold out in their online store.
The experiment has prompted SFMTA to consider a wider program to license the logo on some 20 items including socks, beanies, and T-shirts, with vendors giving the agency 10 to 15 percent of sales, according to SFMTA’s Brophy.
The money from these products wold amount to pocket change for a billion-dollar agency, but promoting the brand and making a few bucks at the same time could win more riders — and more sympathetic voters — at a time when the transit system desperately needs more of both.
Corrections, 2/2/24: A previous version of this story erroneously described SFMTA’s $1.3 billion budget as a two-year cycle; that figure is the annual budget. Also, the story previously called the potential 2026 regional ballot measure a bond, which is incorrect. It will be a different kind of funding mechanism, to be determined.